Who Pays? Consumer attitudes to the growth of levies to fund environmental and social energy policy objectives Prashant Vaze and Chris Hewett About Consumer Focus

Consumer Focus is the statutory Following the recent consumer and consumer champion for England, Wales, competition reforms, the Government Scotland and (for postal consumers) has asked Consumer Focus to establish Northern Ireland. a new Regulated Industries Unit by April 2013 to represent consumers’ interests in We operate across the whole of the complex, regulated markets sectors. The economy, persuading businesses, Citizens Advice service will take on our public services and policy-makers to role in other markets from April 2013. put consumers at the heart of what they do. We tackle the issues that matter to Our Annual Plan for 2012/13 is available consumers, and give people a stronger online, consumerfocus.org.uk voice. We don’t just draw attention to problems – we work with consumers and with a range of organisations to champion creative solutions that make a difference to consumers’ lives.

For regular updates from Consumer Focus, sign up to our monthly e-newsletter by emailing [email protected] or follow us on Twitter http://twitter.com/consumerfocus

Consumer Focus Contents

Executive summary ...... 4

1 Introduction ...... 8

Background ...... 8

The big challenges of the energy policy debate ...... 8

Research objectives of the Who Pays? programme ...... 9

2 Studies commissioned by Consumer Focus ...... 10

3 Policy context and existing studies ...... 15

Current situation ...... 15

Previous work ...... 15

4 How much do consumers and taxpayers currently pay? ...... 18

Consumer levies – past, present and future ...... 18

The three decades ...... 20

Trends in consumer funding over the three decades ...... 23

5 Consumer attitudes to environmental and social levies ...... 25 Question 1 – Is the public willing to pay environmental and social levies on energy bills? ...... 26

Question 2 – What should be the priorities when using the revenues? ...... 33 Question 3 – Is the balance of contributions between consumer, energy companies and tax-payer right? ...... 39

Question 4 – Who are the winners and losers? ...... 40

Bibliography ...... 46

Glossary ...... 47

Annex 1: Methodology of Accent Deliberative Research ...... 48

Annex 2: Methodology of MVA Stated Preference research ...... 53

Who Pays? 3 Executive summary

This report synthesises findings from four research Achieving environmental and social projects that comprise Consumer Focus’s Who outcomes Pays? programme. These four projects collectively Since the 1990s funding of environmental and detail energy customers’ historic and future social programmes has shifted away from financial contributions to energy policy goals subsidising nuclear decommissioning liabilities to and their views about having to make these funding programmes to install energy efficiency, contributions. The research made use of actual renewable energy and support for the fuel poor. and proposed UK schemes on energy efficiency, By 2020, there will have been substantial growth low carbon generation and social tariffs. in the amount of customer levy funded support relative to 2000. Policy makers face some major challenges in the energy market today. These four reports develop Customers broadly support this agenda of information on the customers' perspective on support for vulnerable customers, renewable these challenges. energy and energy efficiency. Most people either support, or see as inevitable, the building of new ●● Achieving environmental and social nuclear, but there is little support for its subsidy. outcomes: What are customers’ views on how best to decarbonise our energy system and Consumers’ views on energy are not uniform and address affordability? can also be quite nuanced. The public would ●● Fairness and efficiency: What is the fairest like to see more support for vulnerable groups way to collect the costs of capital investment especially households with older or disabled and government programmes from customers, members. There is less support for subsidising shareholders and taxpayers? young families, people on low incomes, or ●● Trust: What would be the best way to establish those who are unemployed. There is inherent trust in the energy market? support for renewable energy and this support strengthens after consumers have been through ● Engagement: What is most likely to drive ● the deliberative workshop process; where they customer engagement in the energy market? are provided with information about the different ●● Affordability: What can the Government do generation technologies. Consumers support about fuel poverty? subsidies for specific technologies like off-shore and to a lesser extent on-shore wind and are While the Who Pays? programme did not set out interested in seeing the money being spent to provide all the answers to these challenges, it cost effectively. There was less support for on- has provided useful evidence which Consumer shore wind in Scotland where the technology Focus believes should steer policy in some clear is more prevalent than in Wales and England. directions. There is support for community energy schemes – but there remain doubts, especially for urban We summarise our findings as follows. customers, about whether this is a viable option in their area.

Consumer Focus 4 Views on customer bill financed energy efficiency There was mixed evidence about whether are mixed: a warm home is regarded as a customers supported an increase in the amount basic right and subsidies to the fuel poor were that they should contribute – the online vote and supported. This is not true of subsidies for high private digital vote suggested an acceptance, cost measures like solid wall insulation that will be but the deliberative workshops suggested there supported through Energy Company Obligation were significant affordability issues for many. The (ECO) or for high cost renewables like solar PV online research provided customers with some on homes. A prevailing question was why should contextual information on renewable energy, energy customers, in general, support such energy efficiency and affordability before they were improvements that accrue to the few, especially asked to choose between energy plans. People’s the affluent few? willingness-to-pay increased with their income and the amount of energy they consumed, suggesting Fairness and efficiency that a more progressively structured levy would also be more acceptable to consumers. Currently, social and environmental levies are around 7 per cent of the average bill, broadly at the same levels as they were 20 years ago. In There was substantial hostility to the carbon floor the decade 2000 to 2010 the share of funding price and auctioned European Union Emissions through bills fell and the proportion funded by the Trading Scheme (EU-ETS) revenues being tax-payer rose. The current policy is to greatly retained by Government. Consumers regarded increase the customers’ contribution to costs these as ‘stealth taxes’. There was clear public through the introduction of ‘carbon taxes’1 and support for these tax revenues to be used to pay increase the share of electricity generation that for some of the energy challenges. is aided by a price support mechanism. Since the liberalisation of the energy markets in the Overall consumers believe more of the money late 1990s there is no mechanism to control or being raised from consumer levies needs to be regulate the amount of profits being earned by devoted to supporting vulnerable groups. This generators or suppliers. Price regulation only could be done by broadening the reach of the exists in the monopoly network businesses. Warm Home Discount (WHD), or by ensuring more of the energy efficiency investment is Both of the consumer research projects revealed targeted to the homes of the fuel poor. Structuring people’s acceptance of customer levies, the levies in a more progressive way would also particularly when presented alongside the social be popular. Allowing companies to pass on the and environmental benefits they will deliver. But levies as a flat rate to all consumers is the least people see it as crucial that companies and acceptable method to the public, and further Government also play their part by accepting investigation of ideas such as a rising block tariffs lower profits or paying for some of the policies (such as those used in California) also has support through general Government funding. if the vulnerable can be properly protected.

1 From 2012 electricity customers will pay a carbon floor price and will be passed on the auctioned price of EU emission trading scheme which the generators have to pay the Government Who Pays? 5 Trust Engagement As other studies have shown, there is There is potential for greater engagement from substantial distrust of energy companies and of consumers if energy companies are seen to Government's and the regulator's ability to control contribute more to the costs of investment and their behaviour. A small proportion of people do more for vulnerable customers. In terms support the renationalisation of the industry. of consumer engagement in the market itself, Consumer Focus asked about whether energy there was more than a degree of cynicism over prices should be re-regulated so that Ofgem whether switching suppliers makes any difference. determines the allowed level of profits earned by Consumers expressed some lukewarm support for companies. Ofwat uses such regulation of prices more information on how their energy bills are spent, in the England and Wales water sector. There was but also admitted that they did not read or use the little disagreement with this idea but most people information already given to them on their bill. did not really understand what that might mean in practice. The present idea that competition in Affordability supply of energy allows consumers some form The desire to make the cost of the social and of control over how much they pay and thus environmental policies in energy fair for vulnerable discipline the behaviour of suppliers was not seen groups, both in terms of how the money is raised, as credible. and how it is spent was an important theme in both the consumer surveys. There was particular concern that energy companies should be making a ‘fair’ contribution, Our modelling agrees with Government that the and considerable suspicion that excess profits overall package of changes will in most scenarios are being made and paid to shareholders, rather help the average bill payer. However, in reality than being invested into the future. These views the concept of the average bill payer is a fiction – were only reinforced when presented with data on some customers will be eligible to receive benefits levels of profitability. like subsidised energy efficiency and discounts on tariffs or micro-renewables, but many will not. Consumers regard the present scenario of high and widely publicised profits, increases in customer tariffs, levy-funded incentives on companies to invest in renewables and the need for support for vulnerable households as evidence of a broken market. The sentiment ‘the energy companies can just kind of do what they want’ captured the views of many. This belief that companies are acting unfairly and with impunity is souring people’s preparedness to pay for sustainable energy.

Consumer Focus 6 The difference in the bills between the likely ‘winners’ and ‘losers’ from the package of changes means that ‘losers’ will pay an average of £279 per year more than ‘winners’. Some important issues are raised, in particular for households in vulnerable positions that do not qualify for support under the current rules which are often restricted to low income pensioners. Many poorer households such as single adults under-60 are also ‘losers’, but do not qualify for support on any of the currently used definitions of vulnerability. Some specific groups fare badly because of the way in which the levies are being raised. Those who rely on electric heating are hit harder than those that heat their homes with gas since most of the charges are loaded on to the electricity bill. Also those in the private rented sector require extra mechanisms to ensure landlords improve the efficiency of their properties.

More needs to be done with the current package of measures to protect consumers in vulnerable positions. If investment could be accurately targeted towards energy efficiency in the homes of the fuel poor the overall package would raise fewer affordability issues. To do this the targeting proxies would need to be made less restrictive and permit a greater range of households to be eligible for support.2

2 Consumer Focus believes that a proportion of the revenues from the ETS and Carbon Price Floor, which are currently a tax on consumers, should be spent on energy efficiency, particularly for those in fuel poverty. See: http://bit.ly/SnBS4p Who Pays? 7 1 Introduction

Background More recently tax on the carbon content of electricity – the EU Emissions Trading Scheme The UK’s electricity industry was privatised in (EU-ETS) and the soon to be introduced carbon 1990 and its gas industry in 1986. This hasn’t price floor have further increased the price meant the Government has stepped aside from consumers pay. energy policy – far from it. Public policy interest in energy security, energy affordability (especially for vulnerable households), the need to reduce The big challenges of the greenhouse gas emissions and to develop secure energy policy debate and sustainable energy sources means that This report draws together the findings of the four Government has always intervened in the market. research projects within Consumer Focus’s Who Over the years, Government has subsidised Pays? programme. In commissioning the work, companies and consumers to help meet the costs we were seeking evidence to answer some of of home insulation and investment in renewable the big challenges currently facing energy policy energy, support the storage and safe disposal of makers. Ones to which Consumer Focus needs nuclear materials and on occasion even bailed out answers to effectively represent consumers as the struggling generators.3 future direction of the energy market is set. In our view, these challenges are: As well as such direct subsidies, Government has made use of regulatory obligations on ●● Achieving environmental and social energy firms requiring them to deliver social and outcomes: What are customers’ views on how environmental outputs. Energy suppliers raise best to decarbonise our energy system and the money needed to finance these programmes address affordability? from their customers. Such use of customer bills ●● Fairness and efficiency: What is the fairest is not new. The practice was introduced soon way to collect the costs of capital investment after privatisation to help fund nuclear energy’s and government programmes from customers, backend liabilities and the early capital grants shareholders and taxpayers? for renewable energy.4 But they are becoming ● What would be the best way to establish increasingly important as we move towards more ● Trust: trust in the energy market? expensive energy efficiency measures and a wider adoption of low carbon electricity, and as grant ●● Engagement: What is most likely to drive funding from the Government is withdrawn. customer engagement in the energy market? ●● Affordability: What can the Government do about fuel poverty?

