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Government signals extension to cap on energy bills

The Government has set out proposals for a shake-up in the energy market which it promises will save customers money.

New legislation is being planned to keep the energy price cap in place beyond 2023 “if needed”, it said.

The price cap on energy bills limits the amount some customers can be charged, if they are on their supplier’s default tariff.

It was designed to protect those who are least likely to shop around for better deals.

Since being introduced in January 2019, the price cap has forced bills down as suppliers race to attract more customers. Around 15 million households directly benefit, saving between £75 and £100 on their energy bills each year.

The Government is also looking at other plans which it hopes will increase competition.

They include trials to automatically move customers from expensive to cheaper deals, unless they opt out.

These will take place in 2024, the Government said.

It also plans to create a framework for opt-in switching, which would actively inform customers on expensive deals that they could be better off elsewhere.

A study by regulator Ofgem showed that customers who are contacted in this way are five to 10 times more likely to switch their energy supplier.

“We want to unleash a wave of competition within the energy market and keep energy bills low so households across the UK can keep more money in their back pockets,” said Business and Energy Secretary Kwasi Kwarteng.

“Although more of us are now shopping around for the cheapest tariffs, the existence of better deals on the market is not sufficient in itself to drive consumer behaviour. That’s why we will make the switching process even easier so we can tackle the ‘loyalty penalty’ and ensure everyone pays a fair price for powering their homes.”

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Government to tackle ‘subscription traps’, ban fake reviews and safeguard Christmas savings cash as it unveils new consumer protections

The Government has announced a new set of wide-ranging consumer protection rules, which will require Christmas savings clubs to safeguard customers’ money, firms to make it easier to cancel subscriptions and regulators to stamp out “dodgy tactics” used to lure online shoppers, plus much more. But the new rules won’t come into effect for a while yet.

The plans were initially revealed by the Government on 19 July before it today (20 July) launched a full consultation on them entitled ‘Reforming Competition and Consumer Policy’. The consultation runs until 1 October. Key proposals outlined include:

  • Changing the law so that Christmas savings clubs have to safeguard customers’ money. This will seek to protect savers in the event a scheme collapses (as happened in 2006 when approximately 120,000 customers lost a combined total of £40 million in the Farepak collapse).
  • Strengthening the legal requirements for subscription contracts. Firms will be required to provide clearer information at sign-up including around auto-renewals.
  • Making it illegal to pay someone to write, or host, a fake review. The Government says it’ll target “bogus online ratings”.
  • Helping regulators curb “dodgy tactics” used to dupe online shoppers. The Government says websites are increasing the collection and use of consumer data, and some are using this insight unfairly to exploit consumers’ behavioural biases, forcing them into purchases they would not have otherwise made.

We run through the proposals in more detail below. For more info on the current protections you get as a consumer, see our Consumer Rights guide.

Christmas savings clubs will have to safeguard customers’ money

In the consultation, the Government proposes to increase consumer protection by amending the Consumer Rights Act 2015. This means legislation would be added that will ensure any prepayments made by customers to schemes, such as Christmas savings clubs, will need to be safeguarded through insurance or trust accounts.

We are checking whether these schemes will also come under Financial Conduct Authority (FCA) regulation and whether payments will be protected by the Financial Services Compensation Scheme (FSCS) too and we will update this story when we know more. See our Are my savings safe? guide for more on this.

Firms will need to make info on subscriptions and auto-renewals clearer

Firms will need to make it explicitly clear in the early stages of the subscription process and immediately after the person places their order, that they are signing up for a subscription service; explaining the contract terms and price per billing period, whether the contract will auto-renew and the minimum notice period for cancellation.

Firms will also need to offer customers a clear choice, making sure they are actively choosing the subscription service. They’ll also have to introduce reminders for customers when the contract is set to renew and make it easier to cancel, for example, by only requiring a consumer to put in essential information and making the process easy and straightforward. This will also need to include providing:

  • The date on which the contract will auto-renew or roll-over, and for how long.
  • The current price of the contract and the price following renewal or roll-over.
  • Any notice period for cancelling the auto-renewal or roll-over and details on how to cancel.

But the Government proposes to exclude any contracts for goods, services, and digital content from the proposals, where an interruption in supply could result in serious harm to consumer welfare. For example, this would likely involve excluding contracts for the supply of medicine or for certain financial services, such as insurance. From 1 January 2022, car and home insurers will be banned from charging renewing customers more than newbies under separate FCA action.

