On May 1, 2013, the Office of Gas and
Electricity Markets (OFGEM) took charge of a new programme entitled the Energy
Company Obligation (ECO). This programme imposes certain obligations on energy
suppliers within the UK with regard to carbon emissions and energy
affordability for low-income households and communities. The programme is
currently scheduled to operate in its present form until March 31, 2015
There are three main obligations under the ECO: the Carbon Emissions Reduction
Obligation, the Carbon Savings Community Obligation, and the Home Heating Cost
Reduction Obligation. The following is an explanation of which energy suppliers
are affected, how each of those obligations works and how they will affect the
applicable energy suppliers from year to year.
Which Energy Suppliers are Affected
THe ECO affects suppliers that, either singly or as part of a group, have more
than 200,000 domestic customers and supply more than either 400 gigawatts of
electricity or 2,000 gigawatts of gas to domestic customers.
The Carbon Emissions Reduction Obligation
This obligation imposes a lifetime carbon emissions cap of 20.9 million tonnes
of carbon dioxide on energy suppliers. The related programme looks to assist
suppliers with energy-consuming structures that have difficulty achieving
emission reductions, called “hard to treat homes” within OFGEM’s
lexicon. The focus is on assistance to economically disadvantaged homeowners
The Carbon Savings Community Obligation
This obligation imposes a lifetime carbon emissions cap of 6.8 million tonnes
of carbon dioxide on energy supplied to community-owned and operated structures
and facilities. The focus is again on economically disadvantaged communities
The Home Heating Cost Reduction Obligation
This obligation focuses on the cost of home heating for economically
disadvantaged homeowners and residents of low-income communities, especially
those residing in economically disadvantaged rural areas. The floor is Â£4.2bn
in lifetime cost savings to the overall target population, with energy
suppliers being obliged to assist members of the target population to achieve
those savings through affordable heating-related energy costs, and OFGEM
providing guidance and assistance to energy suppliers toward that end.
How It Will Work for Energy Suppliers
Each program year, OFGEM will allocate a share of the emissions caps and
cost-savings floor to each affected supplier according to the supplier’s market
share, with a review prior to the commencement of the following program year.
During the program year, OFGEM will monitor supplier progress in meeting the
ECO, conduct audits for compliance and fraud, make a final determination whether
the supplier has met its ECO obligations for the program year, and report
periodically to the Secretary of State for Energy and Climate Change.
DECC states that ‘The expected financial savings must be equal to or greater than
the costs attached to the energy bill’.
If you are looking for a national company that can provide the full range of energy
saving services including the new green deal try nesuk.com/green-deal-guide.aspx
who will be able to provide all the help and advice you need.