Final proposal on improving domestic consumer protection in the green and renewable energy tariffs market
Consultation
- Upcoming
- Open
- Closed (awaiting decision)
- Closed (with decision)
- Publication date
- Closing date
- Industry sector
- Supply and Retail Market
- Related consultations
- Consultation on Improving Consumer Protection in the Green and Renewable Energy Offers Market
- Decision
Ofgem is proposing policy changes for the green and renewable tariffs market to improve protection for domestic consumers.
We are proposing rules on how suppliers tell consumers about the environmental benefits of tariffs that include renewable electricity. If a tariff doesn’t lead to environmental benefits, suppliers will need to make this clear too. Finally, suppliers will need to hold certain evidence to show that they have supplied renewable electricity.
Our reforms will support our recent Retail Market Review to make the market simpler, clearer and fairer for consumers. Following our initial consultation published in December, we are now seeking views on our proposed changes to suppliers’ licences to implement these proposals. We expect to issue a statutory consultation later in the year.
Additionality
Our consumer research shows that when customers buy these tariffs they expect they are benefitting the environment by supporting renewable generation. We have called this “additionality”. We are not proposing rules about how we think suppliers should provide this environmental benefit. We propose introducing a requirement on suppliers to show that environmental benefits happen because consumers chose a tariff and not solely due to subsidies or supplier obligations. This is a complex area and in our consultation stakeholders had a wide range of views. This requirement will protect consumers but will allow suppliers flexibility and opportunities to innovate.
Transparency
To help consumers understand the market better, we propose asking suppliers to clearly say if a tariff does not offer any environmental benefit other than those that consumers already pay for through their energy bills or taxes. Most of our stakeholders support this, and our consumer research does too. Suppliers must also give consumers other information that means they can make informed decisions. We have provided additional guidance on how suppliers can meet our transparency principle.
Evidence of Supply
To avoid double selling of renewable energy to domestic consumers and business consumers, we are proposing that suppliers must hold Renewable Energy Guarantee of Origin certificates as well as retiring any associated Levy Exemption Certificates. Most of our stakeholders supported this proposal. Two suppliers disagreed.
Why is this needed?
We published Green Supply Guidelines in 2009 that were implemented through the voluntary 'Green Energy Supply Certification Scheme'. Initially a number of suppliers were certified through this scheme. However, an increasing number of tariffs with environmental claims remain uncertified, and consumers are often unclear about the benefits of these tariffs. It is important Ofgem acts to protect them. We have spoken to stakeholders throughout the process, and have commissioned independent consumer research.
We want consumers to be able to make informed choices about the renewable tariffs they may buy. We also think that suppliers should be able to compete fairly with each other.
We welcome responses to this consultation by 28 July 2014.
Respond name
Natasha Smith