Ofgem Proposes Improvements to Green Tariffs to Improve Protection for Consumers

30th June 2014

Suppliers will need to be clear about whether or not green tariffs provide environmental benefits
Calls for suppliers to improve transparency about what these tariffs offer and provide better evidence that they are supplying renewable power
Announcement is a further step forward following Ofgem's commitment to make the energy market simpler, clearer, fairer
Ofgem is proposing changes to the green tariffs market to ensure that consumers are empowered in making the right decisions. These changes will ensure that suppliers clearly inform their customers and provide evidence of whether or not there will be environmental benefits from a particular tariff.

The voluntary Green Supply Guidelines were developed by Ofgem in 2009 and then implemented through the independent "Green Energy Supply Certification Scheme". This ensured that consumers choosing a certified green tariff could be confident that it provides environmental benefits. Now an increasing number of tariffs that make environmental claims are uncertified, leaving the majority of consumers unable to distinguish between those tariffs with and without environmental benefits.

Following research with consumers and to make these tariffs simpler, clearer and fairer, Ofgem is proposing three key principles that green tariffs will need to follow in the future:

Transparency - To help consumers understand the market better, we are asking suppliers to clearly say if a green tariff does not offer any environmental benefit other than those that consumers already pay for through costs embedded in their energy bill or through taxation. This includes publishing an annual report on how they are providing environmental benefits or being clear to consumers if it doesn't.

Environmental benefits - Suppliers will need to show that environmental benefits happen because consumers chose a tariff and not solely due to subsidies or supplier obligations. This requirement will protect consumers but will also allow suppliers flexibility and opportunities to innovate.

Evidence of Supply - Suppliers must have evidence that verifies where the electricity supplied in a tariff comes from. This means that they must show they have enough Renewable Energy Guarantees of Origin certificates and have retired any other certificates for the same products.

Sarah Harrison, Senior Partner for Sustainable Development at Ofgem said:"We believe these changes will give consumers confidence to make more informed decisions about buying tariffs based on renewable supply."

Following consultation, Ofgem aims for these changes to be fully in place by 1 April 2015.

See the consultation at -
https://www.ofgem.gov.uk/publications-and-updates/final-proposal-improving-domestic-consumer-protection-green-and-renewable-energy-tariffs-market