Appendix 1: Government Response
We welcome the ECC Committee's inquiry and report
into Prices, Profits and Poverty and the opportunity to respond
to the conclusions and recommendations you have made.
We agree with the Committee's overall finding that
transparency in the energy market is critical and that communications
between energy companies and consumers need to be clear, transparent
and easy to understand. Government, the regulator and industry
all have a role in improving this. The Coalition is committed
to driving a more competitive market with more choice for consumers,
innovation, transparency and better value. This includes radical
proposals through the Retail Market Review to simplify energy
bills and make them clearer and fairer for consumers. This will
help consumers to secure a better deal - and in so doing increase
the competitive pressure on energy suppliers to deliver good customer
service at efficient cost. It will also secure consistency across
the market in the way energy companies communicate with their
customers for example through the Tariff Comparison Rate, Personal
Projections and the suppliers' cheapest tariff message on bills.
The Government is taking powers in the Energy Bill to give statutory
backing to Ofgem's key RMR proposals.
Government has committed to publishing information
on the impact of Government environmental levies and programmes
on consumer bills through the "Estimated impacts of energy
and climate change policies on energy prices and bills"[1]
report. This also provides a breakdown of the other costs that
make up a bill including wholesale, transmission, distribution
and metering costs, and other supplier costs.
Government and Ofgem are taking steps to increase
competition in the energy market, in addition to the reform of
the retail market. The Government has also increased the customer
number threshold at which suppliers are required to participate
in certain social and environmental programmes. Poor liquidity
(the ability to quickly buy and sell) in the wholesale electricity
market can also act a barrier to market entry to the supply and
generation markets. Ofgem is tackling this through its proposed
reforms and the Government is taking powers through the Energy
Bill to enable it to intervene if that proves necessary. The Government
is also working to strengthen the route to market for independent
renewable generators in order to ensure they are able to play
a fuller role in delivering investment under EMR and widening
consumer choice.
We agree that there needs to be increased transparency
over the profits of large, vertically integrated energy companies
to engender trust in the industry. We support the steps that Ofgem
has taken to improve transparency, including introducing a requirement
for them to publish Segmental Statements outlining the revenues,
costs and profits from their generation and supply businesses
and providing its own analysis of the statements for consumers.
We also support the work the Committee has done to investigate
in what ways the statements could be improved. Given the centrality
of this issue to trust in the whole industry, we very much support
the further work Ofgem is planning to do to see if it can improve
transparency in this area.
The Committee's report comes at a crucial juncture
for the development of fuel poverty policy. In July this year,
we announced that we are adopting a new definition of fuel poverty
that more accurately reflects the heart of the problem and will
help us tackle it better. We also tabled amendments through the
Energy Bill to the Warm Homes and Energy Conservation Act. Once
passed, these will see us put in place a more sustainable framework
for targeting and measuring progress in tackling fuel poverty.
The Committee's endorsement of our overall approach on the fuel
poverty target, which was also echoed in debate in the House of
Lords, is very welcome.
As the Committee notes, engaging with fuel poverty
practitioners is a vital element of helping us to build the most
effective strategy possible, with a real focus on delivery. We
continuously strive towards very close and effective joint work
with the range of interested stakeholders, recognising that we
may not always be able to be in full agreement. There are many
areas of genuine consensus and we will look to develop these further
when we set out a new fuel poverty strategy in 2014. This strategy,
the first for over 10 years, will reflect the insights from the
new, improved definition and help us ensure we are using our resources
as effectively as possible.
Meanwhile, we continue to deliver policies that we
know are making a genuine difference on the ground, with the Warm
Home Discount delivering to over 1.1 million of the poorest pensioners
automatically and nearly 200,000 measures delivered by the Energy
Company Obligation since its launch earlier this year.
Energy prices
Section 1: Communicating reasons for price rises
1. Energy bills are rising and are likely
to continue to rise in the future. The wholesale price of fuel
has been the largest contributing factor, driven by rising global
gas prices. Several other factors are also contributing to price
rises including the need to invest and finance UK's electricity
and gas network and energy and climate change policies. The extent
to which energy supply companies are actively working to reduce
their operating costs remains unclear. (Paragraph 20)
The wholesale cost of fuel makes up around 50% of
the average dual fuel bill and has been the largest contributing
factor to increases in bills in recent years, accounting for at
least 60% of the increase in household energy bills between 2010
and 2012. The remainder of the average dual fuel bill is made
up of: transmission, distribution and metering costs which account
for 20%, other supplier costs and margins which account for 19%
and VAT which accounts for 5%. In 2013, Government policies to
achieve energy savings, provide support to vulnerable consumers
through the Warm Home Discount Scheme and incentivise the shift
from fossil fuels to alternatives are estimated to account for
around 9% of household energy bills. Accounting for efficiency
savings, household energy bills in 2013 are expected to be 5%
lower on average than they would have been if these policies were
never introduced.
Some information on the operating costs of the 6
largest energy suppliers is provided in the segmental statements
that they are required to provide to Ofgem. These show the revenues,
costs and profits for generation and supply businesses annually.
Competition between energy suppliers will put downward
pressure on their costs and Government and Ofgem are taking steps
to increase competition in the market. The reform of the retail
market will help consumers engage in the market more easily. The
Government has also increased the customer number threshold at
which suppliers are required to participate in certain social
and environmental programmes.
2. We welcome Ofgem's and the Government's
proposals to ensure energy companies improve the way they communicate
with their customers. In addition to their proposals we
recommend that the regulator compel energy companies to:
a) Standardise the presentation of their bills
to make it easier to understand bills and compare prices (for
example on a price comparison website);
b) Identify the various components which make
up the costs of the bill (i.e. wholesale price of fuel, costs
of supply (i.e. transmission, distribution and metering), the
costs of UK/EU policy (including support for low-carbon/renewables
and energy efficiency schemes) and company margins (i.e. operating
costs and profit);
c) Express price changes in pounds and pence
as well as percentages. (Paragraph
25)
The Retail Market Review proposals will require suppliers
to standardise the format and content of bills to a significant
degree. This will include grouping together related information
with standardised headings to assist consumers in navigating the
document and making the information more engaging and accessible.
Tariff summary boxes will provide easily understandable information
on a customer's current tariff and energy usage and the new tariff
information label will provide an easy way to compare the terms
and conditions of tariffs in the market on a "like for like"
basis.
