Energy UK MPs Information Pack

Transcription

1 Energy UK MPs Information Pack Section 1 Guidance for constituents Section 2 Energy policy explained

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3 Guidance for constituents Help for customers Energy supply Ways to pay for energy Issues with suppliers Energy advice days Energy UK s campaigns

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5 Help for customers The facts Help from energy companies: Energy companies work hard to help customers who are struggling with their bills and they operate a number of schemes and trust funds designed to help people manage their energy use. Warm Home Discount: Between 2011 and 2016, under the Warm Home Discount, suppliers will be providing 1.4 billion worth of funding to support around two million fuel poor households annually. Priority Services Register: The Priority Service Register offers special services to customers who are of pensionable age, blind, deaf, disabled or have a long-term medical condition (i.e. chronically sick). Energy Companies Obligation (ECO): Under ECO energy suppliers are required to provide energy efficiency measures to eligible consumers. There is a wide variety of measures available, such as solid wall insulation, cavity wall insulation, loft insulations and boiler replacements. Safety Net: All major energy suppliers have signed up to the Safety Net which means they will never knowingly cut off a vulnerable customer. Fuel Poverty: A household is in fuel poverty if their energy costs are above the national average and if, once they have paid their bills, they are left with an income below the official poverty line. Free meter readings: For vulnerable customers who are of pensionable age, disabled or chronically sick and unable to read their meter, energy companies can arrange a meter reading at least once a quarter. Help available: There is help available to those who need it so get in touch with the Home Heat Helpline on Extra help: Suppliers have links with a range of local organisations, who can offer extra help; including Citizens Advice, local authorities, housing associations, charities and advice agencies and work with these organisations to resolve customers difficulties.

6 Energy supply Electricity supply and power outages As well as your energy supplier, who you receive your bill from, there are companies who deliver the energy to your home. Below is a list of Distribution Network Operators (DNOs). Area Company Emergency No. Website North Scotland SSE Power Distribution Central and Southern Scotland SP Energy Networks North East England Northern Powergrid North West England Electricity North West Yorkshire Northern Powergrid Merseyside, Cheshire, North SP Energy Networks Wales and North Shropshire East Midlands, West Midlands, Western Power Distribution South Wales & South West England Eastern England UK Power Networks Southern England SSE Power Distribution London UK Power Networks South East England UK Power Networks Northern Ireland Northern Ireland Electricity These are the companies to call in the event of a power outage. The DNO for your region can also tell you who supplies your electricity and gas. If you are not sure who to contact, use the Electricity Networks Association postcode checker: Gas supply and power outages Meter Number Helpline (Gas) Switching supplier: The facts Faster switching: Switching is faster, it now takes 17 days to complete a full switch. That is, three working days after the two week cooling off period. Tariff choices: Energy suppliers can offer a maximum of four tariffs per meter type. This makes it easier to compare deals. Lowest price: Companies will tell existing customers if they have deals which could make bills cheaper. Customers can choose to fix their energy bills for a longer period instead. Going when you owe: Customers using a pre-payment meter can switch even if they owe the existing supplier money. It is possible to move supplier even if a customer owes up to 500. The debt is simply transferred to the new supplier. Exit fees: Not all deals have exit fees. There may be a fee if cancelling a fixed contract. Help with switching: This animation provides a helpful guide to the switching process - Switching numbers: Energy UK publishes its electricity switching numbers every month.

