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Eco scheme – will it really help those in fuel poverty?

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The government’s Green Deal has been hogging the limelight, but just as important is the recent consultation on the Energy Company Obligation (ECO). Is this scheme really going to help people in fuel poverty?

ECO is the government’s new plan on how to spend money taken from our energy bills to make our homes more energy efficient, reduce carbon dioxide emissions and help people out of fuel poverty.

Noble goals. But we need to remember that this scheme will cost us £1.3bn every year. And even this is an estimate, with the government reckoning that the cost could be anywhere from £0.3bn to £3bn.

This isn’t a new idea. ECO replaces the current Carbon Emissions Reduction Target (CERT) in December. Under CERT, energy companies have to offer us free or heavily-subsidised loft and cavity wall insulation, and then get the costs back from energy bills.

So why should we care changing to ECO?

Well, first up, we’re all paying for ECO out of our bills. So we need to be sure that this money will help as many people as possible who are struggling to pay their energy bills.

And there’s the snag. CERT has helped a lot of households to get insulated – tackling 2 million lofts and 1.5 million cavity walled homes in the last three years. But ECO looks like it will help far fewer, with just 1.7 million cavity walls insulated up to 2022.

This is partly because the government wants ECO to help houses to get solid wall insulation. This is insulation for older houses and can either be internal (i.e. on walls in rooms) or external (on outside walls). The costs could range from £3,000 to a whopping £13,000 or even more.

The government argues that three-quarters of the £1.3bn raised each year should be set aside to help the solid wall insulation market to grow. The idea is that you finance part of the costs through a Green Deal loan and get the rest from ECO.

But hang on a minute – isn’t the Green Deal meant to be a commercial, market-based product? Should it really be on the receiving end of a significant subsidy from energy bill payers?

Eco needs to be fair

If you live in a house with cavity walls, would you mind paying an additional £50 a year on your energy bills to help others to benefit from a loan for expensive solid wall insulation? And is it right that only a quarter of the £1.3bn raised should go towards helping people in fuel poverty with heating and insulation costs?

To me, that sounds like the wrong way round. Energy price rises have hit the lowest-paid hardest, with government estimates of around 5.5m people in fuel poverty. To give just a quarter of this funding to such a huge societal problem hardly seems right. The government needs to be clear on – and spell out – the impact of this policy on fuel poverty.

And can it be right that such a huge sum from our bills should be directed at expensive solid wall insulation to meet environmental targets? With so many houses still failing to insulate their lofts and cavity walls, wouldn’t the money be better spent on this? The government’s own advisory body, the Committee on Climate Change, certainly thinks so.

These policies are still in development so it would be unfair to write them off. But making our homes more energy efficient is a vital part of helping all of us to cope with big energy price rises. So the government has got to get its plans right and make them fair.

Comments
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Member
David Ramsay says:
23 January 2012

Look, just can the smart meters – £11bn and get every home properly insulated.

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frugal ways says:
24 January 2012

When will people, governments, trade bodies, watchdogs, etc, all wake up?
Every “energy saving” scheme, customer switch, environmental policy, heaps burdens on ordinary bill payers.

People being mislead into fitting “energy saving measures” such as replacement boilers that will never pay for themselves (source: energy saving trust’s own figures) and when performance is watched using metered units – some have even been shown to use more units of energy than previous measures!
Ask your energy company how much money they give each year (which is paid for by every customer’s bill) to the energy saving trust (whom advertise they are “impartial”) and they will not tell you… I wonder why? Try it for yourself, see if you can find out!

People being pushed into “switching energy providers” at every marketing opportunity – but the marketing of these switching websites and energy providers shuts up instantly you have the audacity to question how much is being paid out (read: added to customer’s bills) in commission payments for switching (currently around £60 per switch for a dual fuel customer)

People being walked blindly into higher energy bills, by successive governments policies – leader of the opposition now, Ed Miliband, who brought about policies that burdened every customer’s energy bills with around £200 extra cost to implement – current government’s Chris Huhne, whom seems content that heaping extra costs on energy bills now will somehow save us all a bit of money – maybe – years down the line.
Don’t know about anyone else, but I am sick to the back teeth of the energy providers in our home, advertising all over the place (at what cost to customer’s bills?) sponsoring this and that and claiming credit/publicity for it. (Example: British gas sponsoring swimming for £15 Million – if our home gas bill for the year was typical, it would pay an entire year’s gas for more than 25000 homes!)
OUR bills are paying for all of this and more, which is why the energy companies’ staff cannot even answer basic questions of how they arrived at the price of our bill

In case any of these government ministers, energy saving bodies, switching websites, etc, haven’t noticed – energy bills are at record levels for us normal people!

All was well and good when wages were keeping pace, but now they are stagnating, people simply cannot afford to go on paying for the half baked ideas of these untouchable people. When are they going to live in the real world?
I’d wager a strike against energy companies would have huge public support!

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David Ramsay says:
24 January 2012

Excellent, a person after my own heart. The only schemes that should be allowed are those that give a return after 3-5 years and not the 20 or 30 that are likely for most of them.

Wind farms, a load of hot air they should all be blown up.

The only scheme I have seen recently was one using tidal power to pump seawater into reservoirs so that it could then be used as hydro electric power. The scheme avoided placing the generation equipment under water.

As far as a strike is concerned, well with the likelihood of 15million pensioners around in the very near future we need to get as many of them online as possible so we can then organise a revolt.

