David Cowburn discusses how the recent consultation on the Energy Company Obligation (ECO) could affect those living in fuel poverty in the future.

With the current Energy Company Obligation nearing its end on 31 March 2017, NAPIT has been active in responding to the Government Consultation which ran between 29 July and 17 August and asked a series of questions regarding the proposed transition period and the future of ECO. Currently, the Government is debating the possibility of extending the current ECO by a year as part of a ‘transition period’ prior to the introduction of a new five-year target.

ECO is a Government energy efficiency scheme in Great Britain aimed at reducing carbon emissions and tackling fuel poverty. It is estimated that there are approximately 10.5 per cent of householders in Great Britain suffering from fuel poverty; for this reason, NAPIT has always maintained strong positions on how the obligation should be implemented.

Currently, ECO possesses three distinct targets that are required to be met by energy suppliers. These include the Carbon Emissions Reduction Obligation (CERO), the Carbon Saving Community Obligation (CSCO) and the Affordable Warmth Obligation (AW). These building blocks have been instrumental in providing low income and fuel poor households with energy efficient installations, such as loft and cavity wall insulation and replacement boilers.

In a bid to increase the scheme’s focus on fuel-poor households, coupled with improving cost effectiveness, the Government has proposed that the AW Obligation should become the sole supplier obligation from 2018 onwards, whilst incorporating elements from the other two obligations. The proposed yearlong transition period would however maintain CERO until the implementation of the five-year scheme.

In our response to the Government consultation we expressed our cautious support for the proposed transition period as we hope it will provide certainty to the market and allow time to consider sustainable longer-term plans. We also agreed with the proposal to realign the obligations above by increasing both the Affordable Warmth obligation and CERO during a transition period.

However, our main concern with the realignment of the three obligations is the removal of CSCO, as this obligation aimed to deliver primary insulation measures restricted to any home within the 25 per cent of most deprived areas in Great Britain and primarily promoted the tackling of fuel poverty in rural areas through a rural-sub-obligation. We made it clear that whilst we agreed that this would be desirable from a cost effectiveness point of view, we had concerns that the lack of a rural sub-obligation could have a negative impact on those living in fuel poverty within rural areas. In accordance with this fear, we suggested that an uplift could be applied within the new AW Obligation to encourage deployment in rural areas through incentivising energy companies rather than targets to mitigate this impact.

There were a host of other topics raised in the consultation on which we provided our suggestions and feedback. For example, we agreed with the proposal that measures delivered in new build homes from 1 April 2017 should not be eligible for ECO funding, since current Building Regulations already mandate strict energy efficiency standards. We also supported a recommendation to require all installation companies which deliver energy efficiency measures under the ECO to be certified under the requirements of PAS 2030 to simplify the reporting for energy companies and provide uniformity and assurance of their work.

One topic of discussion that we did not agree with was a proposal to limit the delivery of qualifying gas boiler replacements. In our view, rather than placing a cap on the number of gas boilers which can be installed, we suggested that it would be better to tighten the eligibility requirements so that those most in need are still supported. Gas boilers are a cost effective measure which vastly improve the energy efficiency of properties and should therefore we feel should be available to those who would benefit most from them - not be limited by an artificial cap.

Despite our concerns, we are glad the ECO will continue to exist and are hopeful that the changes proposed by the Government will provide a cost effective means of reducing the number of people in fuel poverty, although they could have gone much further. We will to continue to monitor this debate and await the Governments response to the consultation with interest.