Changes to the consultation on cuts to the Energy Company Obligation betray the precarious future for the government’s energy efficiency scheme

Andrew Warren

The government has dropped one of the key questions being asked in its current public consultation on the dramatic reductions to its Energy Companies Obligation (ECO) and the Green Deal, as announced in its autumn statement .

Between 2013 and 2017, under the ECO, energy companies will now be required to deliver 35% less carbon and energy savings. Consequently 553,000 fewer energy saving measures will be installed than had been anticipated when the scheme begun in spring 2013. This is to enable the government to claim that each of the big six energy companies’ expenditure per average household should be at least £35 less per year than anticipated. 

In practice, this windfall for the energy companies could well be worth around a further £9 more per customer to them. This means that, as a result, the big six will be even more in pocket next year - we estimate by around £245m - from these changes than the government claims.

All of that is money that would have been spent on installing energy saving measures by the construction industry.

The legislation under which it was created stated that the ECO would be at least the same size and ambition as its predecessor the Carbon Emission Reduction Target (CERT) scheme. So it was assumed that, for the scheme’s final stage from April 2017 to 2022, the energy companies should anticipate that their obligations would return to the same annual-equivalent level as initially set last year.

After much delay, the government finally issued its formal consultation on the latest changes on March 6. The consultation included a set of questions, which respondents were invited to answer.

Several of the big energy companies have been making public statements urging still further cuts to the ECO

Initially this included a specific question that floated concept of restoring the ECO to its original value from 2017.  

Question 10 read: “Do you agree that new targets should be set for the subsequent period to March 2017, on the principle that the target is at the original level of ambition for ECO?”

However, within a few days, that question had been removed altogether from the consultation. And another unrelated question inserted.

No announcement as to why on earth this unprecedented step, to completely excise an agreed question, had been taken right in the middle of a consultation process. However, I’ve since been officially  told that it was to “avoid duplication” with a planned later consultation on the 2017 ECO scheme.

But that begs the question of just how far behind the scheme the government is now prepared to stand. For me it is impossible to see quite where this so-called “duplication” might have been taking place, as nowhere else are there consultation questions relating to the long term size of the ECO.

It cannot be coincidence that, over recent weeks, several of the big energy companies have been making public statements urging still further cuts to the ECO. I understand that a senior Treasury official personally intervened to erase this suggestion that the ECO might be permitted to continue after 2017, let alone increase.

Andrew Warren is director of the Association for the Conservation of Energy