3 British Energy was the largest generator of electricity in the UK but had to be bailed out and nationalised in 2004 to prevent its insolvency 4 Grants for energy efficiency include Warm Front, the non- fossil fuel obligation grant subsidised the deployment or renewables before the Renewable Obligation Consumer Focus 8 The Who Pays? programme has produced a body 2 What criteria should be used when of evidence that goes some way to answering these setting decarbonisation priorities? challenges, but does not cover all of this ground. Over time the levies have been spent on different priorities including nuclear power, supporting Section 2 of this report explains the methodology renewable electricity, investing in energy efficiency of the four projects. Section 3 describes some and providing support for those in fuel poverty. of the earlier work by other researchers on these Do people’s attitudes to these issues change their issues. Section 4 presents information on how opinion on how much the levies should raise? the balance of spending between consumers To what extent should that then inform decisions and taxpayers on environmental and social about the criteria for choosing the UK’s most programmes has and will have changed in the appropriate decarbonising strategies? period 1990 to 2020. 3 Is the balance of contributions Section 5 assembles the evidence presented by our between consumer, energy companies research against the sub-questions, set out below. and tax payer right? Support can be provided through different Research objectives of the sources of funding. What should the share of Who Pays? programme contribution be from tax funds, consumer bills and energy companies and their shareholders? This When designing the programme we were further informs decisions on fair ways to recover interested in answering a narrower set of costs and, by extension, how to increase trust questions than the ones outlines above. The four in the market. research questions we set the programme are listed below. 4 Who are the winners and losers? The distributional impact of levies and taxation, 1 Is the public willing to pay the levies? in combination with how the funds are spent The public attitudes research work we has a huge impact on the fairness and public commissioned was designed to assess acceptability of the policies. The research models customers’ opinions about whether, and to the impacts on different groups. The results are what extent, consumers should fund public important for Government fuel poverty policy. policy goals through levies. This focused on their willingness-to-pay the levies, when taking into account the social and environmental benefits the levies deliver. A good understanding of these views will go a long way towards establishing a fair and efficient way to recover the costs of decarbonisation. Some of the evidence also presents ways to establish greater trust in the energy market.

Who Pays? 9 2 Studies commissioned by Consumer Focus

Between October 2011 and March 2012 The Who Pays? programme used a variety of Consumer Focus commissioned four projects approaches: desk research, workshops and within the Who Pays? programme. The programme internet surveys to achieve its goals. The four sought to understand how the use of levies on projects5 were: energy bills to achieve public policy goals: ●● Deliberative research into consumer ●● affected different consumers attitudes to social & environmental taxes ●● had changed over time and charges ●● Consumers' willingness to pay social and The research also gauged customers’ views environmental charges and preferences about whether their energy bills ●● Impact of future energy policy on consumer should be used to fund measures. The goal of the bills research was to: ●● Past and future trends in environmental and ●● model credible scenarios on the future costs of social levies social and environmental policies on customer The boxes on the following pages provide more bills and assess their incidence on different detail on each of the projects. types of household and in particular on households in or at risk of fuel poverty ●● understand consumer priorities regarding preferences and ‘trade-offs’ on how the charges are levied, the relative value to consumers of the social and environmental outcomes and views about fairness and affordability

Many of the findings have relevance outside the energy sector. The water sector is also increasingly concerned about affordability issues, and the rail network has to face the cost of investing in more energy efficient and lower carbon transit infrastructure, often selecting routes to meet social objectives to ensure the viability of sparsely populated parts of the country.

5 http://bit.ly/VrOQyh Consumer Focus 10 Box 1 Deliberative research into consumer attitudes to social & environmental taxes and charges – undertaken by Accent Research

Consumer Focus commissioned Accent to Consumer Focus and Accent prepared stimulus organise three deliberative workshops to material that they presented to the audience analyse consumers’ views on existing and at various points of the workshops. This future environmental and social levies on energy stimulus material provided context or technical bills. Consumers were also shown a short TV information to inform the discussions. At three documentary about energy bills, community points in the day consumers were electronically renewables and energy efficiency schemes. polled using individual handheld devices. The workshops were run in Reading, Cardiff The same poll questions were used at the and Glasgow during the weekends of February beginning and end of the day allowing us to see 2012. Accent invited 30 consumers to each how attitudes had changed as a result of the workshop. During recruitment participants deliberations. A different set of questions was were informed that they would be talking about used in the middle of the day. The electronic energy. The workshops sought to understand voting pads allowed anonymous votes. consumers’ views on: The day was structured into four sessions: ●● the use of charges on consumer bills, as opposed to general taxation or shareholder ●● The first introduced the objectives of the funds, to pay for environmental or social workshop and challenges facing energy objectives policy – ie depletion of fossil fuels and a rise ●● the acceptability of using consumer charges in gas imports, climate change, affordability for different environmental and social and security of supply problems ●● The second debated the policies that have ●● transfers between different classes of been announced by Government to address consumer implied by such charges these challenges and the projected impacts on consumer bills. Participants were asked ●● the structure of the charges (ie a flat rate, a rate proportionate to usage, or rising block whether it was right that consumers should tariffs) pay ●● The third set out different structures of A total of 82 consumers participated in the charges (ie per household, per unit of three workshops. Discussions took place at energy used or a rising block tariff) and the separate tables for each of three consumer consequences if costs were instead borne segments: environmentally motivated (EM), by the individual taxpayer (ie a rise in VAT or fuel poor (FP) and general population (GP). A income tax) number of people were selected who lived in ●● The final session talked about the existing rural locations, of whom one or two were off the levies on energy bills and the levels of gas grid. profitability in the industry

Who Pays? 11 Box 2 Consumers' willingness to pay social and environmental charges – undertaken by MVA Consultancy

MVA was commissioned to investigate The research’s objective was to elicit consumers’ willingness-to-pay social and consumers’ willingness-to-pay through their environmental charges on their energy bills. energy bills for: Energy consumers were presented with hypothetical annual energy bills (domestic ●● low carbon electricity generation (renewable gas and electricity) where the level of the bill and nuclear) varied alongside the amount of social and ●● social tariffs (ie discounts or subsidies to environmental outcomes delivered by a given targeted vulnerable customers) energy plan. This technique, known as Stated ●● energy efficiency improvements for others Preference provides quantifications of the trade offs consumers say they would make in terms Two experiments were run. The first was of changed spending on energy in exchange designed to test preferences between an for different amounts of social or environmental energy plan that provided low carbon electricity outcome. Some of the outcomes were enjoyed (either renewables or nuclear), energy efficiency by the whole nation or in some scenarios for or social discounts to vulnerable households. their local communities.

A second experiment was run asking In order to elicit views from a representative customers to choose between different low sample of consumers, a mixed online and carbon generation options and to provide face-to-face approach was adopted for the insights into consumer preferences for fieldwork. A series of checks were run to community renewable initiatives (to compare exclude respondents who did not appear to the potential benefit of local jobs and local have engaged with the questionnaire in line sustainability against the hypothesised loss with the tests the researchers applied. A total of amenity from local visibility impacts) and of 700 customers provided usable responses also consumer attitudes towards different in the online panel and a further 100 provided energy efficiency options. These varied the supplementary face-to-face interviews to amount of households that benefitted, the cover households without internet access. nature of the households that benefitted This provided a robust basis for estimating from targeting and the depth of energy willingness-to-pay valuations. efficiency improvement achieved.

Consumer Focus 12 Box 3 Impact of future energy policy on consumer bills – undertaken by the Association for the Conservation of Energy and the Centre for Sustainable Energy (ACE/CSE)

This research aimed to improve our ●● To extend the analysis in the DECC review understanding of the distributional impacts on distributional impacts of costs of the of energy prices and the associated costs to policies to allow a more detailed study of the consumers of energy policy. The consultants impacts on those in, or at risk of, fuel poverty reviewed the recent report on distributional ●● To extend the DECC analysis to look at the impacts of energy policy from the Department different impact of policies between those of Energy and Climate Change (DECC) (2011) who are beneficiaries of the measures, and the overall impact on consumers published such as Warm Home Discount (WHD) or by Committee on Climate Change (CCC) energy efficiency measures within the Energy (2011). ACE/CSE assessed the sensitivities Company Obligation (ECO) and those who of the assumptions and worked out the do not benefit (but might also be defined as distributional impacts for different categories of being fuel poor) consumer other than spending deciles (which DECC had already undertaken). ACE/CSE addressed these questions using their two models: Distributional Impacts Model for Policy and Strategic Assessment The specific research objectives were: (DIPMSA), the model used by DECC within ●● To discover what the differences are in the its distributional analysis, and Housing Stock starting prices and the projections of price Optimisation Tool (HSOT), which can assess the change from 2010 to 2020, and what impact impact of energy efficiency improvements and this has on the results policy costs upon the magnitude and incidence of fuel poverty. ●● To find out what the impact of different evidence sources for the assumptions which underlie the energy efficiency measures The two approaches are complementary. is. The DECC analysis is based on cost DIMPSA is an energy consumption based curves and policy costs through impact model and HSOT based on energy need, thus assessments, while the CCC assumptions offering results pertaining to actual bill changes are based on their supply side costs as and those households in fuel poverty. evidenced through cost curves

Who Pays? 13 Box 4 Past and future trends in environmental and social levies – undertaken by (ACE/CSE)

This short study sought to quantify the costs The report does not perform a cost-benefit of historic energy and climate change policies analysis (CBA) of the individual policies from from 1990 to 2010, modelled costs between the householder or the economy’s perspective. 2010 and 2020 and examined how the burden However, CSE’s DIMPSA model has been used has shifted between taxation and energy bills to assess the impacts of measures-based (all costs are shown in 2010 prices). The study policies on consumers' energy demand, eg looked to answer the following questions: through the installation of insulation via the Carbon Emissions Reduction Target (CERT), or ●● What is the historic burden of environmental the generation of electricity from photovoltaic and social policies and to what extent (PV) via the FiT. have these costs been recovered through consumer energy bills? The paper includes an Annex which looks ●● Which policies have had the greatest impact at the burden of costs the FiT poses to on the price households pay for energy? consumers in more detail. The costs of the FiT ●● What additional impact would the feed-in will be estimated for both the proposed rate tariff (FiT) have had on consumer bills in the and the previous rate, exploring the impact on absence of the recent cut in FiT rate? bills if the industry had been free to expand at a higher rate. The paper does not attempt to quantify the cost of energy efficiency delivered through product policies or regulations. It therefore excludes the extra costs of installing high efficiency boilers, higher building standards or removal from the market of high wattage tungsten filament light bulbs. We recognise that these increase the immediate cost to consumers but deliver overall lifetime savings through lower power or fuel costs.

Consumer Focus 14 3 Policy context and existing studies

Current situation These initiatives are designed to help reduce greenhouse gas emissions and fund There are a number of planned and existing environmental investments while ensuring that the Government initiatives which will change the price disadvantaged and lowest income consumers are households pay for gas and electricity in the UK. protected. According to Government’s estimates, These include measures to: the overall impact of these measures on the ●● reflect the externality of carbon emissions average household consumer will be to reduce (Carbon Floor Price and EU ETS) energy bills despite price increases because of the reduction in the amount of energy needed through ● cross-subsidise social support for vulnerable ● greater energy efficiency. This slightly positive energy users thorough the WHD result is dependent on the efficacy of energy ●● fund the installation of energy efficiency efficiency policy and particularly on reductions in measures, currently through the CERT, in the electricity use through product standards. future the ECO and Green Deal (GD) ●● fund investment in renewables (such as hydro, In the current economic climate, and with rising solar PV, wind) and micro-CHP through the wholesale gas prices, there is a real concern FITs and the Renewable Obligation (RO) in some quarters about the impact of these measures on the general public. For instance: will the improvements in energy efficiency really materialise; what about homes that can’t be treated or people who can’t afford new appliances; what if price rises are higher than anticipated? This research explores public attitudes to these policy changes.

Previous work Aside from the work that Consumer Focus commissioned, there are a number of other research papers in this area, undertaken by Government, independent public bodies and academia. We specifically designed the research to build on the existing body of work and, where appropriate, critique previous work in order to create a more complete body of evidence on which public policy decisions are being made.

Who Pays? 15 Box 5 Why did we use deliberative and Stated Preference techniques? Our studies on public opinion went beyond The findings are qualitative in nature, although snapshot polling and used two more some polling on specific questions is carried out sophisticated techniques: deliberative at the beginning and end of the day to see how workshops and Stated Preference. As these opinions might evolve over the debate. are complex issues we felt that there should be an element of engagement with the public Stated Preference techniques use online alongside simple opinion testing. surveys which provide some information alongside specific questions about willingness- Deliberative research provides participants with to-pay for services, public policy goals etc. The a wide range of evidence in different formats. It surveys are undertaken on a representative also gives space and time for in-depth informed sample of the public, last around 30 minutes discussion, consideration of pros, cons and and are designed to test people’s trade offs trade-offs, and a move toward considering between different characteristics of the choices options from a ‘citizen’ perspective (ie thinking and their differences in price. The findings are about society as a whole) as well as from an quantitative in nature. Statistical analysis is used individual (ie consumer or personal) point of to derive a range of ‘willingness-to-pay’ for the view. It allows consumers to discuss their options being tested. personal experiences and attitudes, to develop ideas and opinions and to work collectively to We commissioned qualitative and quantitative prioritise options and generate new ideas. studies looking at the same issues to provide a more robust evidence base for the findings.