Ofgem has taken a targeted approach in setting the
level of prescription to which suppliers must adhere and focused
on areas where consistency and standardisation is of most benefit
to consumers. The Tariff information label has a high level of
prescription with the format as well as the content specified
so that it can be easily used for cross market comparisons. More
generally on bills, the content and headings will now be set in
order to ensure consistency across the industry and familiarity
with consumers but there is less prescription on the messaging
to allow for supplier differentiation and non-price competition
to reflect their branding, and the framing and tone that they
consider appropriate to their customer base.
The Government believes the level of standardisation
required by Ofgem will enable consumers to compare tariffs across
the market much more easily. Ofgem have committed to reviewing
the RMR package as a whole by 2017.
The Government agrees that we must be transparent
about the impact of Government environmental levies and programmes
on consumer bills and that is why the Government has committed
to publishing this information in the "Estimated impacts
of energy and climate change policies on energy prices and bills"[2]
report. This also provides a breakdown of the other costs that
make up a bill including wholesale, Transmission, distribution
and metering costs, and other supplier costs. Ofgem already produces
fact sheets that provide a breakdown of the costs which make up
a typical energy bill.
Given that information on the components of an energy
bill is already available elsewhere we do not see a case for requiring
suppliers to provide it on bills. Our priority is to ensure that
consumers have clear information to help them engage in the market.
In terms of how energy companies express price increases
in communications to customers, the Government notes that one
of the proposals under the RMR is to require suppliers to provide
in price increase notification letters information on the previous
unit rate and standing charge alongside the new rates. Suppliers
must also provide a Personal Projection for the consumer's current
tariff at the old and new rates. All of the information in the
price notification letter, including the personal projection is
to be presented in pounds and pence.
3. We are disappointed at the regulator's
slow progress on requiring energy companies to improve their transparency
and communication with their customers. We hope that Ofgem will
use its existing powers to ensure that its RMR reforms are implemented.
If the requirements proposed under Ofgem's RMR are not in place
by the August 2013 as promised, we recommend that the Government
stand ready to use any statutory powers to compel greater transparency
from energy companies, early in 2014. We believe that this intervention
should deliver the desirable long-term aim of incentivising companies
to provide more competitive products for consumers. It should
not be considered a one-off intervention to reduce energy company
profits. (Paragraph 26)
The overall objective of the RMR is to make the market
simpler, clearer and fairer for consumers. The RMR is intended
to deliver the long-term aim the Committee sets out of incentivising
companies to compete hard for customers. The proposed new rules
strip away the unnecessary complexity of tariff choices, arm consumers
with better, more relevant information to make it radically easier
for them to make better choices. This will help consumers to secure
a better deal - and in so doing increase the competitive pressure
on energy suppliers to deliver good customer service at efficient
cost.
The Government is taking powers in the Energy Bill
to give statutory backing to Ofgem's key RMR proposals, which
will focus minds on the delivery of these important reforms. We
are pleased to note that since the Committee published its report
Ofgem have published their final decision on the licence modifications
and that the necessary amendments to supplier licence conditions
will take affect from 23 October 2013. In addition, the new Standards
of Conduct licence conditions, which set out requirements for
suppliers to carry out their interactions with customers in an
honest, transparent, appropriate and professional manner, have
already come into force.
5. Despite serious shortfalls in the way energy
companies communicate with their customers, we are pleased to
see that they have started to make some progress on improving
how they communicate with their customers. It is clear that some
are doing better than others. We commend those companies, including
British Gas and EDF Energy, who are developing innovative new
ways of communicating complex information to their customers.
We are concerned, however, that their efforts are still falling
far short of what is required to increase transparency and improve
consumer trust. It is clear that meaningful improvements are unlikely
to be achieved without regulatory intervention. (Paragraph 29)
6. We are disappointed that energy supply companies
have not gone to greater lengths to explain to their customers
the reasons behind energy price rises. It should come as no surprise
to energy companies that poor communication on their part has
resulted in deep mistrust from their customers. We welcome the
industry's acknowledgement that it has failed to act and needs
to simplify and improve bills including explaining the individual
components of a bill and the reasons for the upward pressure on
prices. (Paragraph 35)
We have grouped these responses.
It is important for each energy company to explain
to their customers changes in prices, the profits they make and
where they go.
The Government welcomes the steps that a number of
suppliers have already taken to simplify their tariffs and improve
their bills in order to increase transparency and improve consumer
trust. We look forward to seeing further improvements from the
industry following their acknowledgement that of the need to simplify,
improve and explain bills.
There is a clear role for regulatory intervention
to secure consistency across the market in the way energy companies
communicate with their customers. The RMR is providing this with
a step change in the levels of transparency and standardisation
and by introducing new cross industry tools for communicating
information such as the Tariff Comparison Rate, Personal Projections,
the suppliers' cheapest tariff message on bills and other communications.
The new Standards of Conduct licence conditions set out requirements
for suppliers to carry out their actions in an honest, transparent,
appropriate and professional manner; and that suppliers provide
accurate information and ensure customer service arrangements
and processes are fit for purpose.
4. We also repeat the recommendation made
in our Consumer Engagement report that DECC should lead a full
and frank conversation about the contribution that consumers are
being expected to make towards ensuring we have safe, secure and
affordable energy supplies in future. DECC should set out a detailed
strategy and programme for action over the next two years. This
should include how it will engage with the public on these issues
in a meaningful way. (Paragraph 27)
The Government is committed to being open and transparent
about the impacts of energy and climate change policies.
DECC publishes estimates of the impact of energy
and climate change policies on energy prices and bills, covering
the period to 2030. The last such assessment was published on
27 March 2013[3]. This
report details the impacts of policies on electricity, gas, and
energy (electricity plus gas) prices and bills, split by household,
business, and large energy intensive users. The assessment includes
a breakdown of current household gas and electricity bills by
their constituent parts (wholesale costs, transmission, distribution
and metering costs, supplier costs and margins, energy and climate
change policy costs and VAT) and distributional analysis of the
impacts of polices on household energy bills (e.g. by household
type, expenditure level, type of heating used etc.).
Accompanying this, DECC also published easy to understand
info-graphics showing the contribution that policies make to bills
which aimed to address some of the public misconceptions about
how much energy and climate change policies are currently contributing
to bills.
DECC has been upfront in stating that energy prices
will go up: putting a price on emissions and providing support
to low-carbon technologies is necessary to decarbonise our economy
and help tackle dangerous climate change. But we also have a range
of policies to improve energy efficiency, helping households and
businesses reduce energy consumption, and offsetting the costs
of policies. As a result, overall we estimate that by 2020 household
energy bills will be, on average, 11% lower than they would have
been in the absence of government policies.
