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N
 ATIONAL
E
NERGY
S
ERVICES
 
CESP response 090507 - final.docx
Page 1 of 11Version saved on 07 May 2009 at 19:14
 
N
ATIONAL
E
NERGY
S
ERVICES
R
ESPONSETOTHE
C
OMMUNITY
E
NERGY
S
AVING
P
ROGRAMME
C
ONSULTATION
A
BOUT
N
ATIONAL
E
NERGY
S
ERVICES
L
TD
NationalEnergyServices(NES)ownsandoperatesboththeNHERAccreditationSchemeandtheSAVACertificationScheme.TheNHERistheUK’sfirstandlargestenergyratingscheme,establishedin1990.Weprovidesoftware,training,accreditation,researchandconsultancyfororganisationsandindividualsinvolvedwithimprovingtheenergyefficiencyofbuildings,particularlydwellings.TheNHERAccreditationSchemecurrentlyhasover3,000membersaccreditedtoissuevarioustypesofEnergyPerformanceCertificates(EPC)andDisplayEnergyCertificates(DEC).SAVAprovidessoftware,trainingandaccreditationforHomeInspectorsandallaspectsofHomeConditionReportsandhasoperatedsince2000.SAVAwasthefirstapprovedCertificationSchemeforHomeInspectorsandcurrentlyhasover400members.
S
TATUTORY
I
NSTRUMENT
Q1.DoyouhaveanycommentsonthedraftStatutoryInstrument?
No.
I
MPACT
A
SSESSMENT
Q2.DoyouhaveanycommentsonthepartialImpactAssessment?Doyoubelievethereareothersourcesofevidencethatcouldbeusedtohelprefinetheassessment?Inparticular:
Thejustificationforchoosingthepreferredoptionisweakgiventheadditional£1billionintheTotalBenefitofOption4.Surelytheremustbescopeforanoptionunderwhichtheadditionalinvestmentistargetedtowardslow‐incomecommunities,butwhichdeliversabettertotalbenefitthantheapproachcurrentlyproposed?Reducingtheemphasisonmeasureswiththepoorestcosteffectiveness(suchassolidwallinsulation)wouldsignificantlyimprovetheoverallbenefits,intermsofreducedrunningcosts,reducedcarbonemissionsandincreasedsocialequitybyspreadingthebenefitsoftheprogrammeoveragreaternumberoflow‐incomehouseholds.TheexpenditureofsubstantialCERTfundsontheinstallationofmeasuresthatenhancetheassetvalueofanowner‐occupiedhomewhilstdeliveringonlylimitedreductionsinenergyandcarbonemissionsissociallyiniquitous.
 
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CESP response 090507 - final.docx
Page 2 of 11Version saved on 07 May 2009 at 19:14
 
Q3.Doyouagreewiththeidentifiedcostsandthemaingroupsonwhichtheyfall?Ifnot,pleaseexplainwhyandsuggestothercostswhichmayexistandgroupswhichmaybeaffected.
Itisreasonabletoanticipatethatallcostswillbepassedthroughtoconsumersintheirenergybills.Sinceenergycostsareasignificantlyhigherpercentageofincomeforlow‐incomehouseholds,theimpactisfundamentallyregressive.Thetargetingoftheprogrammeexclusivelyonlow‐incomecommunitiesiswelcome,butthepre‐occupationwith“whole‐house”solutionsandtheincentivesgiventopromotetheinstallationofmeasureswhichhavepoorcost‐effectiveness,resultsintoofewhouseholdsbenefittingfromtheprogramme.Fundamentally,thenumberofhouseholdsbenefittingistoosmallgiventhenumber,includinglow‐incomehouseholds,whoarefundingtheprogramme.
D
ISTRIBUTIONBETWEENSUPPLIERSANDGENERATORS
Q4.DoyouagreethattheCESPobligationshouldbesplitequallybetweensupplierandgenerationcompanies?Ifyoudonotagree,pleaseprovideanalternativeapproachandexplainwhyyoubelievethisispreferable.
Itisnotself‐evidentthatextendingtheobligationtogeneratorsservesanypurpose.Itwouldmakeseemtomakemoresensetostickwiththeexistingmodelwherebytheobligationrestssolelywiththesuppliers,allocatedpro‐ratatothenumberofcustomerhouseholdstheyhave.Youranalysisrecognisesthatgeneratorswillhavepassonthecosttotheircustomers,primarilytheenergysupplycompanies.Thesupplycompanieswillinturnpasstheadditionalcostontotheircustomers,togetherwiththeirowncostsfordeliveringtheirelementoftheprogramme.Sincethegeneratorshavenotpreviouslyhadsuchanobligation,theywillinevitablyincurhighermobilisationcostsgearinguptodelivertheprogramme.Thiswillincreasetheoverallcostandreducetheoverallcost‐effectivenessoftheprogramme.Furthermore,sincethegeneratorswillgenerallynothaveanyrelationshipwiththetargethouseholds,thereislittleifanyreputationalorothercommercialbenefitarisingfromtheirinvolvement.
 
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CESP response 090507 - final.docx
Page 3 of 11Version saved on 07 May 2009 at 19:14
 
L
IMITSFOREXEMPTIONOFSMALLCOMPANIES
Q5.DoyouagreewithourproposedapproachtoprovidinganexemptionfromtheCESPobligationtosmallcompanies?Ifyoudonotagree,pleaseprovideanalternativeapproachandexplainwhyyoubelievethisispreferable.
Allowingexemptionscreatescomplexityandanincreasedoversightburden.Itmaybepreferablefortheobligationtoapplytoallrelevantcompanies.Twooptionstoavoidthisbecominganexcessiveburdenforsmallercompanieswouldbe:
•
 
Allowcompaniestocontract‐outtheirobligationthroughacommercialagreementwithoneofthelargersuppliers(orindeedathirdparty);or
•
 
Allowcompaniestocontributetoan“obligationbuy‐outfund”runbyOfgemandpricedatarateslightlyhigherthanthenotionalratepertonneCO
2
assumedintheprogrammedesign.Largersuppliersorthird‐partyorganisationsabletodelivercommunitylevelprogrammeswithinthetargetcommunitiescouldthen“bid”forfundsonthebasisofthecarbonsavingstheywillachieve.Thisapproachmayenableawiderrangeofprojecttypestobedevelopedandevaluatedthanmightotherwiseoccur.
D
ISTRIBUTIONOFTHEOBLIGATIONBETWEENCOMPANIES
Q6.DoyouagreethattheCESPobligationshouldbedistributedbetweencompaniesinproportiontotheirannualelectricitygeneration?Ifyoudonotagree,pleaseprovideanalternativeapproachandexplainwhyyoubelievethisispreferable.
Wearenotconvincedthattheinclusionofthegeneratorsisasensiblemove;continuingtoexcludethesecompanieswouldobviatetherequirementforrulesonburdensharing.However,ifgeneratorsareincluded,thencarbonemissionsmaybeabetterbasisforallocatingtheburdenthanelectricitygeneration.ThiswouldprovideanadditionalincentiveforgeneratorstoreduceCO
2
emissions.
T
HEREGULATORYAPPROACH
Q7.Doyouagreethattheschemeshouldbeflexibletoallowforthedevelopmentofdifferentformsofcommunitypartnershipworking?Ifnot,whynot?
Yes.
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