Two major studies on the impact of policy There have been relatively few recent pieces of measures, past and present, on consumer bills research looking at public attitudes to consumer were published towards the end of 2011. DECC levies on energy bills, and none published on released its report, Estimated impacts of energy the specific proposals being put forward by the and climate change policies on energy prices Government affecting energy bills up to 2020. We and bills, in November 2011. This was quickly wanted to build on earlier deliberative research followed by the CCC report, Household energy published by the Green Fiscal Commission (GFC)6 bills, the impacts of meeting carbon budgets, on attitudes to green taxes, as this was largely in December 2011. The findings of both reports based on hypothetical future green taxes rather relied heavily on particular assumptions about than actual Government policy proposals. future energy prices and the effectiveness of policy interventions. Our work unpicks those assumptions, applies more detailed modelling and a wider set of future scenarios, and so builds on the evidence base already in the public domain.

6 Public opinion on a green tax shift. Green Fiscal Commission. Briefing Paper 3. June 2009 Consumer Focus 16 The GFC work found that public opinion became The willingness-to-pay methodologies have been more sympathetic to green taxes when the used in a couple of surveys in recent years, such uses of the revenue were better understood. as one by National Grid on transmission charges7 We wanted to test this hypothesis further using and Energy Saving Trust on fiscal incentives for deliberative techniques in combination with the energy efficiency investment.8 Both of these quantitative Stated Preference methodology. reports looked at quite narrow issues, where as we wanted to use the methods available to test opinion and attitudes to the full breadth of energy levies that will soon apply to customer bills.

7 Attitudes to Energy Transmission. Brunswick Research commissioned by National Grid. July 2011 8 Willingness to pay. Quadrangle commissioned by Energy Saving Trust and DECC. April 2009 Who Pays? 17 4 How much do consumers and taxpayers currently pay?

Consumer levies – past, The situation is similarly complicated for taxpayer funded schemes. Around a third of Government’s present and future tax-take (£550 billion in 2011) is income tax Consumers and taxpayers have been supporting and employee National Insurance, and a large environmental and social policy objectives in proportion of other taxes, such as VAT (£86 the energy system for more than two decades. billion), fuel duty (£27 billion), council tax (£25 In their report, Environmental and social levies billion) are also paid by households.9 – Past, present and future, analysts from ACE/ CSE describe how much has been spent on In this synthesis report, unlike the original environmental and social policy objectives from ACE/CSE report, we chose to show the full 1990 to the present day. The report then goes spending by all taxpayers and all customers on to use Government projections of wholesale on programmes and not just the spending by energy prices and policies on how much will be households. This eases comparison between spent to 2020. Finally, it looks at the trends of how decades where the proportion funded by tax- much of this spending is raised from the taxpayer, payer and energy customer varies – since how much from the consumer via bills and how we could not suggest a straightforward way this has changed over time. of apportioning taxes between households/ employees and businesses, comparable to the In the analysis below we quote figures regarding more straightforward apportionment of energy how money that was paid – by taxpayers and customer charges between households and customers – to support social and environmental business customers. energy policy objectives. Taxes and energy bills are paid by both households and businesses. The In the ACE/CSE report the analysts display only researchers had to decide how much of the cost the share of spending carried out by households. of various programmes to allocate to households The figures on programme expenditure in this and how much to businesses. This is far from report, which include costs borne by businesses, clear cut. Some measures like EU-ETS are raised are therefore higher than those in the ACE/CSE in line with consumption so households are likely report. ACE/CSE apportioned 34.5 per cent to pay a third of costs as they consume a third of of the costs of tax-payer funded measures to electricity. Programmes like CERT can be funded household customers. This is the proportion however the energy supplier chooses, but they of taxes raised from income tax and employee are likely to be funded from household bills as the National Insurance – ie the explicitly progressive obligation put upon each supplier is in line with the parts of taxation policy. number of household customers.

9 Table C2, HM Treasury finance statistics http://bit.ly/SG3LGA Consumer Focus 18 Figure 1 Cumulative expenditure on social and environmental programmes by customers and taxpayers (£ billion/decade)10

2011 to 2020

Energy bill 2001 to 2010

1990 to 2000

2011 to 2020

Taxpayer 2001 to 2010

1990 to 2000

0 20 40 60 80 100 Nuclear Renewables Energy efficiency Social subsidies Other

Figure 1 reveals three distinct eras in funding From 2011, consumer-funded support energy policy objectives. For the whole of the for renewables and energy efficiency has 1990s, the majority of spending on energy policies mushroomed, and taxpayer support for historic was collected through levies on consumer bills nuclear liabilities has continued to decline. (the Fossil Fuel Levy) and was used to subsidise the nuclear industry. Our analysis stops in 2020. According to current plans any new nuclear power stations Only in the late 1990s was some revenue will be funded by the Electricity Market Review’s allocated to renewable electricity. During the FiT Contract for Difference (FiT CfD) but these 2000s the nuclear subsidy was switched to are not likely to be evident on consumer bills taxpayers and energy consumers instead helped until after 2020. to finance energy efficiency and renewables.

10 For this chart, the ‘other’ category includes revenues from ETS auctions, Carbon Floor Price, Electricity Market Reform and Coal Aid Who Pays? 19 The three decades Substantial sums of money had to be collected to support the running (and closure) of the The sections below describe the transition over Magnox reactors and also to establish funds for the three decades in more detail. the decommissioning of the newer AGR reactors and Sizewell B. All the nuclear power stations 1990s: Consumer funded nuclear were originally scheduled to be privatised as part support of National Power plc. In 1989, in the run-up In the first post-privatisation decade (the 1990s) to privatisation, Government decided to retain there was relatively little taxpayer or customer the nuclear reactors within the public sector levy funded support for energy policy objectives. (MacKerron 2012) due to the rapid escalation As shown in Figure 2, a total of £13.5 billion was in the forecast costs of backend liabilities spent on social and environmental policies over undermining the overall share offer. Eventually in the decade. The vast majority of the spending 1996 the newer power stations were privatised as supported the nuclear industry with £12.3 billion a stand alone company British Energy. Part of the being raised via consumer bills and less than £1 proceeds from the customer levies was paid into billion in total going towards supporting renewable a segregated fund to help finance British Energy’s energy and efficiency measures. decommissioning liabilities. The liabilities for the older Magnox reactors remained with the public sector as part of UKAEA.

Figure 2 Cumulative spending on energy policy objectives 1990 to 2000 (£ billion)

0.7 Taxpayer other

0.3 Customer nuclear Customer renewables 0.2 Customer energy efficiency

12.3

Consumer Focus 20 A small share of the revenue from consumer Over the noughties the nuclear industry received bills was used to finance capital grants to nearly £40 billion in support from the tax-payer renewables in a series of rounds of Non-Fossil instead of customers. This was paid as grants to Fuel Obligation grants (NFFO). These financed the Nuclear Decommissioning Authority and also the UK’s early on-shore wind, electricity from covered restructuring costs when British Energy landfill gas and sewage gas schemes. Unlike entered into severe financial difficulties in 2001 later programmes, subsidy was paid as a one-off and had to be nationalised. (It was sold again in capital grant when the project was completed 2008 to EDF.) rather than on-going price subsidies like the FiT or RO. Tax-payers also spent £2.5 billion insulating the homes of those in fuel poverty. Consumer levies 2000s: Taxpayer funds nuclear, were used to fund growing support for energy consumer funds renewables and efficiency (£4.3 billion) and renewable energy efficiency (£7.1 billion). A further £12 billion was raised from consumers via the EU ETS. In total, energy policy Figure 3 shows total taxpayer and consumer has cost £66 billion, two thirds of which was paid funded support rose more than fivefold in the for by tax-payers. noughties compared to the nineties. The Fossil Fuel Levy was envisaged as a time limited surcharge on consumer bills. It was intended to expire in 1998 when the electricity market was liberalised to level the playing field between nuclear and other non- subsidised technologies. The phase-out of the Levy actually took place in 2002.

Figure 3 Cumulative spend in £ billion on energy policy objectives from 2001-2010

39.8 2.5 Taxpayer nuclear

0.4 Taxpayer energy efficiency Taxpayer other 7.1 Customer renewables Customer energy efficiencey

4.3 Customer other

12.0

Who Pays? 21 2010s: Consumer funding for The big change over the period 2011 to 2020 renewables and efficiency becomes compared to previous decades will be the growth dominant in ‘Customer other’. This cost is expected to come to around £38 billion over the decade. It Figure 4 shows the present decade will see is dominated by energy taxes: carbon floor price a near complete shift back to raising funds and the auctioning of EU-ETS proceeds raising from consumers. Of the £105 billion spending the price of electricity paid by households and almost all – £93 billion – will be raised from businesses. customer bills. Of this £13.3 billion will go towards energy efficiency, £39.4 billion to renewable energy, and £2.6 billion to reduce Following consultation, Budget 2011 announced bills for vulnerable consumers. Only £12 billion the introduction of a carbon price floor from 1 of tax-payer funding is being projected, almost April 2013. The floor will start at around £16 per entirely for the nuclear industry. A small amount tonne of carbon dioxide (tCO2) and follow a linear is also being spent on energy efficiency as path to target £30/tCO2 in 2020 (both in 2009 the Warm Front scheme is wound down. In prices). Phase III of the EU-ETS starts in 2013 2011 and 2012 £100 million tax-payer funding when Government has said it will auction all the is scheduled to be spent on renewable heat emissions permits used by electricity generators. support. We have made no allowance for spending on renewable heat after 2012.

Figure 4 Cumulative spend in £ billion on energy policy objectives from 2010-2020

11.9 0.1 Taxpayer nuclear 38.1 0.2 Taxpayer renewables Taxpayer energy efficiency Customer renewable Customer energy efficiency Customer social subsidies Customer other

39.4

2.6 13.3 Consumer Focus 22 In phase II of the EU-ETS (2008 – 2012) only Trends in consumer funding over the a small proportion of EU-ETS permits needed three decades by the generators was auctioned, the majority Figure 5 below, from the ACE/CSE analysis, shows were freely allocated. This means that the money that today’s level of customer levies, at just under the customer pays for EU-ETS is paid to the 6 per cent of the gas and electricity bill in 2011, for Government rather than energy industry. household customers were the norm for the best part of two decades, with only a short period of Tax-payer funded energy efficiency has declined 2001-2004 where they dropped significantly below from £2.5 billion in the 2000s – chiefly the Warm this. This was a period when support for nuclear Front grant scheme – to just £0.2 billion in the came from the taxpayer and before renewable 2010s. Consumer Focus is campaigning for energy and energy efficiency programmes had the proceeds of carbon taxes to be spent on reached the scale they are at now. But the growth enhancing the energy efficiency of homes lived in over the remainder of this decade is without by fuel poor households.11 precedent. Customer levies will rise to 11 per cent of bills by the end of this decade.

Figure 5 Proportion of the average consumer’s bill spent on energy policies (annual and five year rolling average) Percentage 12

10 Levies as % bill (annual)

8 Levies as % bill (5 year rolling average)

6

4

2

0 1990 1995 2000 2005 2010 2015 2020

11 As part of the Energy Bill Revolution campaign. http://www.energybillrevolution.org Who Pays? 23 There are some changing trends which can be The most recently constructed nuclear power observed from the data. First, the proportion station, Sizewell B, was built between 1987 and of support coming directly from consumers 1995 under public ownership. The Government’s will increase back to the levels of the 1990s policy to build new nuclear power stations will and will continue to increase to over 10 per see renewed energy customer support using cent of the bill in the latter half of the current a contract for difference FiT. So, consumer decade. Because the cost of energy has risen so funding for nuclear is proposed to return, though dramatically since the early 1990s, this implies probably not at any significant scale until 2020. that the overall scale of the programmes will also greatly increase. Finally, the revenues to Government from the EU ETS and Carbon Floor Price will become more The consumer is undoubtedly being asked significant over the decade, while direct taxpayer to contribute more both absolutely and as a funding for energy efficiency in low income and share of his or her bill. Secondly, the support vulnerable homes will have been eliminated for nuclear liabilities is falling from the levels completely in England. experienced in the 1990s and 2000s, while the renewable energy and efficiency programmes are receiving more.

Consumer Focus 24 5 Consumer attitudes to environmental and social levies

This chapter summarises evidence from the Figure 6 shows results from the MVA research. Accent and MVA projects on consumer attitudes It found without prompting that most consumers to social and environmental charges. The chapter are unaware that their energy bills include levies to is organised around the key research questions pay for social and environmental programmes. identified earlier in section 1.3. Only a small proportion of consumers correctly In opinion polls the British public express a identified the existence of levies on their energy willingness-to-pay more for the environment bill (1 per cent knew of the subsidy for low through their energy bills. In 2000 according to the income household energy bills, 1.9 per cent for British Social Attitudes Survey 43 per cent of the renewables and 2.3 per cent for energy efficiency). population said that they would pay ‘much higher A smaller proportion (mistakenly) thought prices’ for ‘the sake of the environment’. This compensation for coal miner’s industrial health support has waned as the country’s economic problems and nuclear decommissioning was difficulties have become a more important funded through energy bill levies. consideration: people’s willingness-to-pay fell to 26 per cent in 2010.