DECC is open to feedback on improving the communication
of the impacts of government policies. DECC has met with stakeholders
- including consumer groups, think tanks, and energy suppliers
- to gather reactions from different perspectives. In response
to the feedback received, several changes were reflected in the
most recent report. These included analysis of the impact of minimum
efficiency standards for new and replacement boilers, a new assessment
of network costs for business and industrial users, an analysis
of the impacts on household bills by type of heating fuel and
presenting impacts separately for CRC and non-CRC-participating
medium-sized business users.
DECC is actively engaging with the public, giving
them the information and advice they need to shop around and get
on the best tariff or energy efficiency measures for their needs.
The Government has provided £900,000 in 2013/14 to fund the
creation of the 'Big Energy Saving Network'. The Network,
a representative body comprising Third Sector Organisations, will
focus on helping consumers understand tariffs and the switching
options as well as how they could benefit from energy efficiency
programmes available to them. In addition, a nationwide communications
and advertising campaign was launched for the Green Deal programme.
DECC has undertaken a series of actions during 2013
to highlight the scale of the energy challenge facing the UK.
This has included face-to-face events in seven cities across the
UK and at the Hay Festival. These have targeted local key influencers
and have used DECC's 2050 calculator. This tool has enabled DECC
to frame a conversation about the transition required in the way
we make and use energy; highlighting the options, challenge and
opportunity. We have also delivered energy exhibitions in Newcastle
and Manchester with a final event happening in Bristol on 10 October.
These have been targeted at the public and have been designed
to bring the energy challenge to life through interactive exhibits.
Finally, a series of three animations have been produced to explain
1) the overall energy challenge, 2) the impact in terms of new
infrastructure and 3) help for the consumer.
We are developing a longer term proposition to take
the approach outlined above to scale. This will be done through
a partnership approach, working with a broad range of organisations,
including those from the energy sector, other business, local
government, community groups, NGOs and academia.
Section 2: Ensuring a competitive retail market
7. We recommend that Ofgem also include 'profit
margin' and 'rate of return on capital' (because excessive profit
margins are a symptom of poorly functioning markets) in the above
list of metrics which would help determine whether the supply
market was competitive. (Paragraph 40)
8. We conclude that the small level of switching
by customers between energy suppliers suggests the retail market
is not as competitive as it could be. There is, however, insufficient
data to determine accurately the actual level of competition in
the retail market. We repeat our recommendation that when
Ofgem implements its final Retail Market Review measures, it should
publish its targets for improvements in the market as a result
of these measures and the criteria it will use to judge the success
of the measures. Going forward, Ofgem should also publish an annual
assessment of the effect those measures are having on competition
and consumer engagement. (Paragraph 42)
DECC and Ofgem have been working to improve competition
in the domestic retail energy market. We have reduced barriers
to entry by increasing the customer number threshold at which
small suppliers are required to participate in certain environmental
and social schemes. We are supporting Ofgem's work to address
poor liquidity in the wholesale electricity market and to increase
consumer engagement in the retail market. Ofgem's Retail Market
Review proposals will introduce a clearer simpler tariff framework
and give consumers clear personalised information on their bills
helping them to compare and switch. As the Secretary of State
pointed out in his evidence the domestic retail energy market
has seen an increasing number of new entrants over the last few
years, with three new companies entering the market last year
and a further two companies entering the market this year. Some
of the smaller suppliers are experiencing strong growth with companies
such as Ovo and Co-op participating in collective switches.
The Government agrees that it is important that Ofgem
use metrics to help determine whether the supply market is competitive.
Ofgem already collects information on the profit margins of the
six largest energy suppliers through the segmental statements,
which they are required to provide to Ofgem. These show the revenues,
costs and profits for generation and supply businesses annually.
Though there are limits to comparability between suppliers and
over time due to changes in the requirements of the statements
over time, they can provide useful information. We understand
Ofgem will explore the extent to which 'rate of return on capital'
can usefully contribute to this task, in particular in assessing
generation activities. We also agree with the Committee that an
annual competition assessment would be useful and we are working
closely with Ofgem to determine the content of this.
Ofgem have committed to monitoring the direct impact
on consumer engagement of the RMR package once it is introduced
and track the impact this engagement has on competition in the
market. In the October 2012 RMR consultation, Ofgem proposed a
wide range of market indicators they would use in this monitoring
and covering a wide range of indicators of effectiveness of competition,
and the level of quality of consumer engagement. Ofgem have also
said that they will review the package in full no later than 2017
and earlier if they consider that the reforms are not having the
expected effect.
Section 3: Profits
9. We understand that there may be difficulties
in getting large vertically integrated energy companies to report
their trading activities especially if they are foreign owned
or based overseas. However, we believe that the increase in transparency
and associated consumer trust clearly justifies including trading
activities in the statements. We recommend that Ofgem require
the big six to include trading activities in the statements. There
is an opportunity for energy companies to make reputational gains
by setting an example of best practice. In the context of low
consumer confidence, we hope that energy companies will see the
benefits of increased transparency. (Paragraph 62)
10. We believe that obtaining an independent opinion
as opposed to requiring an audit of the statements is unsatisfactory
because it does not provide a sufficient level of assurance to
bolster trust in energy companies. The potential cost and inconvenience
to the large vertically integrated businesses would be eclipsed
by the gains in confidence an audit would bring. We recommend
that Ofgem require the statements to be audited. (Paragraph
65)
11. We note that Scottish Power recently changed
its financial reporting period to align with the majority of companies.
We believe that the costs and inconvenience to SSE to change its
year end would be outweighed by the gains in comparability across
the different statements. We recommend that Ofgem require SSE
to change its financial reporting period to align with the other
large vertically integrated energy companies. (Paragraph
67)
12. We reject Ofgem's assertion that most of BDOs
recommendations would put unnecessary burdens on the big six.
The impact of BDO's recommendations should be considered as a
package. We believe that taken as a whole, the benefits of BDOs
recommendations - in terms of improvements to transparency and
comparability of the statements and associated improvements in
consumer trust - significantly outweigh any burdens on the six
largest vertically integrated energy companies. We acknowledge
that there will be additional costs involved with implementation
of BDO's recommendations, but we believe that the benefits in
terms of increased transparency and competition, and the potential
downward pressure on prices that may result, justifies the expense.