It’ll be illegal to pay someone to post a fake review

The Government says it is considering whether to amend its list of unfair practices to include:

  • Commissioning a person to write and/ or submit fake consumer reviews of goods, services, or digital content. Or;
  • Commissioning or incentivising a person to write and/ or submit a fake consumer review of goods or services.

But there are exclusions – within the consultation, the Government said it would not consider a review fake if it reflects the expert’s, influencer’s or consumer’s genuine experience or impartial opinion of the good or service.

‘Dodgy tactics’ used to dupe online shoppers will be stopped

The Government says it will crackdown on “dodgy” practices online including:

  • “Dark patterns”, which manipulate consumers into spending more than they wanted to;
  • “Sludges”, where businesses pay to have their product feature highly on a retailer’s website while hiding the fact they paid for it;
  • And “drip pricing”, where traders use an appealing headline price to entice customers, then load on additional, unavoidable charges before you reach check-out.

Mediation will be mandatory for firms in the used car and home improvement sectors and there will be speedier resolutions

Arbitration or mediation will be made mandatory for firms in the used car and home improvement sectors. This means consumers can use ADR schemes to resolve issues directly, rather than going through court.

The consultation also proposes halving the eight-week wait that consumers currently experience before they can approach an ADR, such as an ombudsman. The Government says this is so businesses are incentivised to resolve customer disputes more quickly and consumers are faced with less stress and financial pressure.

MoneySavingExpert has been campaigning for over four years for this change – read our full story on the proposal for further information.

The CMA will be given new beefed-up powers to impose penalties

The consultation proposes that the CMA should be able to impose fixed penalties of up to 1% of a business’ annual turnover, as well as being given the power to impose an additional daily penalty of up to 5% of daily turnover while non-compliance continues.

Penalties for individuals would remain capped at £30,000 along with the possibility of a daily penalty of up to £15,000 while noncompliance continues. It will also be able to fine unscrupulous traders that breach consumer law up to 10% of turnover.

In addition, the watchdog will be able to enforce consumer law directly rather than going through a court process, block a wider range of harmful company mergers, and disqualify company directors if they lie to it.

The idea behind this shake-up is to make it quicker and easier for the CMA to secure refunds from companies for consumers. The CMA has received around 100,000 complaints relating to refunds since the start of the pandemic, for example.

Source: https://www.moneysavingexpert.com/news/2021/07/stronger-consumer-protections-competition-watchdog/

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Retrofitting leaky homes would cost £5bn over next four years, UK ministers told

Renovating the UK’s draughty homes to low-carbon standards would cost the government only £5bn within the next four years and would create 100,000 jobs, cut people’s energy bills, increase tax revenue and bring tens of billions in economic benefits, the construction industry has estimated.

Sector leaders have written to ministers proposing a new “national retrofit strategy” that they say would boost a green recovery in the UK and put Britain on track to meet its climate targets.

The proposal comes ahead of the government’s heat and buildings strategy, which is expected to be published soon. Decarbonising the UK’s homes, which are among the leakiest in Europe, and which produce nearly one-fifth of the UK’s carbon output, is a pressing issue as the government seeks cuts of 78% to greenhouse gas emissions by 2035.

Gas boilers will have to be replaced with heat pumps, district heating systems and possibly hydrogen systems, and homes will need loft, window and wall insulation. But the task is huge, and a plan has so far been lacking, with the green homes grant – an insulation scheme launched to fanfare last year as a way to build a green recovery from the Covid-19 pandemic – having been scrapped after a disastrous six months in operation.

In a letter to the business secretary, Kwasi Kwarteng, signed by more than 50 organisations and seen by the Guardian, the Construction Leadership Council set out a strategy that would help people to save more than £400 on their energy bills each year, and improve the health of those in fuel poverty.

“If the UK is to meet our world-leading carbon reduction targets, create jobs and level up, we must address the energy and water efficiency of our 28m homes. Our strategy is a blueprint, endorsed by the construction industry and beyond,” they wrote.

A government-led programme for refurbishing houses between now and 2024 would “support the levelling-up agenda, generate government revenue of more than £12bn, provide additional GDP of more than £21bn and unlock £11.4bn of private capital,” they added.

As well as a short-term strategy for this parliament of recruiting tens of thousands of people to install insulation and low-carbon heating systems in more than 850,000 homes, they propose a long-term strategy that would refurbish all of the UK’s homes by 2040. This would cost £524bn in total, of which the government would need to invest £168bn, and would create 500,000 jobs.