Figure 6 Responses to Q: ‘Apart from the cost of the energy you use, what else, if anything, do you pay for through your bill?’ Awareness of current social and environmental initiatives None 67.0%

Other 8.9%

Don’t know 23.4% Subsidy for coal miners suffering from industrial illness 0.1% Subsidy for low income household energy bills 1.0% Subsidy for nuclear decommissioning 0.4%

Renewable energy fund 1.9%

Energy efficiency fund 2.3%

0 10 20 30 40 50 60 70 Percentage Fieldwork by MVA, spring 2012 (N=798)

Who Pays? 25 After an explanation of the levies more people ●● Customers are not happy with the balance expressed an awareness about them – 31 per of costs borne by shareholders, government cent of the sample was either fully (9 per cent) or and consumers. Why are companies allowed partially aware (22 per cent) of the levies. to make large profits while customer prices continue to rise? This distrust sours their But simply increasing the degree of transparency preparedness to fund policy costs even if they might not be the answer. Customers are already can afford to pay confronted with a bewildering amount of ●● People vary in their support for the different information and there are real constraints on the energy policy objectives. Some favour social people’s time for consumer decision-making. A issues, others environmental issues and even number of energy companies already provide a within these broad categories there are more breakdown of the energy bill so customers can detailed disagreements such as who precisely see how much of their bill is spent on networks, are the deserving poor, which exact low carbon energy, profit, running costs and ‘green taxes and technology merits financial support and with other charges’. In the Accent research consumers what other conditions attached professed a desire for greater transparency, but they admitted that they did not read materials that The differences in people’s responses we heard in energy companies already send them. the deliberative workshops and saw in the Stated Preference reflected these differences between Question 1 – Is the public individuals. As a result views expressed in the deliberative workshops were often quite nuanced, willing to pay environmental and dependent on government and shareholders and social levies on energy also playing their part. bills? Because of the low level of engagement in energy Consumers’ willingness to pay for public policy issues, people’s views developed over the course objectives through their energy bills is affected by of the day in the deliberative workshops and so several underlying drivers: initial views changed either as factual information ●● Most consumers are broadly sympathetic to was presented or through discussion with others the Government’s energy policy objectives. in the group. There is an acceptance and understanding that investment in renewables, energy The table in Figure 7 was shown to the efficiency and support for the fuel poor are all deliberative workshop towards the end of the needed, and that consumers should make a day. For the first time we revealed how much contribution customers actually contributed in environmental ●● But, there are genuine affordability issues for and social levies. many households. So while they might, in principle, agree with the objectives some feel they cannot afford to contribute, and most that cannot afford to contribute more

Consumer Focus 26 Figure 7 Where your money goes on the current bill

VAT 38% Social, environmental and efficiency 12% Distribution Profit and investment Produce gas/generate electricity Energy supply and billing 5% Where this money % £ goes Subsidies for 1 11 7% vulnerable homes 20% Renewables 1 13 19% Carbon tax 2 25 Energy efficiency/ 3 40 Average energy bill = £1,260 reduce usage

When presented with the above chart, members The reactions below give individuals feelings about of the public were surprised that only 7 per cent of the breakdown of costs in their energy bill. today’s bill was spent on environmental or social levies. At that stage of the day they had spent ‘If we’re paying it, we’re paying it. I’m glad several hours speaking about energy policy something is going towards it. It would just and had also watched a short documentary be nice to know that something was going on the cost of renewables. Most expected towards it.’ the share of their bill needed to subsidise Environmentally Motivated (EM), Rural (R), social and environmental policy to be higher. C1C2D, Cardiff Political and media criticism of the policy, often ‘I think if bills were lower... I think there would exaggerating costs, has clearly affected public be more of a willingness-to-pay. I think in a opinion. Many wanted to take the information recession everybody’s really stretched, bills home and share it with family and friends, they have gone up massively and at the moment to were genuinely surprised. pay these extra things, you see the big profits of the companies, that all added together is just a recipe for disaster.’ General Public (GP), Rural (R), ABC1, Reading

Who Pays? 27 ‘I think my views have changed now that I know Interestingly, customers expressed different that we are paying it. I didn’t know before. Are opinions in their private responses to a polling you happy to pay this £1 a week? Well, we’re question (Accent electronic votes) or on the paying it anyway.’ online survey (MVA). In the open discussion at Fuel Poor (FP), Urban (U), C2DE, Glasgow the deliberative workshops, customers’ prevailing view appeared to be one of reluctance to accept During the deliberative discussions the prevailing higher energy bills than they are currently facing. view was that consumers should not be expected Much of this is down to the increases in energy to pay more. A minority of EM customers, and prices in recent years and the impact of recession also some individuals on higher incomes were on living standards and disposable income. prepared to pay more. Those in fuel poverty often However, the same people were privately, as said they couldn’t afford to pay more even if they recorded on their electronic vote, more receptive wanted to. to contributing more on their bills.

Table 1 Responses to the electronic polling questions undertaken at start and end of day in the deliberative workshops organised by Accent Intervention Support Support Net Support before debate after debate after debate per cent per cent per cent Willing in principle to pay more on energy bill for 46 62 + 16 greater investment in renewable energy Willing in principle to pay more on energy bill for 57 67 + 10 greater support for vulnerable groups Willing in principle to pay more on energy bill for 31 36 + 5 greater investment in making UK homes more energy efficient Willing in principle to pay more on energy bill for 75 73 - 2 greater investment to make your own home more energy efficient Prefer local scale renewable energy projects to large 61 52 - 9 scale national projects Prefer some or all to be paid instead of bills through 64 38 - 26 general taxation Prefer some of all to be paid through energy company N/A 96 N/A and shareholder profits

Base: 88 responses at three deliberative workshops February 2012

Consumer Focus 28 In Table 1 we see people were also more Real life consumers will not necessarily be supportive of the principle of paying through prepared to pay what they say they will pay in increased bills at the end of the deliberative such ‘Stated Preference’ experiments as there are workshops than at the beginning. In the electronic other competing demands on their incomes which poll customers said they were prepared to pay are not fully reflected in their response. None the more on their energy bills to support vulnerable less the approach gives useful information about people (57 per cent start of day and 67 per cent at their relative preferences between options. the end), support for renewables was less than 50 per cent at the start of the day but grew over the Different segments of customers vary in their day to 62 per cent after deliberations. willingness-to-pay. We were curious to see whether differences in customers’ individual A similar picture emerged from the MVA Stated circumstances: income levels, size of bill, gender Preference research. Customers were asked to and age, mattered. rank four energy plans consisting of a bill for gas and electricity and also different amounts of social By far the greatest polarisation was according or environmental outcome. Before the customers to people’s innate views about social and made their choice, the rationale for the spending environmental issues. We asked our sample was first explained to them. This might have questions about their attitude to various environmental conditioned the customers’ response. People’s issues. These responses – seen in Figure 8 – were willingness-to-pay for the environment and social combined to categorise the customers sampled levies of £120 per year per dual fuel customer into different groups: the common man/woman was higher than the current rate of around £88 (48 per cent of sample), altruistic futurists (19 per per year per dual fuel customer. The range of cent), environment before humans (16 per cent), willingness-to-pay in the MVA research varied immediate individualists (9 per cent) and humans depending on the way the revenues were used, before environment (9 per cent). For all groups the but it was between £95 and £177 per year. On low carbon generation plan we offered was worth average, the energy customers surveyed by MVA less than the social and energy efficiency plans – were willing to pay an extra: customers with a predilection to environment tended to favour energy efficiency over social tariffs. ●● £177 per annum (+11.3 per cent) on their energy bill in order that 3.25 million vulnerable households receive an annual discount of £184 ●● £168 per annum (+10.8 per cent) on their energy bill in order that 1.2 million additional households benefit from energy efficiency improvements annually ●● £95 per annum (+5.2 per cent) on their energy bill in order that 7 million households are powered by low carbon energy renewable or nuclear electricity

Who Pays? 29 Figure 8 Average willingness-to-pay for social and low carbon generation plans by attitudes and values (2012 values)

Willingness-to-pay per annum 400

350

300

250

200

150

100

50

0 The common Immediate Humans before Environment Altruistic man/woman individualists the environment before humans futurists -50

-100

-150

-200 Estimated annual energy bill Low carbon generation plan Energy efficiency plan Social energy plan

MVA Stated Preference polling, spring 2012

Consumer Focus 30 But customers’ level of bill (Figure 9) and age The views of the older customers were perhaps (Figure 10) also gave statistically significant pragmatic – they were likely to immediately benefit differences in willingness-to-pay. For example, from social programmes usually targeted at customers with higher bills and bigger incomes older customers. The quote below captures their were willing to pay more. The over-65s were far lukewarm views about energy efficiency. ‘Haydn’s less willing to pay more for renewables or energy and our age group the pay back would be too efficiency than those between 16 and 35, but they steep’ (Cardiff EM) were just as willing to pay for social energy plans.

Figure 9 Average willingness-to-pay for social and environmental energy plans by current bill level (2012 values)

Willingness-to-pay per annum 200

180

160

140

120

100

80

60 <£1,000 £1,000 to £1,499 £1,500 to £1,999 >£2,000 Estimated energy fuel bill Environment energy plan Energy efficiency plan Social energy plan

MVA Stated Preference survey, spring 2012 (N=798)

Who Pays? 31 Figure 10 Average willingness-to-pay for social and environmental energy plans by disposable household income (2012 values) Willingness-to-pay per annum 250

200

150

100

50

0 16 to 34 35 to 64 65 plus Age band Environment energy plan Energy efficiency plan Social energy plan MVA Stated Preference polling, spring 2012 (N=798)

Pulling all of this evidence together, the public accepts the need for continued payment of levies to ensure investment in low carbon energy, to fund improvements in energy efficiency and to support those in fuel poverty. Consumers have an innate altruistic impulse, but there are other emotional pressures, for instance not being taken advantage of by companies, and budget constraints too. This support is not uniform across all segments of the population. Older people, people with lower energy bills (possibly also with low incomes) and ‘individualists’ are least likely to support levy funded programmes.

Consumer Focus 32 Question 2 – What should be Table 2, from the Stated Preference research, shows the group’s willingness-to-pay for the the priorities when using the three different types of policy support. Social revenues? supplements such as WHD were the most popular, followed by energy efficiency and It will come as no surprise that consumers do lastly low-carbon generation. (The MVA work not have a uniform view about which social did not distinguish between own-home and and environmental issues Government should other-people’s home for energy efficiency prioritise. But there were some themes that we improvement.) can report here. From the deliberative workshops we found some support for continued consumer contributions to all the policy objectives we The results indicate that energy consumers tested at about the level currently being paid. state they are willing to pay more on their energy Table 1 (above from the Accent work) shows bills for defined outcomes, where the need for customer’s ‘willingness in principle to pay more action and the associated benefits of investment, on their energy bills’ to support energy efficiency are clearly explained to them. There is a clear (customers’ own homes and cross-subsidies question about how stated willingness-to-pay for other people’s homes), social tariffs and should be interpreted if consumers are not environmental programmes. actually being asked to contribute real money and take into account alternate pressures on their household budget. In Table 1 people’s relative rankings across the four themes before and after deliberations were (listed in order of support): improving energy efficiency in In the focus groups when the questions were their own homes; support for vulnerable people; being piloted one person commented: ‘Well I’d support for investment in renewables; and do Option D [energy efficiency plan] to make improving energy efficiency in UK homes. my conscience feel better as I’d be doing a little bit. I’d really like to do Option B [low carbon generation plan] but, financially, that would need There was an interesting dichotomy in people’s looking at.’ preparedness for their energy bills to be used to fund energy efficiency improvement in their own homes, and those of the general UK home. The deliberations did not change the overall orderings of these four headings but it did change the absolute numbers quite significantly. The day’s deliberations caused sharp rise in support for renewable and support for the vulnerable.