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frugal ways says:
25 January 2012

All the various schemes to make our homes “energy efficient” have created adverse conditions for the majority.
Take the price of the energy saving light bulbs – stated on sale at a price of £2 in an energy saving trust report/diagram in 2010, yet quoted in late 2011 as being “available for as little as a £1 in many shops” – I have not seen even own brand energy saving light bulbs at under £2.25 in years, schemes making them widely available and phasing out conventional bulbs (of which I could buy 10 for £2 – making my £2 last a lot longer than the 1 energy saving bulb) has cut choice and resulted in grossly inflated prices of the only ones now available – the consumer pays the price!

Insulation, which I agree with, prices for do it yourself loft insulation has shot up in recent years as we all take on emissions and carbon targets. Once again, various schemes (energy company insulation costs are added on to ALL our bills remember) has increased and created a floor price for those needing to purchase it.

Boilers – perhaps the biggest marketing trick of all of them (I’ve not had the misfortune of solar panels as yet) confirmed by british gas senior billing staff, that “an old G rated boiler will not use any less gas than a new A rated boiler” – not once but twice.
The warmfront grants started out at £2700, many people soon found not only were they tied to one installer who was monopolising the fittings/inspections/servicing and continue to do so, but they were also being asked to pay for up to 7 radiators on top of the grant, plus there was no grant left for cavity wall and loft insulation!
The grant was raised to £3400, taxpayer’s footing the bill, which has created a floor for the prices of boilers.
A typical new boiler being installed ranges between £600-£800 at retail (NOT trade prices) and don’t expect to see your bills drop, measure your units used via your meter as we did, over almost a year later, there was no difference, showing a slight INCREASE in meter units used.
The best reasoning offered was, “Just think how big your bill would have been had you not fitted energy saving measures!” Laughable.

From where I’m stood, the consumer is on their own – only choice is hobson’s choice, shop around and pay average or pay too much for your energy.
Regulators, government departments, energy companies, energy saving bodies, etc, all are in it for themselves and simply not listening to the majority of people in the UK.
We simply do not matter, until such time as we do, I doubt the status quo will change.

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Keith says:
20 March 2013

Excellent Information that applied to myself..Thank You Poster.

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E.fried says:
19 June 2015

“An old G rated boiler will not use any less gas than a new A rated boiler” – that is what I would expect, do you think the opposite is true, if you have a good control possibility?

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santorr says:
26 January 2012

All of these comments and yet not one of them targetting the real culprits – the banks! I would quite happily try to fund most of the cost of making my home more energy efficient (solid walls and all) but not when I have to pay through the nose for any loan I take out. Why doesn’t the government get the banks to help energy conservation by offering cheap loans for these things, or am I being very naive?

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Jonathan Braddick says:
3 February 2012

In principle the ‘Green Deal’ is a very exciting and positive scheme that should be supported and encouraged, however there are still some key concerns that need to be addressed if the scheme is to be the success it could be.

The ‘Green Deal’ is a framework to enable private firms to offer consumers energy efficiency improvements for their homes, community spaces and businesses at no upfront cost, and recoup payments through ongoing charges on energy bills.

The financing mechanism allows consumers to pay back through their energy bills. This means consumers will offset the ‘Green Deal’ cost against the savings in energy use and therefore savings on their bill. It also means that if they move out and cease to be the bill-payer at that property, the financial obligation doesn’t move with them but moves to the next bill payer of the property in question. The charge is only paid whilst the benefits are enjoyed.

There are a number of important consumer protections which will be embedded into the Green Deal. The most important of these are:

1. The expected financial savings must be equal to or greater than the costs attached to the energy bill. This is known as “the golden rule” of the Green Deal.

2. The measures must be approved and the claimed bill savings must be those accredited through this process.

3. The measures installed must have been recommended for that property by an accredited, objective adviser who has carried out an assessment.

Whilst the ‘Green Deal’ is arguably the most proactive piece of domestic green legislation to date, there are some key concerns:

1. Large providers (energy companies and contractors) will provide assessments free of charge or at a low rate such that truly independent specialists cannot compete. Therefore any claims that this new scheme will result in mass new employment and or the opportunity for Surveyors and Architects to diversify should be taken with a large pinch of salt.

2. With nearly all assessments being completed by representatives of accredited ‘Green Deal’ providers and/or installers (as is predicted), there is a very real concern that this will result in a lack of independent/impartial advice to the consumer. There may be huge pressure for assessors who are employed by accredited ‘Green Deal’ providers to promote products and or measures that will be most profitable for the installer (and/or provider) and not those that are necessarily the best or most cost effective for the consumer.

3. With companies competing to provide the initial assessments to the consumer as cheaply as possible (or even free of charge) there is a risk that the quality of the assessments may suffer, and a ‘one size fits all’ approach is adopted by many assessors.

4. There may also be a huge difference between the final performance of an upgraded home and the initial predictions, with many homes not seeing the energy bill savings predicted.

5. Customers will not sign up if the interest rate is too high or the repayment system too complex.

As Richard Lloyd, executive director, ‘Which?’ is quoted as saying:

“Unless people are offered a good deal that they can trust and understand, it’s difficult to imagine them flocking to take up Green Deal measures. They won’t if the interest rate is too high or the predicted energy bill savings don’t materialise. The government’s latest consultation does little to put our minds at rest, as the energy department’s own consumer research found that only a small number of people expressed a strong interest and many felt the annual cost savings were simply too small to make it worth their while… We want assessments that are personalised, accurate and genuine