(Paragraph 70)
13. We recommend that Ofgem should require
the six largest vertically integrated companies to implement BDO'
recommendations 1 (publishing statements to the same year-end),
2 (independent auditor opinion on statements), and 4(reporting
of trading function results). We also encourage Ofgem to consider
requiring implementation of BDO's recommendations in full and
to publish, in its response to this report, its analysis of the
cost to energy companies of full implementation. We also recommend
that Ofgem undertake further work to assess current transfer pricing
policies. (Paragraph 71)
We have grouped the responses to these questions.
The Government supports the steps Ofgem has taken
to increase transparency over profits of large, vertically integrated
energy companies. The requirement for them to publish Segmental
Statements outlining the revenues, costs and profits from their
generation and supply businesses provides helpful information
on their businesses in Great Britain. It provides a profit figure
for each company's retail business which helps inform our understanding
of the market and provide further information on the link between
companies' generation and supply businesses.
We agree that there are some limitations to their
use and that the statements themselves are not easily understood
by consumers in assessing the profits made, given the complexity.
To that end, we welcome Ofgem's accompanying factsheet to the
2011 statements that provides analysis of the statements for consumers
and Ofgem's commitment to repeat these annually.
We support the work the Committee has done to investigate
in what ways the statements could be improved. We note that Ofgem
has already made a number of improvements to the statements' transparency
and comparability between companies, including taking up some
of the recommendations of the BDO review that you have cited.
These are decisions that Ofgem, as the independent regulator,
has taken following their assessment of the costs and benefits
of all the recommendations that BDO made. We also note the steps
some energy companies have voluntarily made to improve their statements,
for example one has including trading information in its latest
statements. We acknowledge that the cost of complying with such
a requirement would vary amongst the companies.
We agree with the approach Ofgem has taken. We believe
that improvements should be made that are proportionate, increase
trust in the sector, and where the cost of achieving them would
not be too high a cost to one or all companies, given that costs
may ultimately be borne by consumers. Government does not have
access Ofgem's cost-benefit assessment and the commercially confidential
information contained in BDO's recommendation, so is not in a
position to comment on the cost-benefit analysis of including
these specific items. However, given the importance of this issue
for trust and transparency, we support the decision that Ofgem
has taken to re-consult on whether further information should
be required of the energy suppliers.
SUPPLY MARKET INDICATORS
14. We believe that the Supply Market Indicator
is a useful tool, for assessing the supply margin of the big six's
retail business. The disagreements between Ofgem and the energy
companies over the figures, played out in the media, are deeply
unhelpful and only work to erode public trust in the companies
and confidence in the regulator. Companies should engage constructively
in improving the SMI. We recognise the methodological concerns
and recommend that Ofgem actively review the methodology and improve
it so that the SMI more accurately reflects the actual activities
of energy companies. (Paragraph 77)
We agree with the Committee that the Supply Market
Indicators are a useful tool. As Ofgem have said during the evidence
they gave, it is not designed to be a measure of profits earned
by suppliers, rather an indicator that tracks the movement over
time of the factors that make up energy bills. In order to do
this, Ofgem has to make appropriate assumptions, for example they
assume a hedging strategy for purchasing energy for a representative
supplier. Despite the limitations to the indicators, which have
been highlighted by the Committee and the energy companies, we
support their production. As stated in the original evidence to
the Committee, we think these do improve transparency in the energy
supply market and we also find them useful as an indicator to
use before official statistics are available such as DECC's retail
price statistics or the companies' Segmental Statements, which
are published annually and with a lag.
We agree with the Committee that the methodology
and assumptions should be kept under review, as with all indicators.
We welcome Ofgem's decision to update the figure for typical domestic
energy consumption, one of the areas which was highlighted in
the report[4].
REMIT
15. We recommend that the Government ensure Ofgem
takes full advantage of these new REMIT powers. (Paragraph 79)
The Government supported the EU Regulation on wholesale
energy market integrity and transparency (REMIT) as it would help:
- Improve market integrity in
wholesale gas and electricity markets, by preventing market abuse
and insider trading;
- Improve confidence in traded energy markets,
leading to more trading and an increase in allocative efficiency,
and thereby reduce costs to the consumer; and
- Encourage cross-border market integration which
will in turn support our wider energy objectives of increased
competition in EU energy markets, improved energy efficiency and
a move to low carbon.
The Government's REMIT enforcement regulations came
into force on 29 June. The enforcement regulations facilitate
the requirements prescribed under REMIT by providing Ofgem with
the tools to enforce against breaches of the REMIT prohibitions.
Ofgem's powers include the ability to request any relevant information;
carry out onsite inspections; and impose unlimited fines for breaches
of the REMIT prohibitions. It is hoped that the regulations will
facilitate better regulatory practices and foster cooperation
between Ofgem and market participants.
ENSURING WHOLESALE MARKET COMPETITIVENESS
16. Improving wholesale market competitiveness
will be vital in ensuring customers are paying a fair price for
their energy. We are astonished at how long it has taken Ofgem
to act since it first identified this as an issue in 2008. The
relatively light touch approach favoured by Ofgem has failed to
deliver the changes required to improve competition. We
recommend that urgent intervention is required to resolve this
problem. Ofgem needs to implement its proposals to improve liquidity
as soon as possible taking a more assertive approach than it has
in the past. (Paragraph 87)
We agree that wholesale market liquidity is an important
feature of a competitive market, and an important enabler of the
Electricity Market Reform programme. We need a market that supports
diversity - large companies have an important role to play, but
cannot do it all. Independents drive competition and innovation.
The GB wholesale power market has low levels of liquidity
relative to other major European markets and international commodity
markets - this is acute in the forward markets. We therefore welcome
the ambitious package of reforms recently announced by Ofgem to
address this.
Ofgem intend to implement these reforms by early
2014 and we would like to see industry engage fully with Ofgem
to ensure this target is met. We would also like to see the reforms
implemented fully, with maximum impact.
The Government considers it necessary to retain the
flexibility to be able to act if Ofgem's reforms are delayed or
frustrated. We are therefore taking powers in the Energy Bill
to promote market liquidity.
Government is also looking at other barriers including
how independent market participants secure long-term contracts
that allow them to finance generation projects. Government has
tabled an amendment to the Energy Bill to enable it to implement
an Offtaker of Last-Resort mechanism to provide additional confidence
to the market, should it prove necessary.
Fuel Poverty
17. We conclude that the focus on low-income under
the proposed LIHC indicator, by reference to the official poverty
line, ensures a more accurate identification of fuel-poor households.
