Some thoughts from Birmingham Friends of the Earth on the proposed Birmingham Collective Energy Offer – August 2012
Birmingham Friends of the Earth aims to enable people to benefit from the advantages of a cleaner, greener and more sustainable lifestyle.
We welcome the idea of banding together to get some collective bargaining power with fuel suppliers. The issue seems to be how this power will be used. What would really help with fuel poverty and the rising cost of domestic heat and power?
Birmingham residents suffer from old and leaky homes that fall far behind the efficiencies of newer homes. They suffer from dependence on fossil fuels, and electricity made from fossil fuels, which are subject to global demand pressures. This makes everyone dependent on the Big Six suppliers. How will a collective switching initiative help with changing this situation?
We are aware that cheap deals are a standard marketing approach to getting people to consume more of a commodity. A reduced price does not mean less spending. Supermarkets offer endless discounts, but they keep opening more and more stores – so we cannot be spending less overall. The danger is that a lower price of something, e.g. domestic energy, is likely to make people relax their economising efforts and consume more. The total cost, as price x kilowatt hours consumed may be unchanged. Consumers are rightly suspicious of cheap deals that turn out to cost them the same or even more. The Collective Offer has to clearly reject the ‘confusion marketing’ approach of the Big Six.
The discount obtained by the Big Switch run by Which was about 10%, we understand. This could be enough to disincentive energy saving, so increase their consumption and their carbon emissions while hardly affecting their bill. A reduction of 10% through energy saving, by contrast, would be a permanent gain.
More specifically, the ‘Green Deal’ is coming; an offer to insulate at no upfront cost, as long as measures can meet the ‘golden rule’ of a payback from the energy savings. If the price of units is coming down through collective switching, this could reduce £s savings, so making the golden rule unobtainable and work against the Green Deal.
A danger is that better off, internet-savvy people who can pay by direct debit will gain from a cheap rate that is paid for by those who do not join in. We could be playing off one group of signed up ‘switchers’ against the rest, competing over slices of the same cake, rather than changing people’s long term relationship with energy.
We feel that a Collective Energy Offer should seek to empower people to reduce their fuel consumption, while remaining warm, stop wasting electricity and use solar heat and power from the roof where possible. Fuel not purchased is really cheap, really green and really proof against future price rises. So a bad collective scheme would distract households from energy saving, while a good scheme would help them to realise its benefits.
A Better Deal would;
Ensure there is an option for Clean British Energy bought from renewable sources
Reward energy saving by having no standing charge and no decrease for later units consumed, in fact the first units should be at a lower rate (as opposed the current system where it is often more expensive for the first units and cheaper the more you consume), but step up after the average consumption for that type of house. It would not discriminate by payment type, especially those currently on pre-payment meters. If you save 5% you should always get 5%.
Increase the visibility of what the household is consuming, and what costs they are incurring, using smart meters and In House Displays. This encourages rational economising and switching off or turning down to avoid waste; at the same time giving a budget, so people do not become over-anxious and live in the cold.
Use thermal imaging to show people were heat is being lost from the house. Experience is that people react to visual images more than numbers.
Give control occupants more control over heating systems, by offering appropriate devices, such as radiator valves, programmable radiator valves, weather compensation controls.
Include an assessment for Green Deal to show how energy wastage in the home could be reduced.
Make it clear in all communications that the goal is to reduce our dependence on imported energy, not to just get temporary cheap fuel deals by switching between suppliers.