7 Ways to pay for energy Direct Debit Direct Debit allows customers to spread their payments and budget for their energy costs. Customers agree a fixed monthly payment which is reviewed every year. Paying by Direct Debit can also sometimes be cheaper as energy companies are able to pass on lower administration costs. Standard Credit Customers receive a bill either monthly or once a quarter based on either an estimate of how much they have used or the exact amount if based on a meter reading. Once a bill has arrived there are a number of ways to pay including paying over the phone, online, at your bank or a post office by cash or by cheque, or by cheque through the post. Prepayment Meters Prepayment Meter (PPM) customers load money onto their meters using a key or card which is then used or spent when electricity or gas is used in the home. This allows customers to budget their household expenditures more accurately as there are no surprise bills and they can see exactly what they are spending. Customers can buy credit to top up their prepayment meter card or key at outlets displaying the PayPoint or Payzone logos. Fuel Direct If a customer is in receipt of certain benefits and in debt to their gas or electricity company, they can apply for Fuel Direct. Under this scheme an affordable amount, agreed with the local benefit offices, will be paid directly out of a customer s benefits to their energy company. The deduction will cover what they are currently using and the debt they owe. The scheme is operated by the Department for Work and Pensions (DWP). The facts Cost reflective: Suppliers are required to ensure any difference in costs between different payment methods are reflected in customers bills. Bills are therefore, generally cheaper when customers pay by Direct Debit due to lower administration costs. However, the cost of paying via a prepayment meter is similar to paying quarterly in cash or by cheque. Help available: Help is available for all customers struggling to pay their energy bills no matter what payment method they choose. Suppliers are required by Ofgem to take into account each individual customer s Ability to Pay to make sure repayment arrangements are manageable for individuals. Anyone who is worried should contact their energy supplier or the free, and confidential Home Heat Helpline on

8 Issues with suppliers How to make a complaint If a customer has a complaint, they should contact their energy supplier first. When contacting them, customers should ensure they have details of meter readings and any relevant information on their account. Energy UK has a simple guide on its website to guide customers through the complaint process. Citizens Advice consumer service Citizens Advice gives information and practical advice on energy issues. The Citizens Advice Consumer Service can be contacted on Vulnerable customers or those who have a complex complaint and need extra assistance, will be referred to the Extra Help Unit. This is a team of specialist case workers who will investigate an issue and help to negotiate a resolution on behalf of a consumer. Energy Ombudsman If an energy supplier has not settled the complaint after eight weeks, or the energy supplier has issued the customer with a deadlock letter, customers can contact the Energy Ombudsman. The Ombudsman will look into the complaint and can award customers compensation. This includes small businesses, as well as domestic customers. The Ombudsman Service is free. Energy suppliers have to pay for every case that gets to this stage. Customers can contact the Energy Ombudsman on Reclaiming money owed by a supplier Some customers who have switched energy supplier or moved house may have left money behind with their old supplier. On average, balances returned are in the region of 50. Customers should visit - or call the relevant energy company directly. It is important to make sure that they have as much relevant information as possible relating to their claim to help speed the process up. When the money cannot be reunited with a previous customer, companies are committed to using it to help vulnerable customers instead. Cold calling Energy UK never cold-calls customers. Some organisations have been calling under our name to sell energy-related products, this is not in any way authorised by Energy UK and any calls should be referred to the Information Commissioner s Office.

9 Energy advice days The idea The Energy Advice Day will give constituents an overview of what is available to help them with their energy bills. It is essential to make sure constituents are aware of what help there is and how to get it. Energy UK run these surgeries providing as much support to constituency offices as possible to make sure the day is a success. The event We will help to fit the day around the regular constituency surgery, but with additional focus on energy advice. The aim will be to give attendees all the help they might need to reduce their bills and tailor it to them. We have found this works well when both local and national organisations are in attendance, such as advice services, local bodies, energy suppliers and other institutions that can help consumers reduce their bills. Displays by organisations such as Age UK and Citizens Advice tend to be very popular and we would encourage local branches to attend where possible as they will be able to provide an ongoing point of contact for constituents if needed. The organisation The event itself will be similar to a regular constituency surgery, and Energy UK would be more than willing to help with any additional arrangements such as publicity and providing advisors from the Home Heat Helpline and energy industry. Event publicity Getting in touch with local newspapers and radio stations ahead of the event will help make sure local residents are aware of what is happening. We can provide a toolkit of media content that can be used to publicise the event in advance. We will also liaise closely with the local office regarding a post event press release and photos from the day for local media. This release will include energy saving advice for the local community. Further publicity could be provided by adding promotional material to regular newsletters, blog posts, tweets, etc. from the local constituency office. The next step If you would like to organise an Energy Advice Day for your constituents or want more information on some of the key issues raised at these events; please feel free to get in touch with Christopher McDade on