Who Pays? 33 Table 2 Willingness-to-pay extra on the energy bill for different policy attributes Attribute Specification Willingness-to-pay Social 3.25 million vulnerable households £177 bills reduced by £184 Low-carbon electricity 30 per cent of electricity low carbon £95 Energy efficiency from 1.2 million new households per year £168 their energy bills homes insulated /year MVA Stated Preference polling, spring 2012 (N=798)

Care must be taken in scaling these numbers Funding to support the most vulnerable to higher or lower amounts of renewables or consumers was clearly the most popular public energy efficiency outcomes. Customers will not policy goal in both the MVA and Accent surveys. necessarily be prepared to pay twice the premium Views on energy efficiency were more complex, on their bills if twice the public policy outcome and are set out later in this section, but overall is promised. Customers’ marginal willingness- came out as the second most favoured objective. to-pay for insulating more homes, building more From the Accent work the vast majority of people low carbon generation or subsidising tariffs might supported the idea of financing the costs of decline if more is asked from them. The analysts improving their own home’s energy efficiency designed the Stated Preference questionnaire so through the energy bill, but rejected the idea of people’s willingness-to-pay for each plan could funding energy efficiency for other able-to-pay be broken down into the different attributes of the consumers’ homes. plan. We found for the Low Carbon Generation Plan people were prepared to pay + £61 per At the outset, investment in low carbon generation annum simply for the principle that there would was seen as the responsibility of the energy be ‘low carbon generation’ initiatives – ie helping companies, rather than the consumer. But over to secure future wellbeing and an additional the course of the day there was a substantial shift £43 (+ 3.0 per cent) per annum if the low carbon in support towards renewables. The MVA research generation was offshore wind, rather than nuclear discriminated between support for nuclear and generation. For an energy efficiency plan of roughly renewable generation. Over half of the sample the same scope as the current CERT, customers agreed or strongly agreed with the statement were prepared to pay £168 per annum. This is that ‘Nuclear power is essential to meeting of the much more than the actual costs of CERT. UK’s future energy needs’. But this support did not translate into support for subsidising nuclear For the Social Energy Plan consumers were power through the energy bill. prepared to pay £166 per annum for a social energy plan, regardless of the number of households assisted and another £5.60 per annum per million vulnerable households helped with a discount (of approximately £180 per annum per beneficiary). Consumer Focus 34 We discuss these views in a little more detail In the deliberative discussions, however, it below. became clear that this willingness was not a blank cheque for Government to pay to whom Views on support for vulnerable it sees fit to pay, and people had views on the consumers classes of vulnerable groups that should be eligible for support. Pensioners and households ‘And it does seem astounding that some people with disabled members were generally thought are spending that much of their income on of as deserving support. But approval for keeping warm.’ elderly receiving support was not universal. Cardiff GP Some people knew and disapproved of the fact In both surveys, the most popular policy objective the Winter Fuel Payment was paid to wealthy in terms of bill funding was providing support pensioners not in fuel poverty. Consumers did not for vulnerable consumers. Affordable energy regard households with unemployed members, was seen as a clear priority since the capacity households with children under the age of five or for families to keep warm was seen as a basic households that lived in a cold part of the country right. In the Stated Preference survey, this was as legitimate criteria for receiving special cross- expressed through a willingness-to-pay of £166 subsidies from other consumers. per year, vastly in excess of the £10 per year that the WHD regime actually costs contributing Views on energy efficiency households. During the deliberative workshops The theme of supporting vulnerable consumers 57 per cent of the participants said they would was carried through into views on energy efficiency. be willing in principle to pay more on their energy The headline numbers in the two surveys, backed bill for greater support for vulnerable groups. After up by the deliberative discussions, revealed debate, this figure rose to 67 per cent. strong differences in attitude depending on which households are deemed to be receiving the ‘It depends how fuel poverty is defined because support for insulation. Broadly speaking energy you have the Winter Fuel Payment so if the efficiency is clearly seen as important. While there money went to fuel payment then there’s people is support for levies to pay for insulating the homes who definitely don’t need it but are receiving it of the vulnerable and the fuel poor, there is far less and they’re not going giving it up but if it was support for energy customers to finance energy defined and means tested then I’d be more than efficiency improvements in homes of better-off happy to pay for it.’ home owners. Reading EM

Who Pays? 35 The MVA Stated Preference survey produced Consumer Focus has recently published work a willingness-to-pay of £168 per year for the arguing there are significant further macro- average energy efficiency plan. Put another economic benefits from using proceeds from way, they were prepared to pay an extra 6.3 carbon taxes on grants for energy efficiency per cent a year on their energy bill for every one of fuel poor household’s homes. The MVA million homes that received energy efficiency research suggests such a policy would meet with improvements. This figure is double the amount consumers’ approval. consumers presently spend on levies. When asked to choose between different types of In the deliberative workshops, there were clear targeting of energy efficiency investment, there views that most people expected owner-occupiers was a higher willingness-to-pay for funding and landlords to fund their own improvements efficiency investment for pensioners and disabled in energy efficiency. There was a high degree consumers, than other groups. of familiarity with loft insulation and cavity wall insulation and most people who had experienced Breaking down this result, consumers said they it had a favourable view. But customers doubted would be prepared to pay £3.80 per annum improving their homes’ energy efficiency would percentage point reduction in carbon emissions protect them from future energy price rises. from domestic energy use. The bulk of their willingness-to-pay is support for the concept of ‘I don’t mind getting more efficient, buying more energy efficiency. The figure of £3.80 is much efficient appliances and doing the loft insulation less than the £6.00 per annum that is the value and everything but once you’ve got all that, of gas saved if they really did reduce energy use you’re still stuck with a rising energy bill because by 1 per cent. of costs that you’re got no control over like the price of gas.’ People’s willingness-to-pay, as reported in this Reading GP survey, for an energy-efficiency programme funded through energy bills would be lower than When asked if they were willing to pay more on value of the savings from avoided gas use. In the the energy bill in order to fund greater investment deliberative workshops run by Accent, only 31 the efficiency of their own home, 73 per cent per cent of people were willing to pay more on the supported the idea. The logic of the Green Deal energy bill for greater investment in making UK that the costs of investments in improving a homes more energy efficient (rising to 36 per cent home’s energy efficiency be recovered through the after debate). beneficiary’s energy bill was strongly supported. But during discussions this support melted away once people heard they’d be charged commercial In the MVA work the researchers tested the effect rates of interest. When informed that interest of broadening the reach of the energy efficiency rates might be as high as 7 per cent support programme by increasing the number of homes evaporated. Many homeowners commented they treated – there was a much stronger relationship could extend their mortgages and this would be a between increasing the reach of the programme – cheaper way of financing the investment. £78.50 per annum per million households brought into the ambit of the programme – than the depth of the programme. Consumer Focus 36 Consumers were not happy with the idea of Views on low carbon generation taking on more debt and were suspicious that (renewable and nuclear) and banks and other financial intermediaries would community energy profit from their efforts to reduce their energy ‘I think if we’re running out of energy and we’re use. Consumers were not averse to the idea going to have to import 80 per cent in 10 years of regulations being used to force owners or whatever then... saving energy now is as of properties to be improved. They asked if important as actually trying to generate new something was in the country’s overall interests ways.’ why should some people make the effort, and Glasgow FP put up with the inconvenience of insulating their homes, if other people did not? They also believed There is clear acceptance that more investment that Government could and should stop such in low carbon generation is required for climate free-riding behaviour. change and security of supply reasons. However, the results from Accent’s electronic polling show When the ECO was discussed, consumers less support from consumers to pay for this supported targeting the investment to vulnerable through energy prices than subsidies to protect consumers or those in fuel poverty. There was less the vulnerable households, or energy efficiency support for solid wall insulation subsidies through of their own homes. In the deliberative polling, ECO. Most people were unfamiliar with solid 46 per cent of people were willing to pay more wall insulation. Even the aware environmentally on their energy bill for greater investment in motivated group had misgivings and saw it as renewable energy, although this increased to 62 expensive. ‘We’ll to have a big skin put on the per cent after the debate. These groups were outside of the house with cavities – it would cost not asked specifically about nuclear power, God knows, £20-£30,000 which I haven’t got.’ although it did feature in discussions. The And they were concerned that some of the money Stated Preference survey revealed a willingness- would go towards high cost energy efficiency to-pay of £95 per year to increase investment in measures in the homes of better off people: low carbon energy, which included renewable and nuclear. Customers were asked about their ‘I guess it’s just this pre-1930’s thing… it preferences between investment going to depends who’s living in them. If I’m reasonably nuclear power or off-shore wind. In a straight wealthy, why shouldn’t I pay or why should Tom comparison, consumers were willing to pay pay for my insulation?’ £43 per year more on their bill for support Reading EM off-shore wind production, but nothing extra for nuclear power.

Who Pays? 37 While all consumers believe there should be In the Accent poll there was strong support for greater investment in renewables, especially local community energy over national energy to ensure the security of supply and reduce generation but this support reduced over the the reliance on imported gas, the deliberative day. In deliberations many urban customers discussions revealed a diversity of reactions as to could not easily imagine local opportunities for whether the consumer should be asked to pay community energy, apart from solar PV where for this through energy bills. Many felt that such they lived. (Customers were made aware of the investment was more the responsibility of the high levels of subsidy that paid for solar PV.) In energy companies themselves than consumers. rural areas community energy (community scale This was allied to their view that profits from wind, biomass and small hydro) seemed a more energy companies are too high. viable option. In the Stated Preference work – there was again support for community energy ‘Yes, but predominantly I think the energy largely on the basis of the local employment companies should do it first off from some of opportunities it opened up. But there was the their profit.’ belief that community energy projects would Reading EM increase people’s awareness and encourage them to consume less. However, a minority, support an increase in subsidy for renewables as long as the cost is shared between consumers, company profits and In the MVA work there was no significant the Government via taxation. willingness-to-pay for community energy at a higher level of subsidy than large scale national renewable projects – community energy was In the deliberative workshops we asked consumers expected to ‘wash its face’ financially. about their attitudes to local community based energy generation within their local authority boundaries where they were likely to be able to see the facility but also benefit from local employment opportunities. Consumers were also shown a short TV clip about a Scottish community energy scheme. The scheme had succeeded in motivating people to reduce their energy use and also make an efficient and integrated use of different renewables electricity technologies.

Consumer Focus 38 Question 3 – Is the balance Consumer Focus presented evidence to the deliberative workshops saying that energy of contributions between companies made surpluses of around 20 per consumer, energy companies cent,12 which were either used for investment or and tax-payer right? paid to shareholders. We asked people about their views about this figure. Most consumers did The balance of funding streams between not feel sufficiently informed to express an opinion consumer, tax payer and energy companies was on whether this level of energy company profits raised spontaneously in Accent’s deliberative was acceptable or not. workshops throughout the day. Discussion was deliberately suppressed by the moderators until They looked to Government and the regulator to the last session of the day. The majority view was make this judgement, but didn’t trust their ability that the responsibility for social and environmental either. In the deliberative workshops the staff from policy objectives should be shared equally Consumer Focus presenting the data were asked between consumers, Government and energy for a breakdown on how much was invested in companies. However, there was a universal renewable and network improvement and how mistrust of the companies: not only were they much went to shareholders. They were shocked failing to meet their share of the costs, but also that the regulator did not demand to see a fatalistic belief that Government and regulators detailed information on actual investment costs were toothless in their capacity to make them pay and outturns. their share.

Over the course of the day the complexities Attitudes to company profits of the market were discussed. A few people This was only tested in the deliberative workshops. thought that some profits are necessary to reward Consumers’ instinctive view was that the energy innovation and improvements in services. But companies were earning excessive profits and few people saw much evidence of innovation or the companies’ shareholders should pay for all meaningful competition between suppliers. Even the investment in renewables and other costs of consumers who had switched registered their modernising the system. The idea that companies disappointment saying companies soon increased were offered specific incentives and subsidies their tariffs making their efforts to select a better to incentivise them into investing in renewables tariff pointless. appeared bizarre:

‘If you have a vegetable stand and you’re sitting there and you’re selling vegetables to everybody, when that vegetable stand runs out and you can’t get no more vegetables, I’ve got 12 to go somewhere else and find it.’ Consumer Focus arrived at this figure by examining the major companies' (the Big 6, National Grid and Drax) annual Cardiff FP accounts and using the quoted figures on UK Earnings Before Interest and Taxes. It excludes profits earned by the distribution companies and generators other than Drax and Big 6. Cornwall Associates have reviewed our approach and suggested some improvements Who Pays? 39 Customers also understood that if companies Despite this, after deliberations, support for taxes were asked to contribute more to the costs of (specifically through income and VAT) fell back to renewables and the other policy objectives, these 38 per cent and that for bill funded increases to costs could just be passed onto the consumer. 62 per cent. This is largely because of a strong After the debate, 96 per cent of the participants dislike of VAT and income tax. There was a would prefer some or all of the investments in general suspicion of the Government’s ability to social and environmental objectives to be paid spend money wisely and some cited project over- through energy company profits. The conclusions runs by the public sector. Carbon taxes – either of discussions about company profits often come the carbon floor price or EU-ETS – were seen as down to a strong desire from consumers for stealth taxes. greater transparency about profits and how the companies spend money raised from levies, in combination with a tougher regulatory oversight to Question 4 – Who are the ensure profits cannot become excessive. winners and losers?

