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U.K. Energy Saving Policy `Misleading' to Consumers, Panel Finds

  • Energy supplier obligation won't meet goals, report finds
  • New policies represent `sharp decline' in government ambition

The U.K. government overstated the financial savings that consumers can expect from new energy efficiency policies that will require power companies to fund home insulation, according to a report from a panel of lawmakers Saturday.

Chancellor of the Exchequer George Osborne misled households when claiming reforms to the Energy Company Obligation, or ECO, would save households 32 pounds ($46) a year in 2017 and 2018, according to the report by members of the House of Commons Energy and Climate Change Select Committee.

“The new supplier obligation will represent a sharp decline in government ambition,” according to the report.

The Treasury said in the November Spending Review that it will scrap ECO in April 2017, with “a new cheaper domestic energy efficiency supplier obligation which will run for five years.” Osborne said at the time the change would save the typical household about 30 pounds a year.

The government’s projected savings are “somewhat misleading” as they are based on “comparing new plans to previously planned higher spending which never actually happened, rather than to actual current or past costs,” said the committee.

Projections

A spokeswoman for the Department of Energy and Climate Change said the numbers provided to the committee were projections, and showed a reduced “impact on projected average household energy bills only.” The government is seeking to insulate homes “in a way that drives down costs for consumers,” and will respond fully to the committee’s report “in due course.”

Upgrading Britain’s leaky homes is a key measure to meeting pollution targets. David Cameron’s Conservative government has pledged to insulate one million homes by 2020, while its advisers, the Committee on Climate Change, suggests 1.5 million solid walls and two million cavity walls should be insulated throughout the 2020s.

The previous coalition government’s main energy efficiency program, the Green Deal, was scrapped in July, following low take-up levels and heavy criticism from environmental groups and the insulation industry.

Local Approach

The report raised concerns over the government’s new plan to rely on energy companies to deliver home improvements, saying the U.K. is the only country in Europe to take the approach. Instead, they suggest taking a local, or area based approach to retrofitting homes.

Ministers should also consider introducing new measures to drive the uptake of home insulation, such as stamp duty and council tax discounts, according to the report.

“Ministers should see taking action on energy efficiency as a cross-departmental priority” said Angus MacNeil, chairman of the committee, in an e-mailed statement. “Action is not a cost today, but an important investment for the future. The cheapest form of energy is the energy that we don’t need to use.”

A comprehensive energy efficiency strategy would be a boon to the economy, said Unison General Secretary Dave Prentis, in an e-mailed statement. “Rather than sit on the sidelines and watch as jobs are lost in energy, this report shows how the government could be leading the way, and actually creating employment in the sector.”

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