According to the construction industry’s strategy, this would require a mix of policies, including green mortgages to provide the finance for people to install low-carbon heating, stamp duty rebates on refurbished homes, reduced VAT on home improvement works, and loans to landlords to improve their properties.

Low-income households would need government grants, and those on higher incomes should be given access to low interest loans and council tax rebates, paid for by central government, the Construction Leadership Council said. Ministers should also act quickly to enable companies to start training employees and new recruits in the skills needed, the companies said.

“Wide-scale domestic retrofit is essential to the net zero agenda and backing a long-term strategy will help position the UK as global market leader in the low carbon economy ahead of the UN climate change conference [Cop26] in November,” the organisations added.

A spokesperson for the Department for Business, Energy and Industrial Strategy said: “We are already investing in making our buildings more energy efficient, and in order to meet our world-leading commitments on carbon emissions, we are gradually transitioning away from fossil fuel boilers and incentivising the take-up of low carbon alternatives as appliances are replaced, in a way that is fair, affordable and practical. To encourage energy efficiency and lower people’s energy bills, we are considering a range of options put forward by stakeholders and plan to launch a call for evidence to test what will work best for consumers in the UK.”

The government has said that people would not be fined for using their existing gas boilers, or refusing to switch to a low-carbon heating system, and that no one would be prevented from selling their homes if they do not meet energy efficiency standards, as some media reports have claimed.

Jenny Hill, the head of buildings and international action at the Committee on Climate Change, the government’s statutory adviser, said the industry’s proposed strategy was in line with the government’s net zero target. “This report shows a can-do attitude and a clear vision by the construction industry,” she told the Guardian. “It has all the different elements that are needed to come together: skills, consumer education, compliance and enforcement, performance standards, and a framework for market certainty.”

Public backing for the move to low-carbon heating would be essential, Hill added. Many media reports have focused on the difficulties of switching away from gas boilers, and the cost of low-carbon alternatives such as heat pumps. However, without a comprehensive programme for domestic housing there is little chance of meeting climate targets.

“It’s a condition of success that the negative impacts are minimised, that this is fair and equitable, and that people have a say in the process,” said Hill. “This transition definitely can be done in a sensible way that supports people and listens to their concerns.”

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Water company United Utilities to sell £65M renewables business

Water company United Utilities has put its renewables energy business up for sale.
The decision to market the group’s renewable energy business, United Utilities Renewable Energy Limited, was taken in April and the sake process is expected to commence during June 2021. United Utilities said it will involve the sale of assets – primarily property, plant and equipment – with a carrying value of £65.5 million.
The company said the sale will mean it can continue to benefit from the output of the renewable energy assets over the long term, while being able to reinvest sales proceeds in other low carbon projects. The company said in its annual report, “Our portfolio of renewable energy assets is operating satisfactorily and our investment has delivered the returns that we targeted. Having maximised the opportunities to date and established long-term contracts to secure a proportion of our renewable energy out to 2045, we are now looking at how we can recycle our investment in order to achieve further strong returns and take the next steps in our plans to achieve net zero by 2030”.
In 2019/20 UU generated the equivalent of 191GWh of renewable electricity, an increase of 18GWh on the previous year. It did this with a mix of generation from wind, hydro, solar photovoltaics and energy recovery from bio resources (using sewage sludge to power combined heat and power generators).
The renewables business includes a 1MW floating solar array at Langthwaite reservoir near Lancaster, installed in 2018. Last year it installed a 2MW battery alongside solar panels at its Clifton Marsh wastewater treatment works near Preston. The batteries at were provided by Zenobe Energy.

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Commercially viable electricity from nuclear fusion a step closer thanks to British breakthrough

Scientists appear to have solved the exhaust problem for compact fusion power plants, making them more economically-viable.

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Centrica calls on Government to pay homeowners for heat pump switch

British Gas owner says Retrofit Fund would fund household switch to hybrid systems, where homes run on heat pumps plus a backup boiler

British Gas owner Centrica is calling on the Government to fund the rollout of new “hybrid” heating systems, as ministers face mounting pressure to clarify the future of the gas boiler in Britain.

Hybrid heating systems combine a small gas boiler with an air source heat pump. Transitioning to such a system would cut household carbon emissions in the short term, but would rely on green hydrogen replacing natural gas on the gas grid to become a zero emissions solution for home heating.

Centrica, which is the largest installer of gas boilers in the UK, said ministers should launch a Retrofit Fund to help at least 5,000 households change from a traditional gas boiler to a hybrid heating system by 2024.

