A Year in Energy

Energy Retail AssociationWith debates underway around smart metering, the transition to a low carbon economy and securing supply in a highly charged geopolitical environment, no-one could accuse the energy sector of being dull.

In the first year of my tenure as Chief Executive of the Energy Retail Association, we have seen a new Government Department created with a specific energy remit, the transition to a new consumer champion, Consumer Focus, and a mandate for a national roll-out of smart meters to all homes in Britain by 2020. Looking ahead to the next twelve months, there are further challenges on the way which promise to excite at least as much lively debate as we’ve seen in the past year.

The Government’s announcement this May on the delivery of smart meters to every home in Britain by 2020 truly heralded a new era for domestic energy use. However, as the extensive consultations continue, there are still many details to be finalised before we can move forward with an agreed roll-out programme. During the consultation period, a clear timetable has to be provided by Government in order for energy suppliers to be able to get on with the programme. Any further delays risk us missing this target.

This will be a revolution for energy supply in Britain. The technology being replaced by smart meters is unable to cope with the demands being placed on it by an industry keen to innovate, and a general public that expects new technology in every part of life. Not replacing our existing meters would be like continuing to use telegrams instead of wireless broadband. We will continue to call for a swift response to the consultations ending on 3 August so that none of the momentum around this vitally important project is lost.

Another initiative that we will see making great strides over the next twelve months is the Community Energy Savings Programme (CESP). CESP will build on the extensions to the Carbon Emissions Reduction Target (CERT) scheme announced last autumn, and will take the industry towards new and innovative programmes post-2011, when the current supplier obligations on energy efficiency end. The ERA and the UK Business Council for Sustainable Energy (UKBCSE) jointly responded to the Department for Energy and Climate Change’s (DECC’s) consultation on CESP in May, and we anticipate that the Department will put its response to this consultation to Parliament before the summer recess.

This new, specifically targeted obligation sits with generators and suppliers and will address the needs of low income households in strictly defined communities. The obligation puts more emphasis than before on a ‘whole house’ approach and gives more credits for more costly measures such as microgeneration systems, which have not been delivered on a large scale so far. The scheme is in its early stages and the ERA and UKBCSE has asked for clarity on a number of key areas, namely the complexity of the scoring system, the cost of the scheme itself and the need for a flexible approach to delivery partnerships.

This scheme has the potential to make a huge difference to those most in need of assistance with taking control of their energy bills. We are looking forward to continuing these discussions further over the coming months.

The industry is also making progress with work on an accreditation scheme for green tariffs – a key area in which suppliers are keen to innovate and customers to take part in these green-conscious times. An accreditation scheme will ensure customers can have confidence in what they are buying, and suppliers will have the ability innovate within a framework, which benchmarks their offerings against those of their competitors.

Seven energy suppliers – the ERA’s members and Good Energy – are working with the regulator, Ofgem, to develop a voluntary system that will allow consumers to confidently compare green tariffs in the market. The key to the success of a green tariff scheme is twofold. Simplicity is necessary so that customers can easily understand the products available and make a decision on which product would suit them best. Flexibility is essential if new products are to be developed by all suppliers regardless of size or market share. Making sure any accreditation scheme fulfils these criteria will be a priority for all parties engaged in these discussions.

People say a year in politics is a long time, but arguably a year in energy is even longer. Energy is one of the most high profile and hotly-debated topics across the world today and it is undoubtedly an exciting time to be working in this industry. The next twelve months will no doubt provide food for thought for us all for many years into the future.

Dr. Garry Felgate,
4th Floor,
17 Waterloo Place,
London,
SW1Y 4AR.
Tel: 010 7930 9175
Email: info@energy-retail.org.uk
Web: www.energy-retail.org.uk