The use of a 'fuel poverty gap' is welcome in giving a measure
of the severity of the problem faced by households as energy prices
continue to increase. However, we are concerned by the use of
median national spend on fuel to determine "high costs"
within the indicator. It is clear that fuel costs can be below
the median and yet still remain unaffordable. If the median national
spend is high it may not provide a true indication of affordability.
We recognise that consumers who are paying the median could also
be finding their energy bills unaffordable, even if they are not
classed as fuel-poor. We recommend Government modifies the
proposed definition to better reflect affordability in the context
of low-income households by introducing a link between the income
threshold and the energy costs threshold within the new indicator.
(Paragraph 100)
We agree with the Committee that the fuel poverty
gap is a welcome and helpful measure in understanding and responding
to fuel poverty. As the Committee has noted, the fuel poverty
gap will help us keep track of the effect of changes to energy
prices on those households in fuel poverty.
On affordability, we recognise that all households
on a low income face pressures in meeting household bills, including
energy costs. It is however important to recognise the different
causes of such difficulties and to keep a particular focus on
the unique character of fuel poverty. In this context, our priority
concern is for those whose energy requirements are relatively
high, including because they tend to have limited scope to further
reduce their energy bills.
This is a concern that is reflected in our decision
to adopt the new Low Income High Costs definition of fuel poverty.
We understand why many see the choice of threshold for "high
costs" to be significant. However, given our focus on fuel
poverty, rather than general poverty, we will want to support
those households that are furthest from the energy costs threshold
wherever it is set. Having clarity on priorities is especially
necessary given the reality of limited (if significant) resources.
We note this is a view expressed clearly by Professor Sir John
Hills when he gave evidence to the Committee.
Although we believe there is an important distinction
between fuel poverty and general income poverty, we naturally
recognise that rising energy prices affect everyone on a low income
and our policy package reflects this. For example, the Warm Home
Discount is characterised by a focus on low income households
rather than fuel poor homes. The Government is committed to doing
all we can to help keep bills down, as set out in the Framework
for Action on fuel poverty published in July 2013.
18. We welcome Government's commitment to
monitor the number of fuel-poor households living in E, F and
G-rated properties, and recommend that Government use this information
to help focus policy on improving some of the UK's most inefficient
housing stock. (Paragraph 101)
While in future our main method of understanding
the scale of fuel poverty will be to use the LIHC indicator, including
the fuel poverty gap, the Committee is right to highlight the
value of a broader indicator set. We are committed to monitoring
a range of indicators of fuel poverty in future and to publish
these each year. This could certainly include the number of fuel
poor households living in E, F and G rated properties.
19. We are alarmed by the reported lack of Government
engagement with input from consultees during the Review process,
in particular with regard to recommendations from the Government's
own statutory advisory body (Fuel Poverty Advisory Group). Government
has not modified the LIHC indicator, despite the fact that two
thirds of respondents were opposed to the use of the national
median to determine "high costs". We seek assurances
that DECC will take full account of stakeholder concerns when
formulating the new fuel poverty strategy. (Paragraph 102)
We believe the characterisation of a lack of engagement
to be unfair. DECC Ministers and officials have engaged in detail
and at every stage of the Hills review and subsequent work with
a wide range of stakeholders. This is evident from the warm public
welcome for our recent Energy Bill amendments on fuel poverty
from FPAG, NEA and others. It must also be recognised that in
our consultation on changing the definition of fuel poverty, the
majority of stakeholders welcomed our overall proposals.
We recognise and accept that some concerns were expressed
by stakeholders in relation to the energy costs threshold under
the new definition. However, in our view, none of the suggestions
put forward provided an alternative methodology which improved
on our own proposals. These built on the conclusions of the Hills
Review which provided an independent and painstaking analysis
of the issues.
Our engagement with stakeholders will continue throughout
the process of developing a new fuel poverty strategy to be published
in 2014. As just one example of this, we are actively supporting
a strategy workshop being provided by the Fuel Poverty Advisory
Group in October 2013.
20. We welcome Government's recent commitment
to consider extending the use of data-sharing to ensure the most
efficient and cost-effective delivery of fuel poverty policies.
We further recommend that Ofgem considers introducing a licence
condition to ensure that energy companies share data on household
energy consumption and spend with Government, in order to facilitate
identification of fuel-poor households.
(Paragraph 106)
Data-matching has been shown to be a major success
through the Warm Home Discount scheme which is expected to deliver
more than 1.2m Core Group rebates in 2013/14. Building on this
success, though currently on a smaller scale, DWP data matching
is also used by several suppliers to verify Warm Home Discount
Broader Group customers and as part of ECO Affordable Warmth.
These data-matching activities differ from Core Group data-matching
because customers specifically provide consent for data to be
shared. We have learned from all of these approaches and continue
to work with suppliers, Ofgem and DWP to look for ways data sharing
can improve delivery.
In order to introduce data-sharing in situations
where individual consent is not given, new primary legislation
would be required. We would need to have clear evidence that the
benefits to individuals outweigh the risks and costs of data sharing.
Ofgem would have a similar approach when considering a new license
condition.
Government recognises the potential benefits of data
sharing when used securely in the right situations and is considering
appropriate legislation as part of the legislative programme.
Regarding consumption data, Government already gathers
such data for households as part of NEED (the National Energy
Efficiency Database).
21. We conclude that while an accurate definition
of fuel poverty is important, the Government has been unacceptably
slow to respond to the Hills Review and take action to stem rising
fuel poverty. We are concerned that fuel poverty policy has effectively
been frozen at a time when significant energy price rises have
made energy costs increasingly unaffordable for vulnerable and
low-income households. We welcome the recent publication of the
Government's framework for action on fuel poverty which will underpin
the Government's fuel poverty strategy when it is introduced.
It is imperative that the introduction and implementation of the
strategy, expected at the end of this year, is not delayed any
further. For Government to have done all that is reasonably practicable
to tackle fuel poverty, the new fuel poverty strategy should be
published and implemented as an urgent priority. (Paragraph 109)
Commissioning the Hills Review was a significant
step. It is right that we take the time necessary to respond to
its findings and to put in place a better, more sustainable framework
for future fuel poverty action. The amendments we have introduced
to the Energy Bill for a new target framework also set out the
timetable for the new target and strategy. These provide for regulations
setting out the fuel poverty target to be put forward within six
months of the Bill becoming law. A final strategy to ensure the
target is met must then be published within six months of the
regulations being agreed. These are maximum time limits: our intention
is to bring forward all our proposals as soon as possible.
