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Green energy tariffs 'not always what they seem'
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Green energy tariffs that promise customers environmentally friendly electricity supplies face official scrutiny amid concerns that customers are not getting what they pay for.
Ofgem will today outline plans to create a ratings scheme to highlight the most planet-friendly packages.
The regulator is working with the Energy Saving Trust to determine a set of criteria under which the best schemes will be awarded five stars.
Alistair Buchanan, Ofgem’s chief executive, said that the move was in reaction to concerns over how some products were marketed.
“There was a concern that the power wasn’t entirely coming from green sources,” he said. “Is a very large group able to say, “˜Well, we’ve identified that we’ve captured some renewables here and so therefore we can, with hand on heart, say we’ve got some renewables which are making up your power’?”
The trust, a nonprofit body focused on the effects of climate change, will also look into how an independent accreditation scheme for green tariffs could be structured.
Green tariffs are offered by at least ten suppliers, including British Gas and EDF, and specialist companies such as Good Energy.
Ofgem set out guidelines on green tariffs in 2002. However, these were not meant to be enforced.
A report from the National Consumer Council found that some green tariffs were “not delivering the environmental benefits they claim to”. Some companies were offering renewable energy that they were required to generate under government rules. The council said that households funded renewable electricity by about £7 a household in 2005-06.
It said that it would work with energy companies and customer groups to get the new guidelines in place by September.
Ian Pearson, the Climate Change and Environment Minister, said: “More and more people want to go green, but they need to be sure that what they’re doing is making a real difference.”
Generation game
— Green tariffs became widely available in 2000
— Typically, a household will pay a premium to guarantee that a set proportion of its energy needs will be matched by the company’s generation of renewable energy
— There are also carbon-offsetting schemes and the option to contribute to investment funds that are used to invest in new renewable energy production
— It is impossible for the supplier to guarantee that electricity created from a renewable energy plant is directed to a specific customer’s home
— Instead, companies guarantee that they will buy as much renewable energy as they sell
By Joe Bolger
4 June 2007
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