The fund could target the draughtiest homes, gathering data to help officials decide whether to subsidise a mass rollout of hybrid systems, Centrica said.

The calls follow advice from the International Energy Agency and the CBI, which both say the installation of new gas boilers should be banned by 2025 to keep the UK on track for its net zero emissions target. The Government is reportedly considering a later phase-out date of 2035, but a key strategy document that will set out more details on ministerial plans has been delayed until next month.

 

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British Gas owner Centrica warns financial outlook is uncertain

The owner of British Gas has warned investors it has faced a difficult start to the year, weeks after sacking hundreds of its engineers through a controversial fire and rehire scheme to help turn the business around.

Centrica told its shareholders its financial outlook for the year was uncertain after the impact of the Covid-19 pandemic continued to drag on the business, which has struggled in recent years due to rising competition in the energy market.

In the first quarter of this year, demand for electricity was 15% lower than the year before among the company’s business customers, the company said in a trading update ahead of its annual shareholder meeting. Home boiler repairs and installations were 11% lower than the same time last year because non-essential home service visits were postponed to help prevent the spread of Covid-19.

The slump in home energy services was also due to a long-running series of strikes by thousands of its engineers in response to the company’s plan to toughen its employment contracts in an effort to boost productivity and become more competitive.

Under the fire and rehire plans, most of Centrica’s 20,000 staff were told to accept the new conditions, which would increase working hours for its engineers, or lose their jobs.

The company confirmed that 460 engineers were dismissed last month, as a result of what the GMB trade union has called “a dirty, bullying tactic”. A survey by the union found that more than three-quarters of the public believe that fire and rehire schemes should be made illegal.

Chris O’Shea, who became Centrica chief executive last year, said his plans to modernise the company remained on track and “the difficult, but necessary process to move colleagues on to new terms and conditions is now complete”.

“We are pleased that 98% of UK colleagues have accepted the new contracts which will enable us to better serve the needs of our customers. Although the external environment remains uncertain, our tight focus on cash and on fixing the basics across the group leaves us well placed as we continue the turnaround of our company,” O’Shea said.

O’Shea hopes to save £100m in operational costs this year as part of a plan to stem the steady decline of the FTSE 250 energy company in recent years. British Gas has lost about 3 million household energy customers in the last decade following an influx of successful new energy startups. Centrica crashed out of the FTSE 100 after losing more than 70% of its market value in the last five years.

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‘93% of stakeholders back UK grid charging reform’

Over 90% of stakeholders support reform of the current transmission charging regime to support the UK’s legally binding net zero emissions target, according to a survey by SSEN Transmission.

 

The company said the existing regime currently results in Scottish generators paying a higher cost for use of the transmission network compared to other areas in the UK.

 

For example, while a wind farm in the north of Scotland pays £5.50 per unit of energy, an equivalent wind farm in Wales will get paid £2.80 per unit, it said.

SSEN Transmission said that following the publication of a Transmission Network Use of System (TNUoS) charges discussion paper earlier this year, it has published a follow up summary report this week which analyses and outlines the feedback received from stakeholders on the paper’s findings.

 

It said 93% of all stakeholders agreed that some form of TNUoS reform is required, while 84% told SSEN that TNUoS acts as a barrier to the delivery of their renewable projects in Scotland.

 

SSEN Transmission head of whole system Andrew Urquhart (pictured) said: “Our generation customers and wider stakeholders have been consistently telling us that charges for transmission access in the north of Scotland, as well as uncertainty about future charges, are acting as a barrier to the commercial viability of renewable energy projects.

 

“This, in turn, is making it difficult for us to determine system investment needs for our transmission network.

 

“It is clear from our analysis and engagement to date that there is overwhelming support for TNUoS reform and that urgent action is required to address current barriers in the context of the climate emergency.

 

“Given the level of concern raised by our stakeholders, we hope the feedback outlined in our report will help to encourage action on the need for an urgent review of the current regime to support the UK’s ambitious net zero targets and green recovery goals.”

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Octopus Energy reveals plans to expand into green hydrogen

The Octopus Energy Group is set to expand into the green hydrogen sector, touting the benefits of the technology for “parts of the economy electrification can’t reach”.

It is planning to bring to market a locally distributed ‘green hydrogen as a service’ proposition as part of a new division of the company, Octopus Hydrogen.

Set to launch in Autumn 2021, the green hydrogen is designed to serve sectors such as heavy goods transportation, energy storage, industrial applications and aviation.

