Energy Billing and Metering. Response to consultation The need for an annual energy statement

Transcription

1 1/8 Energy Billing and Metering Changing customer behaviour An energy review consultation Response to consultation The need for an annual energy statement by Harry Bruhns and Professor Robert Lowe Complex Built Environment Systems The Bartlett University College London 6 February 2007

2 2/8 Summary of response This response is directed to the Energy Billing and Metering consultation Section 5: The future of billing. The need for a reduction in UK CO2 emissions and the reasons for this are taken as given, along with the government intention that an important part of emissions reduction will come from both decreased energy consumption and increased energy efficiency. Numerous technical and behavioural measures exist for customers to reduce the energy consumption used to meet their requirements and more measures will be developed in the future. In fact this has been the situation since the oil shocks of the 1970s and it has long been observed that large numbers of economic and effective energy savings measures were not being implemented then, and are not being implemented now. One of the reasons for this market failure is uncertainty, energy consumption is difficult to evaluate, while the costs of reducing it are immediate and clear. How to access information about energy saving measures is largely outside the remit of this response, which is primarily concerned with the provision of specific consumption information that encourages customers to implement steps to reduce their energy use with a clearer knowledge of the benefits of doing so. However such consumption information can also assist them to evaluate alternative measures. Section 5 contains five questions to which responses are sought. These are listed below with summarised responses. 5.1 How can the Government s commitment to mandate the provision of historical consumption information in graphical form best be delivered? This mandate would best be delivered by an annual statement of energy consumption to all metered customers, including numerical and graphical information. This should be brought about by a mix of regulation and practice guidelines specifying the minimum information content. The provision of information could be encouraged by allowing robustly confirmed savings that result from the information to be included in Energy Efficiency Obligations (EEO). 5.2 Would a similar requirement be useful to business customers? Yes. 5.3 What energy efficiency information would be most useful to (a) domestic and (b) business customers? Energy efficiency information is too varied in detail to provide fully with bills. This should be limited broad advice along with sources of on-line and printed advice. 5.4 How can the Government cost effectively improve the frequency with which customers are provided with accurate bills? If it can be reliably shown that more frequent and accurate bills bring about energy savings then also allow these to be included in the EEO. Otherwise regulation is likely to be the most effective instrument. 5.5 What forms of comparative benchmarking might provide useful information to domestic or business customers? Quantitative information accompanied by graphical representations.

3 3/8 Detailed response The response concentrates primarily on questions 5.1, 5.2, and 5.5 concerned with the information included with energy bills. Brief comments are made in relation to Questions 5.3 and 5.4. The response advocates the provision of an annual statement of energy use to all metered gas and electricity customers. The basis of the response is the long observed fact that a lack of information is a major barrier to energy efficiency. The authors have cumulatively some 50 years of experience with energy audits and energy research in the domestic and nondomestic sectors. It has been their experience, and repeatedly noted to them by others, that the most time consuming task in performing an energy audit for most domestic and nondomestic properties is obtaining real energy consumption data. Those data are however vital to giving the customer useful insights into their potential savings. Two further observations underly the response. One is that that the basic information required is already present in supplier billing systems. It would require only modest system development to provide the annual statements. The cost of provision is minimal, even in relation to the cost of billing, let alone the cost of wholesale energy supplies and climate change. The provision of annual energy statements has only to encourage a tiny proportion of customers to take up additional energy savings measures to pay back the total cost of its implementation. It is likely that an annual energy statement alone would in time fulfil the Energy Efficiency Obligations several times over. These underlying observations are clearly understood by the consultation document (p13) with the compelling statement: 5.3 The Government estimates that requiring suppliers to provide information in graphical form about a customer s gas or electricity use in a comparable period from the previous year would involve a design and set-up cost to suppliers of 10-20p per customer per fuel in the first year. Assuming a conservative estimate of a reduction of 0.25% in energy consumption, this measure would reduce an individual domestic customer s bill by over 2 per year and save 0.08 MtC per year from the time that it was introduced. It would thus be an important contribution towards the Government s Climate Change Programme target of saving 0.2MtC from better billing and metering by If it achieved a 0.625% reduction in consumption, this measure would, on its own, be sufficient to achieve the target. This is a point worth reiterating. Additionally we would add that it is critically important that the annual statement contain quantitative as well as graphical information. Questions 5.1 and 5.2 Provision of information to customers 5.1 How can the Government s commitment to mandate the provision of historical consumption information in graphical form best be delivered? This mandate would best be delivered by an annual statement of energy consumption to all metered customers, including numerical and graphical information. This should be brought about by a mix of regulation and practice guidelines specifying the minimum information content. The provision of information could be encouraged by allowing robustly confirmed savings that result from the information to be included in Energy Efficiency Obligations (EEO). 5.2 Would a similar requirement be useful to business customers? Yes

