Changes to the Energy Company Obligation A supplier’s view Nigel Dewbery Head of Obligation Delivery CAN Training Day 7 th October 2014

Contents 1)Timeline 2)HHCRO Positives and negative impacts 3)CSCO Positives and negative impacts 4)CSCO Rural Positives and negative impacts 5)CERO Positives and negative impacts 6)Green Deal changes & impacts 7)Summary 8)Contacts 2

DECC Timetable 1)Autumn Statement Dec 2013DONE 2)Public Consultation releaseMid Feb 2014DONE 3)Public Consultation closesMid April 2014DONE 4)Drafting of new SIApril-June 2014DONE 5)New SI before House B4 20 th July 2014DONE 1)Legislation debate &outcomeOctober 2014In Progress?  Some changes will be back dated to 1 st April 2014, and the supply chain is actively working and delivering against the new proposals. 3

Positives and Negatives -HHCRO Positive Impacts - Extension until March Guidance on Customer Contribution -Introduction of installation warranty with costs offset by target reduction -Uplift for non gas area measures (although insufficient) -Maintaining “Hard” 2015 target Negative Impacts - introduction of deflator, direct additional cost. - Extension target worked on 2.25yr ECO1 period not 2.5yr 4

Positives and Negatives –CSCO/CSCO Rural Positive Impacts - Extension until March Increase of IMD areas to lowest 25% -Maintaining “Hard” 2015 targets -New eligibility by postcode permitted for Rural -Non mandating of Brokerage use Negative Impacts --Limitation on application of excess actions to CSCO Rural - Extension target worked on 2.25yr ECO1 period not 2.5yr 5

Positives and Negatives -CERO Positive Impacts - Extension until March Introduction of CWI, LI and DH as primary measures -Removal of HTT CWI definition which will remove administration Negative Impacts - Levelisation metrics not reflective of true market conditions -Extension target worked on 2.25yr ECO1 period not 2.5yr -Total reduction applied to phase 3 (last year) of ECO1. -“Soft” 2015 target introduced 6

Positives and Negatives –SWI Minima Positive Impacts - Calculated as a tCO2 target Negative Impacts - Use of average of 40tCO2 per property higher than actual average. 7

Overall cost impacts to Suppliers 8 Overall savings were not as large as originally predicted

What next? Now looking for project partners particularly against 1)CSCO Rural 2)SWI Minima 3)District heating For delivery by E.ON until

Green Deal Changes - Incentives 10  Range of offers being announced to drive GD take-up 1)£1000 for 2 measures 2)Up to £6000 for SWI 3)£100 refund on GDAR 4)£500 for homemovers  Cannot be used with ECO  Limit on “state aid spending”  For EON, customers will be offered the best deal (ECO or GD)  Challenge = complexity and confusion ALL SPENT IN SIX WEEKS!

E.ON Green Deal Community Activity  E.ON active in Green Deal Communities Areas  Harringay  Peterborough  Worcester  Nuneaton  Still have capacity to undertake SWI delivery for GD Communities 11

EOTR Vans - Communities & Green Deal focus 12

E.ON – our intent and actions through the changes We simply have had to reduce costs in line with the political intent. 1)Fully complete all obligations and sub-obligations on time (On Target) 2)Deliver at as low a cost as is practical in order to reduce pass-through to E.ON supply customers 3)Renegotiated all existing contracts (incl. timeframe, volume and measure type) to fit into new world. 4)Provide as much continuity and security to partners and installers as possible 5)Secure longer-term, pan-community funding projects 6)Provide customers with best options for them (within compliance constraints) 7)Working with proactive partners 13

Contact Us HHCRO Tina CowleyCrispin Jones CERO/CSCO Lisa SimsJon Kirby Steve Lauri (workshop later)Phil Dawson (workshop later) Head of Obligation Delivery Nigel Dewbery