10 Energy UK s campaigns CO Be Alarmed! Carbon Monoxide Be Alarmed! is a national campaign to reduce the number of deaths and injuries caused by carbon monoxide. Since 2008, the campaign has encouraged people to install carbon monoxide alarms in their homes. The Carbon Monoxide Be Alarmed! campaign is run by Energy UK on behalf of British Gas, EDF Energy, E.ON, npower, ScottishPower and SSE, in partnership with the Dominic Rodgers Trust. It is supported by a wide range of charities and other organisations. Home Heat Helpline Home Heat Helpline is a free, confidential and independent service on or from mobiles, for those struggling with their energy bills. Since 2005, the campaign has helped the most vulnerable customers on low incomes. Friendly advisors are always on hand to make sure callers get all the help available. This ranges from tips on how to keep out the cold, to guidance on getting money directly off bills. My Energy Credit My Energy Credit is a campaign to help consumers claim back credit they have left behind with their previous suppliers. People can claim by contacting the helpline on or via the freepost address which is simply My Energy Credit. The campaign aims to return the amount owed to the customer. Where people are owed money, this is on average around 50.

11 Energy policy explained Energy prices Energy efficiency Smart meters Electricity market reform Levy control framework Jargon buster

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13 Energy prices Wholesale energy prices fluctuate in response to a number of factors including supply and demand, geopolitical risk and market trends. Energy companies do all they can to cushion customers from these fluctuations by implementing a variety of forward buying strategies. There is no single wholesale gas or electricity price. As outlined in the table below, there are a number of different time periods over which to buy gas and electricity. Therefore, the gas or electricity used today may have been bought two years ago at a different price from today s on the spot price. Your energy bill: the facts Outside energy companies control: Around four-fifths of the make-up of a typical energy bill is outside the control of the energy supplier. Make-up of an energy bill: The typical dual fuel energy bill can be broken down as follows: 46% wholesale cost 21% network costs 21% other supply costs & margins 7% Government policies 5% VAT Investment required: There is 100 billion worth of investment required by the year Energy companies have to remain profitable in order to invest in the infrastructure required to keep delivering power for homes and businesses throughout the UK. Profit accounts for about 5p in each pound on an energy bill. Spot = average of daily prices Month ahead = average of month ahead contracts Season ahead = average to deliver winter / winter Year ahead = average to deliver winter / winter two seasons ahead Two year ahead = average to deliver winter / winter four seasons ahead. All average prices are baseload prices Make up of an energy bill - according to DECC in 2014:

14 Energy efficiency Improving the energy efficiency of the UK s commercial and residential properties will play a vital part in tackling the energy trilemma. Energy companies are committed to helping their customers improve the efficiency of their homes and keep warm during the winter months. There are measures that can help improve a property s energy efficiency, from double glazing to insulation. Installation costs vary depending on the technology, however energy companies are on hand to help meet the cost of energy efficiency improvements through two government-backed initiatives. Energy Companies Obligation Over the Energy Companies Obligation (ECO) period (1 Jan April 2015) obligated energy companies have delivered 1,254,878 measures 1 to homes across the country to help save residents money. This program has been extended to March There are now 11 suppliers that deliver ECO. The Green Deal The Green Deal provides loans to customers who would like to install energy efficiency measures in their home. Following an assessment by a home energy assessor a range of energy efficiency measures may be recommended. Loans are provided when the repayment can be met by the likely energy savings. Types of efficiency measures Insulation: The most common and effective forms of insulation are: loft insulation; cavity wall insulation; and solid wall insulation. Different properties may require different types of insulation depending on their age and the way in which they were built. Renewables: Solar panels and heat pumps can be installed in both commercial and residential properties. This means they will be able to generate some of their own electricity and will not have to buy as much from their energy supplier. In some cases surplus power is generated for which a payment is received by the customer. Help and advice There is a lot of help available to customers considering energy efficiency improvements. If you are unsure of where to start, call your supplier or the Home Heat Helpline on for free, confidential, impartial advice. 1. The ECO measures figure is taken from Ofgem s website: ecocomplianceupdateapril2015-pdf