Our work on the new fuel poverty framework has been
additional to our efforts to deliver successful fuel poverty policies.
Since 2011, DECC fuel poverty policies have included Warm Front,
the Energy Company Obligation, the Warm Home Discount and a highly
successful local authority competition.
22. We conclude that energy efficiency programmes
should be the focus of Government's fuel poverty policy in order
to tackle the long-term root causes of the problem cost-effectively.
It is disappointing that so much of current Government fuel poverty
policy centres on short-term help with bills when improving the
thermal efficiency of UK housing stock should be the priority.
We welcome the recent announcement in the Spending Review
that the Winter Fuel Payment will no longer be paid to those living
in warmer European climates. We recommend that Government considers
better targeting of the Winter Fuel Payment through means-testing,
considering how savings made could be used to boost investment
in energy efficiency programmes. We also recommend that Government
reviews the allocation of funds for fuel poverty policies, prioritising
energy efficiency initiatives over provision of financial assistance.
(Paragraph 114)
We share the Committee's view of the importance of
raising energy efficiency standards to tackle fuel poverty. Policy
instruments with other aims - such as providing financial assistance
for energy bills - can also be cost effective and help address
the distributional impact of our policy package.
Our overall approach is set out in detail in the
fuel poverty strategic framework - which we published alongside
the amendments to the Energy Bill to change the fuel poverty target.
This sets out a set of guiding principles that we will use to
shape future policies. One of these principles relates to supporting
fuel poor households with cost effective measures, thus ensuring
we are using our available budgets effectively.
One innovation in helping us understand the type,
nature and scale of the interventions we need is our new assessment
of the 'merit order' of fuel poverty interventions (set out in
the Fuel Poverty Marginal Alleviation Cost Curves - FP MACC).
Published as part of our new framework, this helps us identify
which policy interventions are the most cost effective and to
see the trade-offs associated with delivering more costly measures.
Underscoring the Committee's view on the importance of energy
efficiency, the current version of the FP-MACC show that many
of the most cost effective ways of supporting fuel poor households
involve relatively low cost insulation and heating measures. This
is precisely the sort of measure currently being supported through
the Energy Company Obligation (Affordable Warmth). The FP-MACC
also shows an increasingly likely role for renewable heat technologies.
It is also worth noting that the FP-MACC also shows that energy
bill rebates (like Warm Home Discount) are in fact more cost-effective
at present than some of the more expensive energy efficiency and
heating measures. There is therefore a clear role for such policies.
In relation to the Committee's comments on Winter
Fuel Payment, the Government has no plans to introduce a means
test for this benefit.
23. England will be the only country in the UK
without a tax-funded energy efficiency programme to address fuel
poverty following the closure of Warm Front. We are concerned
that there have been such significant reductions in the fuel poverty
budget for England at a time when rising energy prices are having
an increasingly adverse impact on vulnerable households. (Paragraph
116)
Neither the Government's commitment to fuel poverty
nor the spending directed towards it has diminished. Spending
will, in fact, be higher in 2014/15 than it was in 2009/10. In
any event, the Hills Review was clear: when tackling fuel poverty,
the source of funding is not as important as how it is spent.
Spending figures are not, therefore, the best metric for gauging
the scale of fuel poverty action. This is underlined by evidence
from ECO which shows that we are delivering more cost effectively
than before - this means we are helping more households per £
spent.
Under Warm Front in 2010/11, around 80,000 households
received major heating and/or insulation measures from a budget
of £366million. By contrast, the ECO Affordable Warmth obligation
is expected to deliver heating and insulation measures to around
130,000 households each year of the scheme for an annual cost
of around £350m. Coupled with the ECO Carbon Saving Communities
obligation, worth around £190m per annum, we expect some
230,000 low income households to be assisted each scheme year.
We also expect the main ECO carbon obligation to assist further
low income households. Early delivery data under ECO is bearing
all of this out.
Of course, the scale of potential investment in measures
to tackle fuel poverty is high. We do therefore intend to continue
to consider how we can bring additional investment to this important
area to enhance the significant support already provided.
24. We conclude that resources under ECO are insufficient
considering the scale of fuel poverty. We recommend that
ECO expenditure is devoted primarily to fuel-poor households,
and further recommend that Government reconsider how best to incentivise
take-up and funding of the most expensive energy efficiency measures
such as solid wall insulation. (Paragraph 120)
We note the Committee's view that more ECO expenditure
should be devoted to fuel poor households. However, it is important
to recognise that the ECO has two broad objectives - reducing
fuel poverty and reducing carbon emissions. The Government's aim
in shaping ECO has been to balance delivery of these important
objectives in a cost effective way. An additional factor in this
context is the requirement, under Article 7 of the EU Energy Efficiency
Directive, for Member States to put in place an energy supplier
obligation (or equivalent policy measures) in order to meet a
binding target of 1.5% cumulative energy savings between January
2014 and December 2020.
As mentioned above, ECO is expected to lead to investment
in home thermal efficiency improvements equivalent to around £540m
per year, supporting around 230,000 low income households. By
any measure, this is significant support for fuel poverty.
Whilst solid wall and hard to treat cavity wall insulation
are eligible measures under the Affordable Warmth obligation,
it is our expectation that suppliers will try to meet their Affordable
Warmth targets in the most cost-effective way to minimise the
overall cost of the scheme. This is only right given that these
costs will ultimately be passed through to consumers. It is also
worth underlining that some low income households will benefit
from the Carbon Saving Obligation under ECO, particularly social
tenure properties which present economies of scale.
25. In a letter in July 2012 to Minister of State
Gregory Rt Hon. Barker MP, we outlined our concerns about off-gas
grid consumers and questioned the effectiveness of self-regulation
in the domestic heating oil market, suggesting that Ofgem could
have a role to play. These concerns still stand, and we
urge Government to review regulation of the domestic heating oil
and LPG market, as well as extending support for fuel-poor households
reliant on these fuels. (Paragraph 121)
At the Ministerial Round Table meeting on heating
oil and LPG held on 11th September, the Energy Minister, Michael
Fallon, welcomed the new Code of Practice and Customer Charter,
which was published by the FPS (Federation of Petroleum Suppliers)
on 1st September. It is a welcome commitment from the industry
to engage with consumers on a fair and consistent basis and implement
best practice to raise standards. The Energy Minister also welcomed
the FPS commitment to review the effect of its Code of Practice
and Customer Charter next year. The Round Table members, including
members of Parliament, consumer organisations, oil buying groups,
competition and regulatory authorities, were asked to promote
the FPS Code of Practice and Customer Charter widely though their
various organisations. The Energy Minister plans to hold another
Ministerial Round Table meeting in April 2014.