‘I don’t think it’s necessarily that the price should The Who Pays? programme goes further than come down; I think they should actually be Government and CCC analyses to show the forced to actually invest their profits a little bit distributional impacts in more detail and we hope into actually helping the environment with the it can help policy-makers target support more money that they are taking.’ effectively to vulnerable groups, as well as design Reading EM the way the revenues are raised in ways that are less regressive and least damaging to vulnerable Tax payers or bill payers? groups. In terms of the balance between customer funding and tax payer funding, there are different views, Overall distributional impacts depending on what the revenues are used for. According to ACE/CSE’s research The Impacts of Also opinions changed quite markedly during Energy Policies on Consumer Bills the main factor the course of the workshops. Consumers initially determining whether bills rise or fall over the next preferred environmental and social payment decade is the fossil fuel price uncertainty. Whether to be collected through taxes rather than bills. prices go up or down is almost completely (Throughout we made clear that only taxes paid unrelated to energy policy. In their project ACE/ by household taxpayers ie income tax and VAT CSE use Government’s High, Central and Low were being discussed in the workshop.) Before fossil fuel price scenarios (DECC, 2011). debate, 64 per cent of the sample preferred the use of taxes for such funding, against 36 per cent The cost of policy also depends on how smartly who favoured energy bills. In discussions it was it is designed – to test the sensitivity to this accepted that taxation is a more progressive form ‘Policy Mix 1’ presents a combination of policies of revenue raising than customer levies. delivered at higher costs and/or which result in a lower/less cost-effective delivery of demand reduction measures.

Consumer Focus 40 ‘Policy Mix 2’ presents the opposite situation, with Figure 11 shows that by 2020 in five out of six policies delivered at lower costs and/or which scenarios the average bill payer is better off than result in a higher/more cost effective delivery of under the counterfactual. This echoes Government demand reduction measures. These six policy findings. There is however no such person as and price scenario combinations are contrasted the average bill payer – there are groups that with the ‘counterfactual situation’ where no new benefit from social tariffs and energy efficiency policy measures are in place beyond 2011. (This improvements and there are those that do not. is different to the counterfactual DECC selected, The losers however still have to contribute to the which uses a theoretical state of affairs in which overall costs of the policy through their energy bill. there is no climate or energy policies at all.) Overall, the value of savings by 'winners' from new policies is likely to exceed the increased costs by 'losers' in most of the six scenarios.

Figure 11 Mean energy bills by scenario, 2011-2020. Dashed lines indicate counterfactual bills (excluding policy costs and impacts)

Mean energy bill (£/a) 1,800

1,600

1,400

1,200

1,000

800

600 High policy costs, High fuel price –Total Bill Low policy costs, High fuel price –Total Bill 400 High policy costs, Central fuel price –Total Bill 200 Low policy costs, Central fuel price –Total Bill High policy costs, Low fuel price –Total Bill 0 Low policy costs, Low fuel price –Total Bill

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: ACE/CSE

Who Pays? 41 In addition, both deliberative workshops and the Programmes like the small-scale FiT are not Stated Preference work looked at distributional designed with a social objective in mind but in issues and specifically highlighted the concerns practice they do have a social dimension. This and views of vulnerable groups or those at arises as a side-effect of the design of the policy. risk of fuel poverty. We have found a degree of In practice most of the support has been paid for commonality in the pattern of winners and losers the installation of solar PV. To qualify, households from the Government’s programme as currently need to have a roof which they are allowed to alter designed, and the public’s preferences. The and access to capital to meet the upfront cost of public broadly favours support for households the panels. This means that poorer households, with elderly or disabled members, but does not tenants or people living in flats are less likely to favour special treatment for young families or benefit from the scheme. unemployed people. There are already significant and increasing Details of winners and losers differences in the effects of the environmental and The modelling by ACE/CSE provided a social levies, and the programmes they support, sophisticated analysis of the distributional on different households. Levies are largely raised impact of the levies and an analysis of the likely from electricity bills rather than gas bills. They beneficiaries. The complexity of levy funded currently make up 12 per cent of the electricity bill support programmes – nowadays with highly and by 2020 this figure is likely to rise to 25 per prescriptive eligibility criteria – make it hard to cent (in the central fuel price scenario). present a coherent pattern of winners and losers – since they differ markedly under each programme. People with large electricity bills bear the costs of the programmes, whereas many of the energy The new Carbon Saving Obligation under the ECO efficiency measures are focused on heat savings. will for the first time provide substantial support Households that use electricity to heat their to homes with solid wall insulation. How should homes bear a disproportionately high burden of this new class of beneficiaries be considered the levies and are less likely to benefit from the in terms of the dimensions traditionally used in programmes the levies fund. distributional analysis like household income, region or tenure? And how should the combined Some vulnerable households are losers from effect of all these programmes be presented? the shift from tax-payer to energy bill funded programmes. Energy consumption is positively correlated with income, but there are significant numbers of poorer, high-consuming households that are worse off. The ACE/CSE team also carried out modelling of the delivery of the programmes to gauge their impact on fuel poverty.

Consumer Focus 42 The results showed that the current suite of In Figure 12 we see on average that ‘winners’ are policies will only make small reductions in fuel likely to pay £279 less for their energy than losers poverty, irrespective of whether the current across all six scenarios by 2020, although in the definition of fuel poverty is used, or that high fuel price scenario this difference increases recommended by Professor John Hills in his markedly to £400. This emphasises the need for recent report (Hills 2012). very good targeting of benefits towards those in vulnerable groups to either reduce or remove The analysis looked at the expected difference in them from fuel poverty. bills between households receiving support (either energy efficiency improvements or energy bill support), and those who would not (but would of course also be paying the levies).

Figure 12 Mean total energy bill in 2020 for the ‘winners’ and ‘losers’ by scenario

Average energy bill (£) Losers 1,800 Winners 2020 Average 1,600 2011 Average bill for 'Winners' 1,400 2011 Average bill for 'Losers'

1,200

1,000

800

600

400

200

0 Policy Mix 1 Policy Mix 2 Policy Mix 1 Policy Mix 2 Policy Mix 1 Policy Mix 2 High fuel price Central fuel price Low fuel price

Source: ACE/CSE

Who Pays? 43 Characteristics of ‘losing’ households included The variable charge is tied to the unit price those with homes heated by electricity, those of energy and thus paid in proportion to living in expensive or difficult to treat homes, consumption. Levies for renewable energy and households with single adults under the age of the EU-ETS are charged in a variable manner. 60, and renters with private landlords who refuse Standing charges are more regressive since to improve the energy efficiency of the properties they constitute a larger share of energy bills for they own. Identification of these groups should households who don’t consume much – which help the Government improve the design of the tends to be the in poorer households. The ACE/ whole programme in order to target support for CSE analysis looked at the distributional impacts these groups. of loading more or less of the policy costs on to standing charges versus variable charges. They CSE also made the point that both the found that low income groups would be paying current definition of fuel poverty and the one disproportionately more on their bills if certain recommended by Professor Hills, have flaws. The levies such as the ECO or WHD were recouped as current one is very sensitive to fluctuations in fuel part of the standing charge. price, so the assessment of how many people are removed from fuel poverty is almost completely The deliberative research also considered the dependent on fuel price assumptions. However, distributional impacts of tariffs. We asked the the Hills definition, where a household is fuel workshops to consider different tariff structures poor if both their relative income is low and their and contrasted standing charges, charges required energy costs are higher than the median proportionate to consumption and rising block household’s, is entirely insensitive to a general tariffs – where the price of a unit of energy improvement in all homes' energy efficiency. increases in successive blocks as consumption rises. We showed the workshop illustrative Impact of standing charges and rising charges from California, where the state regulator block tariffs imposes a rising block charge structure on the energy companies. The Californian tariff excludes The way that levies are passed on to consumers some households with vulnerable members from by companies, either as a flat rate addition to rising block pricing. the standing charge, per unit of energy sold or a combination of both, can make a large difference to the impact on vulnerable groups. In the deliberative workshops, consumers At the moment tariffs incorporate a standing tended to prefer levies to be paid on energy charge – paid at a flat rate per bill, or recovered consumption rather than on a per household from the first few hundred kWh of energy use – basis (as is the case with standing charges). and a variable charge. The standing charge is In addition, consumers viewed rising block intended to cover some of the costs levied by tariffs as favourably as charges proportional to transmission and distribution companies and usage. This was not a universal view however. some environmental levies. Some felt that it would unfairly penalise those who could not control their consumption due to having a large family or rented property with poor energy efficiency.

Consumer Focus 44 ‘I agree with the rising block because I think it Variation in attitudes between makes people think more about why they are different social groups above average. And I think, like you said with the There was clear evidence from the Stated fuel, the more you use, so now people consider Preference research (see Figure 13) that when they buy their car how many gallons it willingness-to-pay increased with both income uses to the mile. They think of what they’re and size of energy bill, giving greater potential for using. I think that would make people think well political support for progressively designed levies. why am I over the average.’ Cardiff FP Other differences among social groups included ‘It would depend on your own home position… older people being less keen on energy efficiency through no fault of my own because my house as they didn’t see they would benefit from long was so cold and the higher I burn it and because pay-back periods. Older consumers were also I am working so you are not vulnerable so I more supportive of the social energy plans would actually be even more vulnerable...’ than environmental ones. Similarly, those in fuel Glasgow GP poverty, struggling with bills already, saw the logic of energy efficiency but didn’t want to, or couldn’t, take on new financial commitments. Women gave slightly higher willingness-to-pay answers in the Stated Preference survey to men.

Figure 13 Willingness-to-pay consumer levies by household income bracket

Willingness-to-pay per annum 250

200

150

100

50

0 <£20,000 £20,000 to £49,999 >£50,000 Gross disposable household income Environment energy plan Energy efficiency plan Social energy plan

MVA Stated Preference polling, spring 2012 (N=798) Who Pays? 45 Bibliography

Accent (2012) Deliberative research into consumer Hills, J. (2012) Getting the measure of fuel poverty attitudes to social & environmental taxes and Final Report of the Fuel Poverty Review, CASE charges. Accent, November 2012 Report 72 Centre for the Analysis of Social Exclusion, LSE, London The Association for the Conservation of Energy & the Centre for Sustainable Energy (2012) The MacKerron (March 2012) Evaluation of nuclear Impact of future energy policy on consumer bills. decommissioning and waste management – A The Association for the Conservation of Energy report commissioned by the Department of and the Centre for Sustainable Energy. November Energy and Climate Change SPRU, University of 2012 Sussex

Brunswick Research (2011). Attitudes to Energy MVA Consultancy (November 2012) Consumers’ Transmission. Commissioned by National Grid. willingness to pay social and environmental July 2011 charges – Report to Consumer Focus

Committee on Climate Change (2011) Household The Association for the Conservation of Energy & energy bills, the impacts of meeting carbon the Centre for Sustainable Energy (2012) Past and budgets. December 2011 future trends in environmental and social levies. The Centre for Sustainable Energy. November Department of Energy and Climate Change (2011) 2012 Estimated impacts of energy and climate change policies on energy prices and bills. November 2011 Quadrangle (2009). Willingness to Pay. Commissioned by Energy Saving Trust and Green Fiscal Commission (2009). Public opinion DECC. April 2009 on a green tax shift. Green Fiscal Commission. Briefing Paper 3. June 2009

Consumer Focus 46 Glossary

ACE Association for the Conservation of FiT CfD Feed-in Tariff with Contracts for a Energy Difference AES DECC’s annual energy statement FP Fuel Poor ATP Able-to-pay households, generally GD Green Deal refers to those who aren’t low income GP General Population BAU Business as usual HSOT Housing Stock Optimisation Tool CCC The Committee on Climate Change HVDC High voltage direct current CCL Climate Change Levy IA Impact Assessment CCS Carbon Capture and Storage LCF Living Costs and Food Survey CERT Carbon Emissions Reduction Target, LI Loft insulation the programme that followed EEC 2. MAR Maximum Allowed Revenue CESP Community Energy Savings MTP Market Transformation Programme Programme OECD Organisation for Economic Co- CLG Department for Communities and operation and Development Local Government Ofgem The Office of the Gas and Electricity CFP Carbon floor price Markets CWI Cavity wall insulation OO Owner-occupied DECC Department of Energy and Climate PRS Private-rented sector Change PV Photovoltaic panels Defra Department for Environment, Food RHI Renewable Heat Incentive and Rural Affairs RHPP Renewable Heat Premium Payment DIMPSA Distributional Impacts Model for Policy and Strategic Analysis RIIO Revenue=Incentives+Innovation+Outp uts. ECO Energy Company Obligation RMR Ofgem’s Retail Market Review EEC Energy Efficiency Commitment RO Renewables Obligation EHCS English House Condition Survey ROC Renewables Obligation Certificate EHS English Housing Survey, which has replaced the EHCS ROI Return on investment EM Environmentally Motivated SM Smart Meter(ing) EMR Electricity Market Reform SP Stated Preference ENSG Electricity Networks Strategy Group SWI Solid wall insulation EPC Energy Performance Certificate TDMO Transmission, distribution, metering and ‘other’ costs incurred by suppliers EU ETS The European Emissions Trading Scheme WHD Warm Home Discount FiT Feed-in Tariff

