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Ofgem Consultation: Amendments to the CERT (2008-2011) Supplier Guidance

ACE have submitted a written response to the Ofgem consultation on the amendments to the CERT (2008-2011) supplier guidance.

ACE response to the consultation:

Introduction to the response:

•This consultation sets out how Ofgem intends to do two things: ensure the successful delivery of new low-cost behavioural measures that have been assigned inflated carbon scores, whilst ending the fiasco resulting from the delivery of CFLs – the other low-cost CERT measure with an inflated carbon score. The CFL mess, created by DECC (for proposing carbon scores far in excess of reality) and Ofgem (for failing to monitor and swiftly act on the excessive delivery), has meant that energy suppliers have put a large amount of finance (ultimately raised by passing costs through to energy bills) into a ‘carbon reduction’ and ‘energy saving’ measure that is neither delivering the expected carbon reduction nor energy saving.

•Ofgem understands why energy suppliers will prioritise low cost measures with inflated carbon scores: in their recent discussion paper1 they describe how energy suppliers can outcompete their competitors by both keeping the cost of the CERT low, but also (and importantly) by delivering measures that are ineffective, or at least less effective than their carbon scores suggest. The latter point, neatly illustrated by CFLs which sit in household drawers (or worse), means that the cost of the CERT is spread over a greater number of energy units sold, since the anticipated reduction in energy consumption hasn’t materialised. This reduces the unit price of energy they sell. Energy suppliers therefore have a perverse incentivise to deliver ineffective measures in order to keep the unit price of energy they sell low, and offer a more attractive tariff than their competitors. Whilst CFLs are to be withdrawn, there are now two more measures that will enable energy suppliers to behave in a similar vein.

•Real Time Displays (RTDs) and Home Energy Advice (HEA) have all the hallmarks of the great CFL giveaway: they are relatively cheap for suppliers (compared to traditional ‘hard’ measures) and offer notional carbon scores that are far in excess of the evidence base. The obvious example is an RTD with a battery life of less than one year, which is still awarded CO2 savings based on a 3.5% reduction in energy use over 7.5 years! Will the average recipient of such a device really replace the batteries every year for 7.5 years? Ofgem itself found during an ongoing trail that “after one year, only a quarter of the installed clip-on displays were still in active use.”2 So it would appear unlikely.

•Ofgem has no control over the scores given to these measures. However, it does have control over the way in which they are delivered. ACE urges Ofgem to usethis power to ensure that only those households who qenuinely wish to use an RTD, or who are genuinely interested in receiving energy advice do so; to ensure that the measures are not just delivered but subsequently used. This is vital to ensure the credibility of the CERT and the respectability of Ofgem in helping to fight climate change and reduce energy bills. Measures provided to those who do not use them will do neither.

Click here for the full response

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