The supply of heating oil and Liquefied Petroleum
Gas (LPG) is not covered by the natural gas and electricity regulatory
regime established through the Gas Act 1986, the Electricity Act
1989 and updated through more recent legislation, notably the
Utilities Act 2000 which established Ofgem as a combined regulator
for Gas and Electricity. This is because the Gas and Electricity
Acts principally addressed the issues of setting up a regulatory
regime to ensure that the natural monopolies of the gas pipe network
and the electricity transmission and distribution systems are
not exploited. Ofgem also ensure appropriate regulation of gas
and electricity supply, which are licensed activities for reasons
that include the need to balance the electricity and gas systems
and the relationship with the natural monopoly networks. As there
is no natural or structural monopoly for supply and distribution
in the heating oil or LPG markets, regulation by Ofgem is not
deemed to be appropriate.
DECC recently published the fuel poverty strategic
framework which highlighted the key factors that increase the
likelihood of a household being fuel poor. This analysis showed
that heating the home with a fuel other than gas was one of the
factors most strongly associated with being fuel poor and in severe
fuel poverty. In developing the detail of the new strategy we
will consider how well Government policies are supporting the
most severely fuel poor households.
26. We conclude that further and more specialised
resources are needed to tackle fuel poverty in rural areas, in
particular to address the difficulties experienced by off-gas
grid customers. Ofgem and DECC should consider further measures
as part of RMR and the Fuel Poverty Strategy to ensure that pre-payment
customers and those without internet access are able to obtain
best market deals. (Paragraph 123)
The Government recognises that some consumers need
extra help and advice to engage with the energy market and to
give them the confidence to take decisions that will reduce their
bills. That is why we have launched the Big Energy Saving Network
of voluntary organisations and community groups which will work
proactively with trained energy advisers to support vulnerable
consumers to engage in the energy market, including those on Pre-payment
meters. .
Whilst the use of pre-payment meters is more common
among poorer households, it is not the case that all customers
are in fuel poverty - less than 20% of fuel poor households are
pre-payment customers.
Prepayment meters enable customers to monitor and
control their energy expenditure. Since 2010, pre-payment customers
have been offered the same prices by large suppliers as customers
paying on standard credit. In addition, Ofgem have raised the
debt threshold where prepayment consumers can switch suppliers
to £500 under a voluntary agreement with suppliers. This
will help those paying off debts through prepayment meters switch
supplier to find the best deal for them.
Smart meters are expected to bring savings to suppliers
in the prepayment market, such as those savings from avoided site
visits to replace credit with pre-payment meters and vice versa.
Consumers on pre-payment could benefit if these operational costs
savings are passed on as lower prices.[5]
Smart metering should also greatly improve the customer experience
for prepayment customers. For example, suppliers will be able
to offer a range of ways to top-up - so topping a meter could
become as easy as topping up a mobile phone.
The analytical work carried out in support of the
fuel poverty strategic framework highlighted the key factors that
increase the likelihood of a household being fuel poor. This analysis
showed that heating the home with a fuel other than gas was one
of the factors most strongly associated with being fuel poor and
in severe fuel poverty. In developing our new strategy we will
consider how well Government policies are supporting the most
severely fuel poor households.
Use of levies on bills
27. We conclude that the increasing use of levies
on bills to fund energy and climate change policies is problematic
since it is likely to hit hardest those least able to pay. We
note that public funding is less regressive than levies in this
respect. (Paragraph 136)
28. We are particularly concerned by the significant
projected increase in the wholesale electricity price and how
this will impact on households reliant on electric heating. It
is clear that vulnerable and fuel-poor consumers require protection
from the impact of rising bills and extra support to ensure affordable
warmth in their homes. We therefore recommend that Government
consider introducing a "protected block of consumption"
on bills exempt from levies, as proposed by FPAG and Consumer
Focus. (Paragraph 137)
29. We note that under the current tariff structure,
energy users are effectively penalised for low consumption, with
reduced rates for high energy consumption. This is at odds with
both energy conservation and fuel poverty aims. We therefore
recommend that the Government and Ofgem consider how tariffs could
be restructured to ensure that energy conservation is incentivised,
while ensuring that high consuming vulnerable consumers are protected.
(Paragraph 138)
We have grouped the responses to these questions.
We share the concern that energy prices are likely
to continue on an upward trend, with or without policies, as a
result of rising fossil fuel prices and network costs. However,
on average, energy efficiency policies mean bills will rise by
less than they would do in the absence of policies.
The distributional impact of policies is driven by
a number of factors - in particular, who pays the costs and who
benefits. The Affordable Warmth obligation and the Warm Home Discount
are examples of levy-funded policies whose benefits are focused
on low-income households. This helps to mitigate the regressive
impact of rising energy costs.
The Department is conscious of the potential for
the climate and energy package to have a regressive distributional
impact. That is one reason why we publish a report on the impact
on prices and bills of our policy approach. Distributional analysis
undertaken for the Government's March 2013 report 'Estimated impact
of energy and climate change policies on energy prices and bills[6]'
found that the average impact of policies is a reduction on energy
bills across all expenditure deciles and for each different household
composition, compared to if these policies had never been introduced.
The poorest 30% of households are expected, on average,
to see the largest reduction in bills as a percentage of their
household expenditure, seeing reductions of between 1.0% and 2.4%
of total expenditure in 2020 compared to what would happen in
the absence of energy and climate change policies.
We recognise that electrically heated households
are projected to experience higher bills, on average, as a result
of policies. There are policies specifically to help off gas grid
customers, such as Ofgem's current work to encourage the extension
of the gas distribution networks to fuel poor households and homes
that were in the Carbon Emissions Reduction Target (CERT)[7]
priority group. We also have the Renewable Heat Premium Payment,
a one-off grant scheme which helps householders with up-front
costs of installing renewable heating equipment[8].
An important advantage of levy funded market-led
policies - like Affordable Warmth - over Exchequer-funded schemes
is that the market tends to find the most cost-effective way of
delivering a particular outcome. This means that more households
can be helped within a given budget.
We note the Committee's recommendation on removing
levies from the initial block of consumption. In practice this
would lead to suppliers recouping costs from subsequent units
- that is, the units of energy consumed above the initial block.