Who Pays? 47 Annex 1: Methodology of Accent Deliberative Research

Three deliberative workshops were undertaken. ●● fuel poor (FP): consumers who have got 30 consumers were recruited to attend each into debt to pay their energy bills and/or live session with an expectation that between 24 in an excessively damp or cold home. During and 30 would actually attend. The numbers of the recruitment interview these consumers attendees were: answered questions that showed that:

Reading 30 –– they often find it difficult to pay their energy bill on time or they are rarely or never able to Glasgow 24 pay their energy bill on time Cardiff 28 –– there are parts of their home that are significantly cold, damp and/or draughty Respondents were recruited to ensure that there –– during the winter they cut back on others was an even representation within each workshop things or got into debt in order to keep of the following consumer segments: warm ●● environmentally motivated (EM): consumers who are more motivated than the general It should be noted that this definition was used population to ensure that their behaviour has a for recruitment purposes and that it is not the limited impact on the environment. During the same definition used by Government to define fuel recruitment interview these consumers agreed poverty with the following attitudinal statements: ●● general population (GP): consumers who are I care about the environment: I use energy –– neither fuel poor nor environmentally motivated efficiently and recycle whatever I can A copy of the recruitment questionnaire is The amount of climate change we have –– included in the full report. The three workshops already experienced is a threat to the world were structured as follows:

Reading Consumer segment General population Environmentally motivated Fuel poor Home location Rural Urban Urban SEG ABC1 ABC1 C2DE Cardiff Consumer segment Environmentally motivated General population Fuel poor Home location Rural Urban Rural SEG ABC1 ABC1 C1C2D Glasgow Consumer segment Environmentally motivated General population Fuel poor Home location Rural Urban Urban SEG ABC1 C1C2D C2DE

Consumer Focus 48 A mix of ages was recruited for each of the Deliberative research provides participants with sessions and within each of the consumer a wide range of evidence in different formats segment groups. Additionally, there were one or and gives space and time for in-depth informed two consumers who are not on the main gas grid discussion, consideration of pros and cons represented in each of the rural sessions. There and trade-offs and a move toward considering were insufficient off-gas grid consumers to provide options from a ‘citizen’ perspective (ie thinking analysis of their views; rather they are contained about society as a whole). It also allows them to within the analysis of rural consumers. consider the individual (ie consumer or personal) perspective. It allows consumers to discuss their No other quotas were set. Other consumer personal experiences and attitudes, to develop characteristics (such as age and gender) were ideas and opinions and to work collectively to allowed to fall out naturally as follows. prioritise options and generate new ideas.

A range of stimulus was used including Cardiff Glasgow Reading PowerPoint presentations covering: Age 18-34 15 9 5 ●● the key energy issues faced by the nation and the definitions for the issues under 35-54 9 9 11 consideration (such as fuel poverty, renewable 55+ 4 6 14 energy, fossil fuels etc) Gender ●● the proposed Government framework for Male 18 7 12 change including information on schemes and Female 10 17 18 the potential impact on the average household bill Incentives of £150 were provided to thank ●● explanation of different ways that could consumers for their time. The sessions started at be used to pay for our renewable, energy 10am and finished at 4pm on the following dates: efficiency and social obligations and needs ●● Reading: Saturday 18 February 2012 ●● explanation of different parties who could pay for these obligations and needs ●● Cardiff: Sunday 19 February 2012 ●● the current situation – including what levies ●● Glasgow: Saturday 25 February 2012 are already imposed on the average consumer energy bill Deliberative techniques were used throughout the day to help consumers fully understand and engage with the complex topics under consideration.

Who Pays? 49 In addition to these PowerPoint presentations, It was important to ensure that all consumers consumers attending the sessions also started the discussions from a similar position in participated in an Energy Quiz and were shown terms of awareness and understanding. However, a short ITV programme entitled: The Cost of given that environmental levies are already used Going Green which was aired on 9 February within the energy market there was a need to 2012. Finally, consumers were asked to vote on assess current awareness levels and how much a number of questions throughout the day. Some additional information should be provided. There votes were repeated at the beginning and end of was a risk that consumers might overstate their the sessions to assess how views changed. willingness-to-pay if they were not aware of the current environmental levies. However, if they were Utilising these techniques and stimuli enabled an made fully aware of the current situation in a way assessment of how and if consumer views and that does not match current consumer awareness priorities evolved and changed through the day there was a risk that the findings would not reflect once consumers became aware of different factors real consumer attitudes. impacting on the energy market as well as the current regime of bill levies and cross subsidies. Additionally, it was likely that awareness of the potential changes would vary among consumers. It should be noted that deliberative workshops There were recent discussions in the media (for are a qualitative methodology. Therefore, the example, BBC news prompted by the release data is not statistically representative of the of the latest analysis by the CCC). Consumers views of consumers in the UK. It is not possible had different exposure and relationships with the to detail the precise proportions of responses media so whilst it’s likely that some (those who on all discussion points, but an indication is are environmentally motivated for example) will given wherever possible of whether the findings have picked up the story and spent some time represent a majority or a minority view from the reviewing and analysing the news stories, and workshops. Additionally, this report highlights even sourcing data, others are less likely to have where differences in response and opinion were engaged with the story on anything other than observed between different types of consumers a superficial level, if at all. Also several energy such as fuel poor, environmentally motivated companies had just announced their profits. and the general public or between the different geographical locations. To help deal with this a benchmark of awareness of the current situation and attitudes/responses Deliberative research permits consumers to to potential changes in taxation was taken consider different options and make more before consumers were provided with baseline informed decisions than is possible from information against which responses to potential traditional consultation methods and helps changes were measured. Electronic votes were the public engage with more complex issues. taken at three points during the day to assess Deliberative research can provide policy makers how and if consumer views evolved as the with an understanding about how the public might discussions progressed. change their opinion and/or behaviours if provided with relevant information.

Consumer Focus 50 A decision was made not to include a vote at the Pre-lunch vote to assess response to subjects beginning of the day asking respondents if they discussed during the morning sessions: would prefer for some or all of the investment to come from energy company and shareholder ●● How strongly do you agree or disagree that profits. There was a concern that consumers energy bills should be increased to fund the would solely focus on this as a means of funding following: (answers on a scale of 1 to 5 where all investment, given what is known about 1 = strongly disagree, 2 = disagree, 3 = neither consumer views of energy companies and their agree/disagree, 4 = agree and 5 = strongly levels of profit. A discussion without this vote was agree) useful in encouraging consumers to consider –– On shore renewable projects where £10 alternative means of investment. Respondents per household per year would subsidise were given an opportunity to vote on the option of sufficient electricity for 600,000 households company and shareholder profits at the end of the and possibly provide community benefits workshop. –– Off shore renewable projects where £10 per household will subsidise sufficient electricity The questions asked were: for 300,000 households

Benchmark digital vote on current awareness –– Solar panels on people’s homes where £10 and attitudes: per household will subsidise installation on 150,000 household Are you willing in principle to pay more on your ●● –– Cavity wall or loft insulation where £10 energy bill for greater investment in renewable per household could pay for insulation for energy? (Yes/No) 600,000 homes Would you prefer local scale renewable energy ●● –– Cavity wall or loft insulation where £10 projects that would bring other benefits (for per household could pay for insulation for example local jobs) but would be visible to 600,000 vulnerable homes the local community or large scale national projects? (Local/National) –– Help for vulnerable households so that it could include families with young children ●● Are you willing in principle to pay more on your in addition to the current help for elderly energy bill for greater support of vulnerable households groups? (Yes/No) –– Increasing the amount of help given to ● Are you willing in principle to pay more on your ● elderly households to pay energy bill for greater investment in making homes in the UK more energy efficient? (Yes/ No) ●● Are you willing in principle to pay more on your energy bill to make your own home more energy efficient? (Yes/No) ●● Would you prefer for some or all of this to be paid instead through general taxation instead of bills? (Yes/No) Who Pays? 51 Vote at the end of the deliberative workshop: Adopting a full day workshop session enabled all voices to be heard from across the financial ● How surprised were you by the policy costs on ● spectrum encompassing those likely to be current energy bills? (1 = not at all surprised – highly affected to those least affected. However, 5 = very surprised) care needed to be taken to ensure that the ●● Are you willing in principle to pay more on your groups were mutually exclusive to ensure all energy bill for greater investment in renewable consumers were with similar consumers. ‘Their energy? (Yes/No) society’ needed to be recreated so that all would ●● Would you prefer local scale renewable talk freely. The full day deliberative workshop energy projects that would bring other benefits workshops included breakout groups that were (for example local jobs) but would be visible to discreet to allow consumers to feel comfortable. the local community or large scale national projects? (Local/National). Repeat of the The three workshops followed the same morning question structure as follows: ● Are you willing in principle to pay more on your ● ●● Presentation and discussion of energy policy energy bill for greater support of vulnerable including fuel poverty, security of supply, groups? (Yes/No). Repeat of the morning carbon reduction and renewables question ●● Presentation and discussion of the ●● Are you willing in principle to pay more on your Government’s proposed framework energy bill for greater investment in making homes in the UK more energy efficient? (Yes/ ●● How to pay and who pays for the investment No). Repeat of the morning question areas ● Presentation and discussion of the current bill, ●● Are you willing in principle to pay more on ● opportunity to fund through taxes or profits your energy bill to make your own home more energy efficient? (Yes/No). Repeat of the morning question Copies of the topic guide and the full stimulus pack are included in the full report. ●● Would you prefer for some or all of this to be paid instead through general taxation instead of bills? (Yes/No). Repeat of the morning Throughout the report we have included quotes question to illustrate the commentary. These are shown in italics and reference the location and consumer ● Would you prefer for some or all of this to be ● segment summarised as follows: paid instead through company and shareholder profits instead of bills? (Yes/No). Repeat of the Fuel poor = FP morning question General public = GP Environmentally motivated = EM

These research findings should be treated as indicative of consumer views rather than as a robust representation of them.

Consumer Focus 52 Annex 2: Methodology of MVA Stated Preference research

This annex provides an overview of the research The quantitative survey, which formed the design for the MVA Stated Preference research, heart of the research, was formed on a series commencing with the key challenges and issues of earlier design tasks, including qualitative which were of most relevance to the analysis. research and the piloting of survey materials with It then provides an overview of how these were energy consumers to check understanding and addressed in the research. engagement. Figure A1 provides an overview of all tasks, with further details on individual components available in the full report.