The move follows Octopus Energy Group acquiring Octopus Renewables, bringing a portfolio of more than 300 clean energy assets with a combined capacity of 2,800MW across six countries together with the company’s supply business which currently serves two million domestic customers.

Its Kraken platform is now used by 2.2 million customers in the UK alone, with the software used by energy companies including E.On and Good Energy in the UK, and companies like Origin Energy and Hanwha Corporation in Australia.

Together, its large renewables portfolio and Kraken platform means the Octopus Energy Group is “uniquely positioned to drive down costs and help customers drive the transition to a competitive and 100% green economy”, the company told Current± in a statement.

Green hydrogen picks up pace in the UK

Green hydrogen is increasingly drawing focus from both the government and companies looking to invest in a solution for decarbonising challenging sectors. In March, the UK government announced a £171 million Industrial Decarbonisation Fund for green tech projects focused on hydrogen and carbon capture and storage (CCS), which built on the National Infrastructure Strategy announced in November 2020.

Among the nine projects set to be funded by the scheme are Zero Carbon Humber – which will include one of the world’s first at-scale low carbon hydrogen production plants, as well as CO2 and hydrogen pipelines – and the South Wales Industrial Cluster – which will see solar giant Lightsoure bp develop solar powered green hydrogen for direct use in the steel manufacturing on site.

Other energy suppliers are also becoming increasingly interested in the sector, with ScottishPower submitting a planning application for up to 40MW of solar along with up to 50MW of battery storage and a 20MW electrolyser as part of its Green Hydrogen for Scotland project this April. Hydrogen companies are also expanding their operations, with Logan Energy announcing former SSE CEO Ian Marchant is to become chair of the board this week.

In a report produced by the International Renewable Energy Agency in March, it suggested that if global warming is to be curbed, green hydrogen must take over from fossil fuels in a number of sectors. It expects 30% of electricity to be dedicated to green hydrogen and the fuel’s derivatives such as ammonia and methanol by 2050. In order to reach this point, the green hydrogen sector needs to scale up massively, with almost 5,000GW of hydrogen electrolyser capacity needed, up from just 0.3GW today.

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Government reveals true scale of Green Homes Grant farce

ARLA Propertymark says there should be a long term appropriately funded strategy to help the private rental sector and home owners improve energy efficiency and combat climate change.

Its call follows the government revealing figures relating to its ill-fated Green Homes Grant programme which was scrapped recently, a year earlier than expected.

Data released by the Department for Business, Energy & Industrial Strategy shows that despite receiving over 100,000 applications – many from landlords seeking to improve their properties – only a small number of pay-outs were actually made. Since its launch in September 2020, the scheme saw 113,700 applications, with 10,300 measures installed but only 6,700 homes receiving the money from the scheme.

The target for this period had been 600,000 homes to have had measures installed.

ARLA says the data shows that while there is an appetite to make these improvements, this needs to be backed up by sufficient funding and a well-thought-out strategy.

“Without providing landlords and homeowners with incentives and access to sustained funding, it is unlikely that energy efficiency targets for the private rented sector and a reduction in emissions will be met” warns ARLA policy and campaigns manager Timothy Douglas.

“We are hopeful for a new solution to be on the horizon and would encourage cross-departmental working to analyse the scheme’s shortcomings and introduce something more fit for purpose.”

Earlier this month the government announced that £300m previously allocated for the Green Homes Grant would instead go into a programme administered by local authorities, targeted at lower income households.

There was no suggestion this would include any private rental sector properties.

After the GHG scheme was scrapped at short notice the House of Commons Environmental Audit Committee chair Philip Dunne MP – a Conservative – said: “We have been clear all along:the Green Homes Grant was a good initiative but was poorly implemented.

“This government has shown its willingness to be an environmental world leader, but I fear its green credentials risk being undermined by poor policy decisions.

“Actions speak louder than words, and simply abandoning a critically important decarbonisation scheme when cracks appeared sets a poor example in the year we aim to show climate leadership.

“Cutting emissions starts at home. The homes we live in contribute a huge amount of the UK’s greenhouse gas emissions, so undertaking effective retrofits and stemming those emissions is key to reaching net zero by 2050.

“Businesses need to get behind low-carbon housing and have the confidence to upskill employees. Householders need to get behind low-carbon housing and understand how energy efficiency can be enhanced and heating costs cut.

“Above all, the government must get behind low-carbon housing and comprehend the complexity of decarbonising our housing stock, committing to initiatives essential to make net zero Britain a reality.”