15 Smart meters Smart meters are set to transform how people understand and manage their energy usage. In-home displays and mobile phone applications will provide customers with near real-time, accurate information on their energy consumption and the financial cost of this, helping them to better understand and budget for their energy use. The roll-out The Energy Acts of 2008 and 2011 provided the Secretary of State for Energy with broad powers to implement and direct the roll-out of smart gas and electricity meters. In 2013, the then Secretary of State for Energy announced the completion date for the full-scale roll-out of the smart programme would be Great Britain is currently in the foundation stage of the smart meter roll-out with just under one million smart and advanced meters installed across the UK. Benefits & costs Accuracy: Smart meters will allow energy suppliers to read gas and electricity meters remotely, putting an end to estimated billing. Innovation: There is more potential for suppliers to offer innovative products and services. Energy security: Smart meters will help contribute to improvements in demand side management which could make a significant contribution towards energy security and sustainable energy use. Home Area Network: This will support the gas and electricity meters, and in-home displays. Overall cost of roll-out: 10.9 billion. Overall estimated benefits, in part from energy efficiency: 17.1 billion. Privacy Keeping the information generated from smart meters secure is a key consideration of the project. Energy UK, alongside DECC and Consumer Futures, have developed the Data Guide which articulates the smart metering data choices customers are able to make, and how suppliers communicate them with customers. Smart Energy GB Smart Energy GB is the not-for-profit organisation tasked by government with consumer engagement during the smart meter roll-out. Their independent national campaign will inform every consumer how they can get a smart meter, and how they can use the new technology to get the full range of benefits. Smart Energy GB works in close contact with energy suppliers, and has a particular focus on ensuring low income, vulnerable and pre-payment customers reap the benefits from smart meters.

16 Electricity market reform Electricity Market Reform (EMR) is how government intends to tackle the three energy policy challenges (or trilemma ) facing the UK: maintaining security of supply; whilst reducing carbon emissions from electricity generation and delivering this in a way that is affordable. EMR, which is legislated for in the Energy Act 2013, introduces a number of mechanisms aiming to attract the investment needed to transform the UK s electricity infrastructure. The mechanisms Contracts for Difference (CfD): CfDs are intended to encourage investment in all forms of low-carbon generation (renewables, nuclear, CCS) and have been designed to provide efficient and cost-effective support for new generation through revenue stabilisation, therefore reducing exposure to the volatile wholesale electricity price. Once the power station is built, the company sells energy into the market as usual. The wholesale price received is topped up to the agreed strike price in the contract, and paid for by electricity consumers via their energy bill 1. If the wholesale electricity price is higher than the strike price generators must pay consumers. Capacity Market: The Capacity Market enhances the security of our electricity supply by ensuring sufficient reliable capacity is in place to meet demand. In other words, it is an insurance policy to keep the lights on. The Capacity Market works by offering the opportunity to all providers (new and existing power stations, electricity storage and capacity provided by demand side response) of a steady, predictable revenue stream on which they can base their future investments. The cost of the Capacity Market will be met by consumers via a levy on electricity suppliers 2. Carbon Price Floor (CPF): The CPF aims to encourage companies to invest in low-carbon generation by taxing carbon emissions (for example, from coal and gas fired power stations). The CPF acts as a top up to the carbon price set by the EU Emissions Trading Scheme to ensure that the tax will increase up to 2020, although government recently announced a freeze to the support level from 2016 to Emissions Performance Standard (EPS): The EPS is a backstop limitation on the CO2 emissions from new power stations and effectively reinforces the existing planning requirement for any new coal-fired power station to be equipped with Carbon Capture and Storage (CCS) technology. Impact on customer bills: These policies will initially be paid for via consumer bills. Government believes these policies will be more cost effective than taking no action. If we didn t invest in new low carbon technologies we would fail to meet decarbonisation targets. This would have knock-on effects for energy security and risks missing out on additional jobs and economic benefits which the increased investment brings. Government estimates that household bills will on average be about 41 cheaper over as a result of EMR Overall spending on supporting low carbon projects is capped at 7.6bn a year by 2021 under the Government s Levy Control Framework. 2. Estimated 100bn needed between now and 2020 according to the DECC Energy Investment Report - uploads/system/uploads/attachment_data/file/331071/decc_energy_investment_report.pdf page 10

