Suppliers deliver £8.5bn in savings through ECO3

Energy retailers have delivered more than £8.5 billion in estimated lifetime bill savings to fuel poor and vulnerable consumers through the ECO3 scheme, Ofgem figures have revealed.

The regulator’s final determination report into the scheme, which ran from October 2018 to March 2022, shows that a total of more than 1 million measures were installed during this period.

Unlike earlier schemes, ECO3 consisted of one distinct obligation to collectively achieve lifetime bill savings of £8.253 billion under the Home Heating Cost Reduction Obligation (HHCRO).

Additionally suppliers were required to deliver a minimum amount of the savings through two sub-obligations. One required them to achieve at least 15% of their total HHCRO by delivering measures to domestic premises in rural areas, while the Solid Wall Minimum Requirement (SWMR) required them to collectively deliver savings of at least £0.721 billion through the delivery of solid wall insulation or solid wall alternative measures.

Ofgem’s report revealed the most common type of measures installed were heating control measures which accounted for more than 29% and £342 million in lifetime bill savings.

Boiler replacements were the second most common at just over 24% but were responsible for much higher lifetime bill savings of almost £3.2 billion.

Despite accounting for almost 75% of total savings boiler replacements, cavity, solid wall and loft insulation account for only 51% of the measures installed. Meanwhile ‘other heating’ (heating control) measures only account for 4.5% of savings but represent 29% of the measures approved.

Co-operative Energy, which exited the market in 2019, was the only non-compliant supplier and achieved just 36% of its obligation by the scheme’s end, leaving a £35 million shortfall.

Ofgem said the retailer had “engaged constructively” and that it agreed to deliver approximately an additional £3.5 million lifetime bill savings on top of its outstanding obligation.

Out of the 26 retailers obligated under the scheme, 10 exited the market during ECO3. Of these, six submitted measures towards their obligation before they left and the remaining four exited without submitting any measures towards their obligations.

The regulator said there was a collective obligation of £190 million or 2.3% of the total HHCRO between these suppliers.

A total of 29% of this was met by those that did submit measures, leaving a shortfall of £135 million, or 1.6% of the total obligation. Yet over delivery by other obligated retailers meant that the overall bill saving targets were still met.

Furthermore, more than 6,300 measures had their savings refused or revoked following Ofgem’s investigations into suspected fraud.

The regulator said: “Following tightening of our guidance over the course of ECO3 suppliers have increased protections and controls to detect issues more effectively in future.

“We expect suppliers to continue to be dynamic in their approach to the prevention of fraud and scheme abuse in the delivery of their ECO4 obligations. As part of this suppliers should be regularly reviewing and updating their evidence checking process and fraud prevention strategies.”