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Utility Week 18th April

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Herein lies the key issue with the Eco scheme. It is not a fuel-poor target. It's a carbon target. In addition, energy suppliers have under- standably become reluctant to continue with projects with the rules of the game up in the air. Work has been cancelled or post- poned until clarity is given, leaving organi- sations across the supply chain in a state of flux, particularly smaller businesses without the resources to cope with such peaks and troughs. I don't blame the energy suppliers, but this boom or bust culture the government seems to continu- ally engender is simply bad for businesses, bad for customers and bad for investors. We've witnessed this situa- tion time and time again with energy policy, from EMR to the feed-in tariff and now Eco. I find it hard to recall one piece of energy policy that hasn't been changed mid-way through. I welcome efforts to rectify issues with policy when they're identified, but what's clear is that the continued level of uncertainty caused by the lengthy nature of these changes – and the lack of con- tingency to ensure stability during a period of change – benefits no one. EUM has been highlighting issues with Eco and its administration for a long time. Last year we issued a report to Decc highlight- ing how more than £610 million of savings could be achieved by reducing unnecessary red tape and improving process efficiencies. This consultation, as prolonged and pain- ful as it has been, has at least given the sup- ply chain a good opportunity to have their voices heard. I recently hosted a roundtable with 16 supply chain participants. Attendees included Eon, Which?, SIG Energy Manage- ment, DGI, The National Insulation Asso- ciation and Decc. The discussion focused on both the impact witnessed since Decc 6 | 18th - 24th April 2014 | UtilitY WEEK Comment A er much anticipation, the consul- tation on the future of the Energy Company Obligation (Eco) closed last Wednesday (16 April). The supply chain now has to play the waiting game to see whether or not our voices will be heard, a waiting game that sadly we've all become used to. To say that the gap between the Autumn Statement in December and the Eco consulta- tion this month has been painful for the Eco supply chain would be an understatement. The continued uncertainty in the scheme has seen the carbon price plummet, smaller properties with a low carbon score le unsupported, jobs cancelled and businesses le with no projects to support. What's worse is that the supply chain is expected to endure this dire situation until at least October this year, when the proposed Eco policy changes are submitted to be passed by law and the rules of the new Eco game are finalised. In theory, the proposals announced last year by Decc should open up Eco to sup- port more households. However, the impact of the delay – combined with Ofgem failing to offer reassurance that measures delivered between April and October will be hon- oured under the scheme – means a hiatus of work is inevitable – a hiatus that is entirely avoidable. Following the Autumn Statement we saw the price of carbon drop from a peak of £100 per tonne to as low as £25. The impact of that was felt almost immediately. Overnight, more than 4,000 smaller households on EUM's books that were eligible for work were suddenly classed as "loss making" because the carbon score (which multiplies carbon lifetime savings by the carbon price) had plummeted. This situation would never have occurred under the previous energy efficiency schemes (Cert/Cesp) because an upli in the carbon price was allowed for vulnerable cus- tomers in smaller houses, flats or bungalows. This upli ensured that they were always cost-effective, meaning that households who needed the measures the most were priori- tised, and rightly so. Will we be heard on Eco? The supply chain has been battered by the government's chopping and changing over Eco. Fundamental flaws must be addressed, and boom and bust must be eradicated in favour of steady workflow. Director's view Alex Tsimboykas, EUM Group proposed its changes last year, and views on the proposed changes. Delegates highlighted four key concerns. First, thousands of smaller properties are no longer receiving Eco measures under the scheme because of the fall in the carbon price. Second, large, detached properties with a higher carbon score are being treated instead of smaller houses. Third, supply and demand would be det- rimentally affected if suppliers were able to carry any "over delivery" of targets of pre- vious schemes at the incentive levels proposed. Fourth, uncertainty caused by the time lag between measures being announced, consulted upon and approved has had a detrimental effect on the supply chain. The supply chain is crucial to deliv- ering Eco but it is at the end of its tether, expected to work in a frequently unstable environment with continual changes. The current environment is creat- ing peaks and troughs in workload, and could even put some of the smaller businesses in the Eco supply chain out of business. No one should be expected to support a scheme when the goal posts are constantly shiing. The proposals set out in Decc's con- sultation do go some way towards solving the issues with Eco, but there remain fun- damental flaws with the scheme's adminis- tration that I fear will still cause problems later down the line, even once these changes are implemented. Rather than focusing on incentives and carry overs, Decc and Ofgem must use this final opportunity to turn Eco into the fuel poverty target it should be, rather than a scheme that focuses solely on carbon and red tape. If we're going to get a scheme that lasts beyond 2015, that gives the supply chain cer- tainty to invest and that allows suppliers to meet their targets in a cost-effective way, this really is Decc and Ofgem's last chance to get it right. "The problem with Eco is that it is not a fuel- poor target. It's a carbon target"

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