Energy regulator failing country's poorest

5 April 2011

The national gas and electricity regulator, Ofgem, is failing the country's poorest families, councils leaders warn.

Thousands of families are missing out on vital upgrades to the warmth and energy efficiency of their homes due to Ofgem's failure to prevent gas and electricity companies from cherry-picking easy to improve homes to meet their carbon reduction obligations.

Under the Community Energy Savings Programme (CESP), large energy suppliers and generators are required to fund energy efficiency improvements, like insulation instalments and boiler upgrades, to homes in the country's poorest neighbourhoods. It is hoped the scheme will deliver £350 million of upgrades to 90,000 homes, reducing the UK's carbon emissions by 2.9 million tonnes per year.

However, due to weak guidelines energy suppliers are avoiding the cost of upgrading hard to improve homes (typically flats with a mixture of private and council ownership) by placing prohibitive demands on council partners in CESP contract agreements, or ignoring the homes all together.

Some suppliers are demanding councils contribute as much as 80 percent of the cost of each scheme. This is unaffordable at a time when cuts to council budgets leave them facing a £6.5 billion funding shortfall in the next financial year.

Clyde Loakes, Vice Chairman of the LGA Environment Board, said: “Ofgem needs to get its act together and start laying down the law, otherwise energy companies will continue to cherry pick the easy to improve homes, leaving thousands of vulnerable families out in the cold.

“CESP is supposed to ensure that people who would benefit most from warmer, more energy efficient homes get them. At the moment it's not achieving that because energy companies are being allowed to dictate terms. They are riding roughshod over the initial intention of the scheme which was to upgrade the warmth and energy efficiency of entire neighbourhoods, not just easy to improve homes.

“The prohibitive financial demands energy companies are placing on councils to get these schemes off the ground are undermining the credibility of the entire scheme. Ofgem needs to issue stronger guidance as soon as possible to make sure fuel poor families are not left in damp and draughty homes. ”

Notes:

It is expected that more than 300 schemes will need to be approved before the end of the 2011/12 financial year in order to meet the scheme's carbon reduction target. So far 100 projects have been ratified with a further 66 awaiting approval.

100 CESP projects are currently in operation. They will provide 45 percent of the expected £350 million of home upgrades. This is enough to improve the energy efficiency of 40,000 of the targeted 90,000 homes the scheme set out to improve.

Further information on CESP is available from

http://www.ofgem.gov.uk/Sustainability/Environment/EnergyEff/cesp/Pages/cesp.aspx

Further information on the LGA's offer on climate change is available from

http://www.lga.gov.uk/lga/aio/14130176

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