Figure A1 Research design

Task 0 – Inception

Research design Task 1 – Develop hypotheses and outline design

Task 2 – Focus groups

Detailed design Task 3 – Survey design

Engagement Task 4 – Stated performance Project with design management deliberative research Task 5 – Cognitive testing project and piloting Task 6 – Main field work

Task 7 – Data cleaning and high level analysis

Task 8 – Choice modelling

Reporting and delivery Task 9 – Final report and presentation

Who Pays? 53 Research challenges This would result in some disparity between The context for the research, and subsequent the willingness-to-pay values estimated from investigation during the qualitative phase, raised a this study and any observed in a real world number of challenges to the more detailed design situation. This effect could be either way, process, including: depending on the ability of the supporting marketing material to engage and inform ●● In a standard willingness-to-pay experiment consumers, relative to the information energy consumers are typically trading presented as part of this research. In the between alternatives for personal gain quantitative survey, energy consumers or satisfaction (in economic terms this is were given a thorough context setting known as ‘utility’). However, with social and section, outlining the rationale for social and environmental charges there is an additional environmental initiatives and what was currently layer of complexity as the energy consumer being done, setting this against other factors does not receive a direct benefit per se. In which contribute to energy prices. effect, the energy consumer must display a ●● To deliver the stated outcomes everybody degree of altruism and a perspective for the (barring recipients such as vulnerable groups ‘bigger picture’ to what they may, or may for certain initiatives) must contribute, and, not, consider to be worthwhile policy goals while percentages are equal across energy and desired Governmental outcomes. The consumers, absolutes will vary markedly approach attempted to explain the background according to current energy bill level. The and rationale as to why action has been, or designed choice experiment was therefore will be, taken to provide an informed energy dependent on perceptions of fairness and consumer. willingness to contribute as a collective, which ●● In the real world, respondents are unlikely to in this case is all British households. The be fully informed about current energy bills, approach took care to express the change in any social and environmental charges and bill level as both a percentage, which would taxes included within them, the rationale for apply to everyone, and as the absolute change action and the outcomes which are trying to be for the individual in question. achieved. For the researchers, therefore, there ●● Stated outcomes can be expressed in a was a careful balancing act as providing too number of different metrics, and with a variety much information to energy consumers would of explanatory text. Indeed, different groups run the risk of overload and disengagement, or segments of energy consumers are likely but a lack of information would preclude to relate, or respond, to different metrics, informed choices. In addition, with the research or combinations thereof. The approach aiming to estimate consumers’ hypothetical piloted a number of different presentation willingness-to-pay for initiatives which may, or techniques and text, and quantified outcomes may not, be introduced, there was a potential via alternative metrics. In addition to the disconnect between the information provided willingness-to-pay research in question, this to consumers as part of this experiment and also has applications for marketing and the that provided by utility companies, government, creation of informed and engaged consumers. regulators etc.

Consumer Focus 54 ●● Many of the benefits and outcomes are not ●● energy use and supplier – gathering important immediate and consumers must be able to contextual information on current supply, bill engage with a long run, bigger picture. To levels and efficiency measures ensure the outcomes were tangible, particularly ●● current awareness of social and environmental for energy efficiency outcomes which will take initiatives longer to accumulate, and to allow the ‘do nothing’ plan to accumulate some projected ●● a ‘Between’ energy plan set of five choices, wholesale energy price increases, the choice trading off between ‘do nothing’, a low carbon scenario was cast four years hence in 2016. By generation, a social, and an energy efficiency contrast many willingness-to-pay experiments alternatives frame the choice in the present day with ●● two ‘Within’ energy plan set of five choices, immediate, direct (as detailed above), benefits trading off between (i) alternative low carbon for the energy consumer. generation plans, and (ii) alternative energy efficiency plans Survey ●● agreement/disagreement with a series of Survey methods attitudinal and value-related statements A mixed method approach to surveying was ●● demographic and socio-economic employed, combining: characteristics

● over 1,000 online interviews with energy ● The online surveys took an average of 18 minutes consumers to complete, with the ‘Between’ energy plan ●● an additional 100 face-to-face interviews with section taking an average of four minutes 44 households without internet access seconds, or slightly less than one minute per choice scenario. This mixed approach aimed to ensure that the sample was representative of all energy Figure A2 provides an illustration of an energy consumers in Great Britain. To assist, quotas plan choice scenario. Appendix E of the full report were specified on the number of responses to be contains a Microsoft Word version of the final online achieved by gender, age, geography (ie residence survey. Respondents to this experiment were in a large city/town, small town or rural area) and asked to rank the four alternatives. Rather than just by GB country of residence. a single choice, this instead provides three choices (observations) per scenario. The energy plan which Survey design is ranked [chosen] first is excluded from the second The online and face-to-face interviews were split choice, where the second ranked energy plan is into the following sections: assumed to be chosen over the third and fourth ranks. Likewise, the third choice is the third ranked ●● screening questions – ensuring minimum option with the first and second ranks excluded quotas were met to produce a representative from the choice set. sample and only those, solely or jointly, responsible for paying energy bills responded

Who Pays? 55 Figure A2 Example between energy plan choice set Plan, features and conditions 2016 calculated Please select annual price one option only Plan ●● Discount for vulnerable 11.5% more than now A households of £170 per (£176 per year) annum, mainly targeted at pensioners + disabled people Price breakdown >> ●● 5.2 million households at risk Select Plan A 1 of fuel poverty receive support (77% of these at risk) ●● no reduction in carbon emissions from domestic energy

Plan ●● Investment is in offshore wind 15.8% more than now B turbines only (£241 per year) ●● 5.3 million households are powered by clean, green Price breakdown >> energy (21% of all British households) Select Plan B 2 ●● a reduction in carbon emissions of 11.6 million tonnes per annum from 2010 levels, which is 21.3% of domestic energy emissions, and 6.6% of total British carbon emissions

Plan ●● No social or environmental 8.0% more than now C changes (£122 per year) ●● No discounts for those at risk Select Plan C of fuel poverty Price breakdown >> 3 ●● No reduction of carbon emissions from domestic energy

Plan ●● Free energy efficiency 13.0% more than now D improvements are provided for (£199 per year) all households ●● 1.4 million households have Price breakdown >> improvements per annum (5.7% of all households), with everybody covered by 2030 Select Plan D 4 ●● once improved a households bill is reduced by 15% ●● a reduction in carbon emissions of 1.8 million tonnes per annum from 2010 levels, which is 3.4% of domestic energy emissions, and 1.1% of total British carbon emissions Consumer Focus 56 Figures A3 and A4 present corresponding example choice sets for the two within energy plan scenarios.

Figure A3 Example within low carbon generation plan choice set Plan, features and conditions 2016 calculated Please select annual price one option only Plan ●● 3.9 million household are 7.6% more than now A powered by clean, green, (£95 per year) applied energy (15% of all British as a variable rate households) across all consumers ●● a reduction in carbon emissions of 8.4 million tonnes per annum, which is 15.5% of domestic energy emissions and Select Plan A 1 4.8% of total British carbon emissions ●● energy provided by local onshore wind turbine schemes ●● additional profit from the scheme is reinvested in local parks, playgrounds, and nature reserves

Plan ●● 7.2 million households are 5.2% more than now B powered by clean, green, (£65 per year) applied energy (28% of all British as a variable rate households) across all consumers ●● a reduction in carbon emissions of 15.6 million tones per annum, which is 28.7% Select Plan B 2 of domestic emissions and 8.9% of total British carbon emissions ●● energy provided by national offshore wind turbine schemes ●● additional profit from the scheme is reinvested in supporting 50,000 jobs nationally

Who Pays? 57 Figure A4 Example within energy efficiency plan choice set Plan, features and conditions 2016 calculated Please select one annual price option only Plan ●● Free energy efficiency 7.6% more than now A improvements are provided for (£95 per year) applied all house holds as a variable rate ●● 2.3 million households receive across all consumers improvement every year (8.9% of all British households) with all households converted by 2024 Select Plan A 1 ●● once improved a households' bill is reduced by 8.0% ●● a reduction of carbon emissions of 16 million tonnes per annum from 2010 levels, which is 2.9% of the domestic energy emissions and 0.9% of the total British carbon emissions ●● efficiency improvements targeted at households with disabled members

Plan ●● Free energy efficiency 5.2% more than now B improvements are provided for (£65 per year) applied all households as a variable rate ●● 0.6 million households receive across all consumers improvements every year (2.4% of all British households), with all households converted by Select Plan B 2 2054 ●● once improved a households bill is reduced by 18% ●● a reduction in carbon emissions of 0.9 million tones per annum from 2010 levels, which is 1.7% of domestic energy emissions and 0.5% of total British carbon emissions ●● efficiency improvements targeted at households already taking action to improve their environmental impact Consumer Focus 58 Willingness-to-pay behavioural research Data weighting and representativeness Energy consumers were presented with a series of To support analysis of variation in willingness- choices within the survey where they were asked to-pay by country of residence, minimum sub- to trade-off between different types of energy samples were specified of 100 energy consumers plan. When cost is included in such choices, it from each of Scotland and Wales. As a result, enables the estimation of consumers’ willingness- residents of these countries were overrepresented to-pay for different features, or attributes, of the in the final achieved sample in comparison to energy plans. Willingness-to-pay lies at the heart English residents. Weights were therefore applied of UK Government recommendations on appraisal to each energy consumer based on their country and evaluation of policies, programmes and of residence, the sub-sample achieved, and the projects13 (HM Treasury, 2003), and is founded resident adult populations in each country. This on a substantial evidence base of economic ensured that average results across all energy and behavioural research that the consumer will consumers were not biased by over or under choose the alternative which maximises their own representation from a given country. satisfaction. Critically, willingness-to-pay research enables non-monetary items to be converted The large sample of potential respondents into pound and pence valuations, from which (N=400,000 in the online panel from which the benefits of a policy, programme or project to energy consumers were drawn) from which society can then be offset against its, more readily the final sample was drawn helps to ensure quantifiable, costs. representativeness across all main market segments. Coupled to this, there are uncertainties An improved understanding of how consumers’ regarding the exact profile of those who are trade-off in decision-making through willingness- wholly or jointly responsible for paying energy to-pay research has been pursued for many bills, meaning any further weighting to the decades across a range of sectors, from utilities, general population may bias the results. As one through environmental and product-specific example, we would expect younger adults to be research, to fields as diverse as transport, underrepresented in a profile of energy bill payers, health, and education. A substantial evidence compared with the GB population, as they are base now exists, much of it online, on both more likely to be living with family and friends, or the background theories and examples of its be in rented accommodation where energy bills application. Of particular relevance is a discussion are included within the overall rent. on current issues produced by HM Treasury and the Department for Work & Pensions (DWP), at: http://bit.ly/S7bEom

13 The HM Treasury Green Book is available at: http://bit.ly/TlH2i3

Who Pays? 59 Logic and consistency checks Energy consumer sample The results described in subsequent chapters, for Table A1 summarises the sample of energy the final sample of energy consumers, followed consumers by their principal demographic and a series of logic checks. These were designed to socio-economic characteristics. In comparison exclude any energy consumers who were felt to to the GB population as a whole, the energy have: consumer is representative of all main segments. All else being equal, we would expect energy provided erroneous information ●● consumers to be slightly older than the ●● failed to engage with, or struggled with the population as a whole. This is due to the greater complexity of, the choices offered to them propensity for young adults to be living in shared ●● been inconsistent in the information they accommodation, or with parent/guardians, where provided energy bills may either be included within other payments or dealt with by another household member. The full report contains full details of Any quoted sample sizes are post these all sample characteristics, and any statistically exclusions, the criteria for which are described in significant differences in sub-samples by GB the full report. The logic checks aim to ensure that country of residence. These were: the final results from the research are founded on the most robust evidence base. ●● energy consumers with lower disposable household incomes, in the range of £10,000 to £19,999, were slightly overrepresented in Scotland (32 per cent) and Wales (33 per cent) compared to England (22 per cent) ●● Welsh and Scottish energy consumers were more likely to be resident in a home rented from a social landlord or local authority, at 17 per cent and 19 per cent respectively compared to 11 per cent for English resident energy consumers

Consumer Focus 60 Table A1 Energy consumer sample profile Characteristic Age and gender Male, aged 16 to 34 8 per cent Female, aged 16 to 34 13 per cent Male, aged 35 to 64 27 per cent Female, aged 35 to 64 21 per cent Male, aged 65 plus 12 per cent Female, aged 65 plus 18 per cent Disposable household income < £10,000 13 per cent £50,000 to £74,999 9 per cent £10,000 to £19,999 25 per cent £75,000 to £99,999 3 per cent £20,000 to £34,999 27 per cent >= £100,000 2 per cent £35,000 to £49,999 18 per cent Refused 3 per cent Occupation Professional/ Senior managerial 10 per cent Full-time student 3 per cent Middle managerial 13 per cent Retired 31 per cent Junior managerial/ clerical/ supervisory 19 per cent Unemployed/ between jobs 5 per cent Skilled manual (with professional 12 per cent Housewife/ Househusband 2 per cent qualifications/ served an apprenticeship) Unskilled manual (no qualifications/ 5 per cent not served an apprenticeship)

Who Pays? 61 Consumer Focus t: 020 7799 7900 Victoria House f: 020 7799 7901 Southampton Row e: [email protected] London WC1B 4AD www.consumerfocus.org.uk Media team: 020 7799 8004/8006

Published: December 2012

If you have any questions or would like further information about our research, please contact Prashant Vaze, by telephone on 020 7799 7919 or via email [email protected]

For regular updates from Consumer Focus, sign up to our monthly e-newsletter by emailing [email protected] or follow us on Twitter http://twitter.com/consumerfocus

If you require this publication in Braille, large print or on audio CD please contact us.

Deaf, hard of hearing or speech-impaired consumers can contact Consumer Focus via Text Relay:

From a textphone, call 18001 020 7799 7900

From a telephone, call 18002 020 7799 7900