Electricity and Gas (Energy Company Obligation) Order 2018

Debate between Baroness McIntosh of Pickering and Lord Grantchester

Tuesday 30th October 2018 Grand Committee

[Baroness McIntosh of Pickering (Con)]

My Lords, I bow to the superior knowledge of the noble Lord, Lord Teverson. I have a couple of questions. I want to press my noble friend, if I may.

At the outset, I declare my interest in the register as a vice-president of National Energy Action. I have long taken a close interest in the Warm Front programme. Like the noble Lord, Lord Teverson, I welcome the continuation of the scheme. Obviously, it is a matter of record and ongoing regret that around 4 million households are still in fuel poverty. Any scheme that can be seen to reduce that is very welcome. How does the scheme compliment what is already happening? What more could potentially happen through building regulations? A more joined-up approach to warm homes would be very welcome indeed.

Being half Danish, I am particularly interested that we currently export residual household waste from the city of York and north Yorkshire to Holland at a cost to the local taxpayer. However, at the end of the day, the benefit is to Dutch residents, because the waste is burned and energy from waste is recovered in the form of district heating. My aunt in Denmark gets the benefit of that—although not from our residual waste in north Yorkshire—through cheaper electricity, hot water and heating. I am very interested to know the potential number of new district housing connections that could be made through the continued scheme before us this afternoon. Does my noble friend have a projection of that? What plans do the Government have to retrofit? There is a firm in Denmark that has changed its name to Ørsted, but I prefer the old name of DONG—the Danish Oil and Natural Gas company—which is easy to remember. It claims it could retrofit properties here in London. Is that something that the department has considered?

My last question is about the figure in the order before us today for potential savings. Is the overall home-heating cost reduction target of £8.2 billion realistic? How do the Government plan to achieve that?

[Lord Grantchester (Lab)]

I thank the Minister for his introduction to the order before the Committee today. As he explained, it introduces a completely new energy efficiency programme—ECO3—focused essentially on those in fuel poverty but with elements of ECO2 and 2t. Indeed, the first ECO order, made in January 2013, was itself a successor to previous government energy efficiency schemes such as Warm Front, CERT and CESP. These previous schemes were more centrally funded, whereas ECO is an obligation on energy companies to fund and finance energy efficiency measures using their own resources and without additional government support. In that regard, austerity is still continuing.

The order extends to 2028, which, as I mentioned last week, is only four years short of 2032, the end period for the fifth carbon budget. We note that the Government are at risk of failing to meet that. The new ECO3 measure, as suggested, replaces the wider remit of former ECO schemes, which were based on a carbon-saving metric and encompassed a number of programmes relating to energy efficiency for carbon-saving purposes, where only a minority of the overall funding was directed specifically towards people in fuel poverty. The main programme therefore restricts measures to those households in band E, F and G properties. For these reasons, I cannot fully endorse the order before the Committee today. I also detected a slightly less than encouraging response from the noble Lord, Lord Teverson, and perhaps some criticism.

The order is a continuation, reducing and restricting policies that fail to address the wider issue of energy efficiency on a more comprehensive basis. Nevertheless, it does contain some good measures in response to previous Labour criticisms. The Government should be commended for reducing the obligation threshold for suppliers from 250,000 to 150,000 accounts over time, and for looking at the problems encountered by customers when switching from a company above the threshold to a smaller company operating below the accounts threshold.

Also to be welcomed is the Government’s response to extending the 25% of the suppliers’ obligation to be met by local authority flexible eligibility. It is, in effect, a nominations scheme in which local authorities can participate, whereby area-based activity can be undertaken to improve similar properties in a location. Another important aspect of this measure is the focus on innovation and the benefits it can bring—for example, Q-Bot, which undertakes the laying of insulation in inaccessible places.