This type of change would share some of the characteristics of
a rising block tariff - which is a tariff where initial units
of energy are priced at a lower rate. While this would be a broadly
progressive change - reducing costs on lower income households
- it would penalise a large number of 'low-income high usage'
households, who would see an increase in their energy costs. It
would also benefit low usage and high income households and so
would not be a targeted way of providing support to those who
struggle to afford their energy bills.
Furthermore, as was demonstrated in the analysis
undertaken by the Committee on Climate Change for their first
progress report, this type of policy would also result in a worsening
of fuel poverty. The fuel poor tend to have the highest energy
requirements. This means that any tariff that increases the unit
price of energy above a given threshold will penalise the fuel
poor, making it more difficult for them to heat their home to
an adequate standard. It is for this reason that Professor Hills
did not make the case for rising block tariffs in his final recommendations
to Government.
Under the Retail Market Review reforms, suppliers
will no longer be allowed to offer tariffs which vary the standing
charge or unit rate for different levels of consumption. This
means that suppliers will no longer be allowed to offer multi-tier
tariffs where suppliers charge customers a different price for
different blocks of units. This will simplify the market to help
the vast majority of consumers, who currently do not engage in
the market, onto cheaper tariffs.
30. We agree with Government that an elimination
target is not the best approach for tackling fuel poverty. The
importance of a target lies in its ability to create political
momentum and measure the effectiveness of policy. The current
target has failed to achieve these objectives. We therefore
support Government proposals to introduce a new target which focuses
on improving the energy efficiency of fuel-poor households. We
look forward to hearing further details on the form, date and
level of the proposed target. Government should also consider
whether further short-term, fuel poverty targets which can adapt
to changing policy contexts could also be introduced as part of
its forthcoming fuel poverty strategy. (Paragraph 142)
We very much welcome the Committee's conclusion that
an elimination target is not the best approach to tackling fuel
poverty. We are also grateful for the support for an energy efficiency
target, as we have proposed. As noted above, our approach has
also been welcomed by a range of stakeholders with whom we have
engaged. It is important to recognise that targets of this kind
can only drive effective action when they are properly formulated.
The Government's proposals on the detail of the new target, including
any interim milestones, will follow when the amendments to the
Warm Homes and Energy Conservation Act have received Royal Assent.
31. We conclude that energy companies are not
the best delivery agent for fuel poverty policies due to low levels
of consumer trust and lack of local knowledge. In the longer term,
policy instruments such as the Energy Company Obligation may not
therefore be the most effective means of addressing fuel poverty.
Local councils and voluntary organisations may have greater knowledge
of property and occupant characteristics, leading to a more effective
targeting of resources. We therefore recommend that Government
considers how to maximise the involvement of councils, voluntary
sector organisations and other trusted intermediaries as part
of its new fuel poverty strategy. We also recommend that Government
considers extending access to the ECO brokerage scheme to local
councils, in order to ensure finance for locally-led energy efficiency
projects. (Paragraph 147)
We note the ECC's recommendation that Government
considers further the role of local partners in delivering support
to the fuel poor.
The Fuel Poverty Local Authority Competition 2012-13
sought to improve the thermal efficiency of fuel poor households,
providing £31 million funding to 60 projects, involving 169
local authorities working individually or as part of consortia.
From the outset we sought to capture learning from these widely
varying projects to gain insight into local authority-led delivery
models for alleviating fuel poverty. Evaluation of the outcomes
is ongoing. Many of the projects have sought to demonstrate how
partnership working at the local level can be useful in identifying
the fuel poor, and enabling them to access support. We are testing
this approach further through the Big Energy saving Network. The
outcomes of these activities will inform future policy development
and we will discuss in the forthcoming Strategy.
In terms of ECO brokerage, it is that the case that
access to the brokerage platform is currently open only to Green
Deal Providers (GDPs). A number of housing associations (HAs)
and the Local Government Association (LGA) have argued that access
should be opened up, which may help in identifying qualifying
properties, increase competition and potentially drive down ECO
costs (which are passed onto consumer bills).
However, there are also trade-offs. By extending
access to the platform and giving all ECO delivery agents a direct
route to brokerage we risk the decoupling of ECO from the Green
Deal and subsequently encourage a market that relies on 100% ECO
subsidy. We also understand that HAs do not intend to offer Green
Deals to social housing tenants which could undermine the benefits
of increased competition that we might expect from an expanded
platform. In the long term, blending ECO and Green Deal finances
will be key to keeping the costs of ECO low and expanding access
now could have negative effects on GDPs, consumer bills, and the
Green Deal more generally.
There are also issues surrounding the regulatory
framework governing LAs and HAs which only apply to their own
housing stock which brings into question the standards and consumer
protections in place. Energy companies are also aware that while
some LAs and HAs have an excellent track record of delivery, others
do not and lack the skills and capacity to estimate and deliver
ECO. Furthermore, it is expected that the contracts LAs or HAs
enter would be significant, which would open up both the HA/LA
and energy companies to large financial risks if undelivered.
In reality, and partly owing to this, we do not think that there
would be many non-GDPs joining brokerage if access was opened
up due to many being either unable or unwilling to sign the Bilateral
Off-take Contract which sets out the terms for delivery, payment,
and damages for non-delivery. While we have heard from the LGA,
we have not received anything directly from specific LAs.
The brokerage mechanism is proving to be a very successful
avenue to date with over £203 million traded through the
platform over 16 auctions. We have decided that, while the market
continues to establish and settle, and while brokerage participants
familiarise themselves with the whole ECO process from start to
finish, access will not be extended. We will re-examine the issues
at stake in future.
1 https://www.gov.uk/policy-impacts-on-prices-and-bills. Back
2
https://www.gov.uk/policy-impacts-on-prices-and-bills. Back
3
https://www.gov.uk/policy-impacts-on-prices-and-bills Back
4
https://www.ofgem.gov.uk/ofgem-publications/74735/tdcv-review-consultation.pdf
Back
5
DECC 2013 Smart Meters Impact Assessment: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/78666/IA-Feb.pdfpg
50-51 Back
6
https://www.gov.uk/policy-impacts-on-prices-and-bills Back
7
The 'Priority Group' was made up of vulnerable and low-income
households, including those in receipt of eligible benefits and
pensioners over the age of 70. Back
8
The scheme provides support for solar thermal, biomass, air-to-water
source heat pumps and ground source heat pumps. Whilst all households
can receive support for solar thermal installations, the grants
for the other three technologies are available to off gas-grid
householders only. Back
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