A letter to government related to the Energy Company Obligation (ECO), providing key information on the vital need to maintain this obligation in order to tackle fuel poverty and provide long-term, sustainable support to reduce the energy bills of low income and vulnerable households.
11 January 2022
Dear Prime Minister, Chancellor of the Exchequer, and Secretary of State,
Ensuring the Fuel Poor and other Vulnerable Customers are Protected During the Energy Price Crisis and Beyond
As you and your Ministerial colleagues consider options for action to alleviate forthcoming energy price rises, I would like to bring to your attention the critical importance of preserving or expanding the Energy Company Obligation (ECO) for two key reasons:
- Continuing with and accelerating the removal of households from fuel poverty in accordance with the Government’s statutory target – and shielding other qualifying consumers from price rises, through energy efficiency improvements to their homes.
- To ensure the continued health of the substantial SME sector that executes the ECO programme – a sector worth £16.7bn supporting 114,000 jobs.
“Green levies” have come into focus in recent weeks, with some commentators calling for them to be suspended, removed altogether, or moved into general taxation. However, among those costs that find their way onto energy bills, ECO is the one that is absolutely vital to preserve given that it directly tackles the very problem at hand – the impact of price rises on the most vulnerable. Since ECO started in 2013, Government schemes have led to around 3.4 million energy efficiency measures being installed in 2.4 million homes, 97% of which came from ECO.
In 2020/21 our company helped over 44,000 low income and vulnerable households improve their homes and reduce their energy - a significant proportion of which received measures via ECO. We therefore understand the worries that such households have about the prospect of energy price rises and we are able to provide you with insight into the issues they face.
In our view, it is imperative that the opportunity to achieve significant, long-term reductions in energy use and costs is not sacrificed for a relatively small and short-term benefit. ECO currently adds £27 to a £1,184 typical dual fuel annual bill – a mere 2%. Both the fuel poverty and net zero targets are already challenging – any suspension of schemes such as ECO will make them even harder, and likely more expensive, to achieve.
We welcome the Government’s review into what can be done to reduce energy bills, but we urge you to leave ECO in place at the level proposed and introduce ECO4 on time in April 2022. Indeed, our recently published report on the funding required to meet the 2030 fuel poverty target highlights the need for significant expansion – with funding levels falling short by £10bn of what is needed to reach the target, even before the impact of the expected price rises is considered. Reducing the support available from ECO would increase the number of households in fuel poverty, currently 3.2 million in England alone. There would also be a knock-on effect on the ability to achieve net zero carbon by 2050.
I have attached to this letter some further thoughts on ECO and reasons to preserve it, with references to source material that your officials may find informative. We would also like to highlight the recent letter sent to Government by the Energy Efficiency Infrastructure Group which also sets out the need to maintain ECO and which we wholeheartedly support. I hope that you find this contribution helpful, and I would appreciate the opportunity to meet with Ministers and officials to expand on any of these points in more detail.
Agility Eco Services Ltd