Last edited 14 Apr 2016

Energy companies obligation ECO

On 4 December 2012 Parliament passed the Electricity and Gas (Energy Companies Obligation) Order 2012. The energy companies obligation (ECO) then came into effect in January 2013. It ran until March 2015 when a new obligation period (ECO2) was introduced, running from 1 April 2015 to 31 March 2017 and extending the lifetime of the original scheme.

The energy companies obligation replaced the Carbon Emissions Reduction Target (CERT) and the Community Energy Saving Programme (CESP), which ended on 31 December 2012.

The energy companies obligation provides support for the installation of energy efficiency measures to reduce energy consumption in the UK and to help people living in fuel poverty and in properties that are hard to treat. This is part of the UK government’s strategy to achieve its legally binding commitment to cut emissions of greenhouse gasses by at least 34% by 2020 and by 80% by 2050 compared with 1990 levels. This commitment is set out in the Climate Change Act.

The energy companies obligation includes:

The ECO is worth approximately £1.3 billion a year and is funded by the big six energy suppliers. It is intended to run alongside the green deal and can be provided directly to customers, or through pre-approved arrangements, such as green deal providers.

ECO is administered and monitored by the Office for Gas and Electricity Markets (Ofgem). Energy suppliers report on delivery against their obligation, to demonstrate that they will meet their target by 2015.

The Energy Saving Advice Service offers advice about the help consumers may be able to get.

NB On 14 April 2016, the National Audit Office (NAO) published Green Deal and Energy Company Obligation, in which it found that the design of the ECO to support the Green Deal added to energy suppliers’ costs of meeting their obligations. This reduced the value for money of the ECO, but it was not able to determine by how much.

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