Changes to the Energy Company Obligation A supplier’s view Nigel Dewbery Head of Obligation...

Changes to the Energy Company ObligationA supplier’s view

Nigel Dewbery Head of Obligation DeliveryCAN Training Day 7th October 2014

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Contents

1) Timeline

2) HHCRO Positives and negative impacts

3) CSCO Positives and negative impacts

4) CSCO Rural Positives and negative impacts

5) CERO Positives and negative impacts

6) Green Deal changes & impacts

7) Summary

8) Contacts

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DECC Timetable

1) Autumn Statement Dec 2013 DONE

2) Public Consultation release Mid Feb 2014 DONE

3) Public Consultation closes Mid April 2014 DONE

4) Drafting of new SI April-June 2014 DONE

5) New SI before House B4 20th July 2014DONE

6) Legislation debate &outcome October 2014 In

Progress?

Some changes will be back dated to 1st April 2014, and the supply chain is actively working and delivering against the new proposals.

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Positives and Negatives -HHCRO

Positive Impacts

- Extension until March 2017

- Guidance on Customer Contribution

- Introduction of installation warranty with costs offset by target reduction

- Uplift for non gas area measures (although insufficient)

- Maintaining “Hard” 2015 target

Negative Impacts

- introduction of deflator, direct additional cost.

- Extension target worked on 2.25yr ECO1 period not 2.5yr

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Positives and Negatives –CSCO/CSCO Rural

Positive Impacts


- Increase of IMD areas to lowest 25%- Maintaining “Hard” 2015 targets

- New eligibility by postcode permitted for Rural

- Non mandating of Brokerage use

Negative Impacts

--Limitation on application of excess actions to CSCO Rural

- Extension target worked on 2.25yr ECO1 period not 2.5yr

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Positives and Negatives -CERO

Positive Impacts


- Introduction of CWI, LI and DH as primary measures

- Removal of HTT CWI definition which will remove administration

Negative Impacts

- Levelisation metrics not reflective of true market conditions

-Extension target worked on 2.25yr ECO1 period not 2.5yr

- Total reduction applied to phase 3 (last year) of ECO1.

- “Soft” 2015 target introduced

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Positives and Negatives –SWI Minima

Positive Impacts

- Calculated as a tCO2 target

Negative Impacts

- Use of average of 40tCO2 per property higher than actual average.

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Overall cost impacts to Suppliers

Overall savings were not as large as originally predicted

Area Change Spend

HHCRO Introduce Deflator

HHCRO Introduce Upside off gas

HHCRO Warranty costs

CSCO IMD areas

CSCOR Postcode areas

CSCOR Excess actions

CERO Target reduction

CERO Levelisation metrics

CERO Primary Measures

CERO Admin on HTT CWI

AllExtension based on 2.25 years

SWI Minima Based on "high" averageCERO (for small suppliers only? Phase 3 reduction

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What next?

Now looking for project partners particularly against

1) CSCO Rural

2) SWI Minima

3) District heating

For delivery by E.ON until 2016

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Green Deal Changes - Incentives

Range of offers being announced to drive GD take-up

1) £1000 for 2 measures

2) Up to £6000 for SWI

3) £100 refund on GDAR

4) £500 for homemovers

Cannot be used with ECO

Limit on “state aid spending” For EON, customers will beoffered the best deal (ECO or GD)

Challenge = complexity and confusion

ALL SPENT IN SIX W

EEKS!

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E.ON Green Deal Community Activity

E.ON active in Green Deal Communities Areas

Harringay

Peterborough

Worcester

Nuneaton

Still have capacity to undertake SWI delivery for GD Communities

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EOTR Vans - Communities & Green Deal focus

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E.ON – our intent and actions through the changes

We simply have had to reduce costs in line with the political intent.

1) Fully complete all obligations and sub-obligations on time (On Target)

2) Deliver at as low a cost as is practical in order to reduce pass-through to

E.ON supply customers

3) Renegotiated all existing contracts (incl. timeframe, volume and measure

type) to fit into new world.

4) Provide as much continuity and security to partners and installers as

possible

5) Secure longer-term, pan-community funding projects

6) Provide customers with best options for them (within compliance

constraints)

7) Working with proactive partners

Contact Us

HHCROTina Cowley Crispin Jones07891 291641 07794 [email protected] [email protected]

CERO/CSCOLisa Sims Jon Kirby07736 617946 07872 [email protected] [email protected]

Steve Lauri (workshop later) Phil Dawson (workshop later)07525 240968 07740 [email protected] [email protected]

Head of Obligation DeliveryNigel Dewbery07595 [email protected]

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