Sustainability Committee SC(3) (p9)

Transcription

1 1 Sustainability Committee SC(3) (p9) Written Submission from EDF Energy October 2008 Introduction EDF Energy outlines in this submission to the Sustainability Committee a number of developments since we last gave evidence, which will affect our customers living in or at risk of fuel poverty, including our customers in Wales. We have around 5.5 million customers in the UK, predominantly in London and the South of England. Of this, around 35,000 customers are in Wales. EDF Energy s Social Commitments In 2007, EDF Energy launched Our Climate Commitments, representing the most far reaching commitments to reduce carbon emissions and help tackle climate change made by any major UK company to date. Since we last gave evidence, we have also launched Our Social Commitments, which demonstrate our genuine commitment to the social well being of our customers, our partners, our employees and the communities in which we work. These include a number of pledges to support our most vulnerable customers as we commit to: Being the first energy supplier to commit to offering a social tariff until 2012, and, in the first instance, extending the industry s first social tariff, Energy Assist, for a further period until March We also commit to allying this to a package of support including the offer of a new benefit entitlement check Being the first energy supplier to make a five year commitment to continuing to support our Energy Trust Fund until at least We established this Trust Fund, an industry first, which others have now emulated, in Since then we have donated over 8 million to the Fund to make awards to over 10,000 customers in serious household debt. The Trust Fund is also currently funding debt advice workers in a number of projects over a 3 year period. Helping our most vulnerable customers to reduce their energy bills by ensuring that they have access to free energy efficiency advice and practical measures to reduce their energy usage.

2 2 These commitments allow us to maintain our industry leading work to support our most vulnerable customers.

3 3 Prepayment Customers EDF Energy s prepayment bills for a typical customer, whether on a duel fuel, electricity only or gas only tariff, are on average in the UK currently the cheapest of any of the main six suppliers. We also ensure that our prepayment customers in Wales pay a fair price to use prepayment meters. Although there are additional costs to offering prepayment as a method of payment to customers, EDF Energy was the first energy supplier to align this cost to our standard prices for electricity customers in In Our Social commitments, we pledged to try and keep these additional costs to a minimum and to ensure that the prices we charge our prepayment meter customers are reflective only of these additional costs. Ofgem assessed back in June 2007 that the additional costs to the supplier associated with prepayment customers was 65 more than for a customer paying by cash or cheque, and 85 more than for a customer on direct debit. Even after our recent price change, EDF Energy s cost differentials are still below Ofgem s estimation of reasonable cost, as highlighted by our average price differentials for Wales below: EDF Energy average differential in Wales. Ofgem assessment of reasonable additional costs to suppliers. Differentials to price paid by dual fuel customers paying by cash/cheque Differentials to price paid by dual fuel customers paying by Direct debit. The Voluntary Agreement with the UK Government in April 2008 In April 2008, all energy suppliers agreed with the UK Government that we would voluntarily increase the level of spend on initiatives to support our customers in or at risk of fuel poverty to a total of 375m between 2008 and For EDF Energy this will mean spending over 40 Million over the next three years, although we already estimate that we will be exceeding the agreement in the current year. Whilst Government has agreed that this funding can be spent on a range of initiatives, EDF Energy is focusing on tariff relief to our most hard pressed

4 4 customers to get through a particularly difficult period, when other cost pressures combine with the impact of energy bills. We have also signed up to a Fuel Poverty Action Programme with Ofgem, which focuses on creating a lot more publicity and public awareness among both vulnerable customers and their advisors of how their energy supplier can help them. Price Change Record wholesale energy cost rises forced EDF Energy to increase its electricity prices by 17% and its gas prices by 22% on the 25th of July Wholesale energy prices had increased by 70% for coal, 63% for gas and 47% for electricity since EDF Energy last increased its prices in January Our price increases in both January and July 2008 were overall the lowest of the big six supplier, for dual fuel customers, as we focused on managing our costs and the impact on our customers. They were also applied in all our areas of operation equally, including South and North Wales, so that we have kept those price rises down to a minimum for all our Welsh customers. However, we were particularly concerned about the impact of these prices on our customers on the lowest incomes and therefore we decided to increase by 50% the number of customers benefiting from the 15% discount available with our social tariff. We took the proactive step of automatically transferring 33,000 customers who we believed to be most likely to be in fuel poverty onto our social tariff to mitigate the impact of the price rise for them. EDF Energy has been applauded by stakeholders such as energywatch and Ofgem for not simply waiting for vulnerable customers to find out about the help available, but proactively seeking them out to help them. We have been assisted in this by our in-house fuel poverty model, which combines our own customer data with other data sets to identify those customers with the highest propensity to be fuel poor. Since our price rise, we have seen the impact of the increased awareness of our social tariff with growing numbers of customers applying for the support offered, so that we have now almost doubled the number of customer accounts to over 110,000 and these are continuing to grow by several thousand a month. Targeting the hard to reach The recent publication of the UK Fuel Poverty Strategy s 6 th Annual Report highlights that 50% of those living in fuel poverty are households aged over 60, and EDF Energy is therefore working with partners such as the WRVS to develop a campaign for the winter of 2008/09 to reach those elderly households who are most vulnerable in England and Wales. This builds upon our previous Safe Warm and Well campaigns over the last 2 years to highlight winter risks to the elderly and their families and carers, but

5 5 intends to go further to ensure that those households can access the help available to them. The WRVS is an ideal partner which works directly in people s homes with their Meals on Wheels Service or with those in hospital or using their community centres. Government Announcement on the Home Energy Saving Programme Members of the Sustainability Committee will be aware of the recent Government announcement of an increase in the CERT programme by 20%, and creation of a new Community Energy Saving Programme (CESP) as part of the Government s Home Energy Saving Programme announcement. This will be funded by energy suppliers and electricity generators and will see energy suppliers, including EDF Energy, deliver a much enlarged fuel poverty programme. The Home Energy Saving Programme is an important step to provide permanent support to those struggling to pay their fuel bills. We believe that helping people to use energy more efficiently is the most effective way to provide long-term support and we have demonstrated this consistently though our actions. The Government s new CESP will encourage members of society to work together to ensure that the investment reaches the most vulnerable and isolated. This way of working is fully consistent with the approach EDF Energy has pioneered through our own community initiatives. We would like to bring one specific scheme to your attention and to commend it to you as a model for how the new community programme might work. This brings together a range of funding to deliver energy efficiency, central heating and benefits entitlement checks to maximise the opportunity to lift households out of fuel poverty. EDF Energy established the London Warm Zone in 2001 in partnership with the London Borough of Newham. This community programme has made more than 140,000 door to door assessments with more than 20,000 homes in receipt of energy efficiency measures. Based on the lifetime of these measures, 672,000 tonnes of CO² emissions have been saved and the scheme is now successfully operating in 17 London Boroughs. We particularly welcome the creation of the CESP to roll out the type of local, holistic solutions developed in our industry leading and award winning community model.