17 Levy control framework A number of energy and climate change policies are funded directly from energy companies. This method of funding government policies, aimed at tackling climate change and fuel poverty, results in higher consumer bills. The Levy Control Framework (LCF) was introduced by DECC and HMT in 2011 as a way of capping the cost of government policies placed on consumers bills. The limit placed on these policies for is 4.3 billion and will rise to 7.6 billion by A 20 per cent headroom allowance is available on top of the cap to allow for unexpected variations above forecast spending. Upper Limits to Electricity Policy Levies, 2011/12 prices 2015/ / / / / / bn 4.90bn 5.60bn 6.45bn 7.00bn 7.60bn Source: Department of Energy and Climate Change Spending limits under the LCF have been calculated by DECC through modelling assumptions of the volume of capacity for various low-carbon technologies that it expects to come forward within each support scheme in order to meet the UK s renewable targets. Policies Falling Under the LCF Contracts for Difference: A contract between a low carbon electricity generator and the Low Carbon Contracts Company, a government-owned company. The generator party is paid the difference between the strike price and the reference price for the electricity it generates providing stability and investor confidence. Feed-in Tariffs: Provide payments to businesses and consumers who generate their own electricity e.g. through a solar panel or wind turbine. Surplus generation can also be sold back to the Grid. Renewables Obligation: Eligible renewable energy generators report the amount of renewable electricity they generate to Ofgem each month and in return receive Renewable Obligation Certificates which allows them to receive a premium on top of the wholesale electricity price. Although the Warm Home Discount falls under the LCF it is not included in the cap on the upper limits to electricity policy levies (represented in the table above). Decisions about the future of the Warm Home Discount will be decided by future governments. The Energy Companies Obligation (ECO), which obligates large energy suppliers to deliver energy efficiency measures to domestic properties, does not currently fall under the Levy Control Framework.

18 Jargon buster This factsheet contains a number of agreed terms. It also sets out some common acronyms. Agreed Term Definition p per day or pence per day The cost in pence for each day of a use. p per kwh or pence per kwh The cost in pence for each kwh. Actual meter reading The amount of energy a customer has used based on a recent accurate meter reading. Capped price tariff A tariff which guarantees that the customer s bill will not go above a set price. Estimated meter reading An estimate of a customer s energy use based on old bills if there is not a recent meter reading. Exit fee The charge to a customer if they cancel a contract earlier than agreed. Fixed price tariff A tariff where a set price is agreed for a fixed period, regardless of how much energy is used. Green tariff A tariff which makes a positive contribution to the environment. E.g. through funding energy efficiency schemes or using renewable energy. kwh A unit of energy, the amount of power needed to create a kilowatt over the course of an hour. Price Tracker Tariff A tariff where each quarter the price of wholesale is reviewed and the customer s bill is adjusted accordingly. Standing Charge This is a regular, automatic payment made from the customer s bank account to the supplier. Stepped price tariff A fixed tariff where future price rises and falls are prearranged. Tariff The deal the customer is signed up to, previously referred to as a package, product or deal. Tariff Comparison Rate (TCR) The Tariff Comparison Rate enables customers to compare tariffs at a glance. It is measured in pence per kilowatt hour (p/kwh) and based on consumption of an average user. Unit Rate The cost of gas or electricity per kwh. Variable price tariff (no end date) A tariff with no fixed price or end. The price can vary following changes in costs for the supplier. CfD CHP ECO EMR FiT GW, MW, KW LCF PSR RO / ROC WHD Acronym Definition Contract for Difference Combined heat and power Energy Companies Obligation Electricity Market Reform Feed-in Tariff Gigawatt, Megawatt, Kilowatt Levy Control Framework Priority Service Register Renewable Obligation / Renewable Obligation Certificate Warm Home Discount