Concerns raised about supplier insultation scheme targets

Concerns have been raised about the way in which energy supplier insultation targets will be set, monitored and enforced.

As part of the Great British Insulation Scheme (GBIS), suppliers are obligated to achieve annual delivery targets in each year of the scheme (referred to as phases), as well as an overall target for the whole scheme duration.

The scheme, launched in March, will support the existing Energy Company Obligation Scheme (ECO4) in the delivery of additional energy efficiency measures targeted at a wider range of households. It runs until March 2026.

Five respondents to Ofgem’s consultation on the scheme sought clarity on how the regulator intends to measure progress. In particular, respondents “sought clarity on how this would work when targets were set based on notional annual bill savings”.

Some respondents also expressed views that it would be “difficult for Ofgem to effectively measure and monitor achievement of targets in first year”, as the data register to track progress would not be available until January 2024. They argue that this would not give the regulator sufficient time to raise concerns with suppliers falling behind their targets before the end of the first phase.

Consequently, respondents suggested that Ofgem handles “any failure to achieve the first, Phase A annual targets with pragmatism and a flexible approach to enforcement”. In total Ofgem received 14 responses to the consultation, seven of which came from suppliers.

Other concerns relating to targets in the scheme included:

• Timing of final guidance (two respondents), with one supplier saying they would not start delivery until the final guidance was published
• The timing of the legislation coming into effect part way through the first obligation period (one respondent)
• Timing of progress updates, with one supplier asking for quarterly updates rather than annual updates as proposed

In response, Ofgem said: “We will monitor suppliers’ progress against annual phase targets by reviewing notifications of measures and any provisionally approved measures. If we have any concerns a supplier is not on track to achieve their annual target, we proposed we will engage with suppliers more closely. We will not be able to confirm achievement of annual targets until the end of the scheme.”

The regulator’s response adds: “With regards to the metric we intend to use to measure progress, we will initially use notification of measures and also any provisionally approved measures as appropriate to monitor the progress and likely achievement of all obligated suppliers’ annual targets.

“Where we have concerns that a supplier is not on track to achieve their annual target, we will engage with them more closely and, if appropriate, take compliance action following conclusion of that year. Taking compliance action in respect of annual obligation targets is at Ofgem’s discretion and we may consider a supplier’s notice that they intend to use transfers when evaluating progress.”

In relation to supplier concerns about tracking progress, Ofgem said that it would expect “all suppliers to maintain their own records” and therefore be “tracking their own progress against their obligations”.

The regulator has also announced that while over-delivery of targets will be encouraged, it is not within Ofgem’s remit to offer financial incentives to the industry.

The GBIS was the first scheme to be launched by the Department for Energy Security and Net Zero after its formation at the start of the year.

Unlike previous iterations of the ECO scheme, the GBIS will not solely be available for low-income households. Those living in homes with an EPC rating D-G and within council tax bands A-D in England and A-E in Scotland and Wales will also be eligible for support regardless of their income status.

Each household in the new “general group” will, however, only be able to receive one measure of support. Owner occupied households in the low-income group are eligible for heating controls in addition to an insulation measure.