The Costs of the Energy Company Obligation

Wed Nov 21 15:24:38 EST 2012
By Graham Shuttleworth, George Anstey, and Matthew Mair

A NERA team led by Director Graham Shuttleworth was commissioned by Energy UK to carry out an independent analysis of government estimates of the cost of a new energy efficiency program, the Energy Company Obligation, which will run from January 2013 to March 2015. NERA found that the annual cost could be £2.35 billion or more, significantly greater than the Department of Energy and Climate Change (DECC) estimate of £1.3 billion a year. NERA's report found flaws in the government's cost calculations, concluding that the DECC Impact Assessment had: underestimated the cost of finding customers eligible for support under the program; overestimated how often customers consider installing insulation; and overestimated customers' willingness to pay for insulation in their homes.