4 4/8 Annual statement of customer energy use Specification All customers of electricity and gas suppliers should be provided with an annual statement showing both quantitative and graphical information on their energy use. The statement should be on a separate sheet. The quantitative information should comprise: For each meter and tariff. A series of periodic consumption records. These should be based on meter readings, with start and end date of each reading, and whether consumption is based on a supplier or customer reading, or estimated by the supplier. When accurate these subannual consumption data allow advisors to examine the important seasonal variation in consumption and impute base loads and some end-uses. Even when readings are estimated the data suffice to some extent for this. Annualised total consumption for each meter and tariff. Total annualised consumption each fuel (this applies mainly to commercial customers with multiple meters). Total consumption by the customer of all fuels (for multi-fuel suppliers). Graphical feedback comparing annual total consumption with past years. Obviously the periodic consumption records are available since these are the content of bills. The annualised consumption is already calculated for all gas and electricity meters for suppliers own purposes and is the basis of DTI energy statistics. Thus the information required for annual statements is already available within supplier computer systems for all customers except those on pre-payment meters, for which annual consumption only is usually available. The statement should cover at least one full year, but the inclusion of historical data would improve its immediate usefulness and in the longer term assist those who have mislaid their statements for previous years. All consumption data should be expressed in both kwh and current carbon emissions. The kwh data is important because it is delivered energy that customers use in plant and appliances and can evaluate with view to increasing their energy efficiency. The corresponding carbon emissions data are important because they reflect how that energy use impacts upon the global climate. The customer can also use the latter to calculate their building s contribution to their own carbon footprint. The statement needs to be both simple and complete The information should be both simple enough for the vast majority of customers to understand, and complete enough to assist a technical advisor to offer them professional advice. That is, the annual statement should present the maximum information already available within suppliers billing systems in a simple tidy layout along with easily understood summary data. These twin requirements imply the need for a two part statement, a simple graphical summary along with a quantitative section. For the graphical section our judgement is that the most effective course of action is likely to be to provide a simple summary on an annual basis. The greatest benefit is likely to be gained if gas and electricity information can be combined in a single summary, so that the consumer can assess their total energy consumption from graphs on a single side of A4. This multi-fuel summary is immediately feasible where the supplier provides both gas and electricity to the customer. It would be essential to work this up with panels of domestic and nondomestic customers to achieve greatest possible communicational impact. The Bartlett has experience with providing graphical energy use feedback to some groups of domestic energy customers that have been involved in research studies. Purely graphical comparisons of a customer s energy consumption with previous years tells the customer only about what they have done, not what they might do. The latter requires some information on the norms the customer might expect for their property and benchmarks to which they might aspire. This can be a somewhat complex evaluation, requiring quantitative information to

5 5/8 initiate it. The quantitative portion should contain the information described in the above specification. All annual energy statements should be based on standard layouts of core information to assist the development of a cultural understanding of energy use. Suppliers may enhance the standard layout in various ways. Why are billing records are not sufficient as a source of quantitative data. Consumption units and layouts of bills vary widely. Even informed professionals can find it time consuming to collate detailed consumption records and the periods in which this occurred from bills. Bills are often shredded for security reasons. In commercial organisations bills tend to be filed in accounting systems (if kept at all) and not easily available (if at all) to technical personnel or advisors that could assist a customer to reduce energy use. Correction for weather This should not be done in the annual statement. Doing so merely masks one of the major determinants of energy use in dwellings and smaller nondomestic properties. Customers should be able to do this optionally themselves where they have the skills or software, or via a web tool. Importance for businesses The annual statement is as important for business as for domestic customers. It provides immediately useful information to their own building services engineers and energy managers, and saves time on the part of these personnel. It also saves time on the part of professional staff they may commission to carry out energy audits. All these factors reduce what is in fact one of the significant financial costs of energy savings, identifying and quantifying them in the first place. The difficulty of otherwise obtaining the information contained in annual energy statements is well known, cf. (p16 of the consultation call). The Government also notes the Carbon Trust s conclusions, set out in the Energy Review, that lack of access to accurate bills was a barrier to energy efficiency management in the business sector. To that we would only add the problem is often the lack of access to any energy consumption information at all. Why on a separate sheet The statements should be on a separate sheet so that they are not filed, discarded or shredded with billing information. They should be labelled and designed to provide reference information for customers, who should be encouraged to store them for future use. Identify theft The annual statement should be designed to reduce the risks of identify theft should it be discarded or otherwise obtained for malign intent. Its use for confirmation of identity should be specifically disallowed. Making it happen Though it is to us indisputable that an annual statement is in the interests of suppliers, as well as the nation, this step has somewhat surprisingly not yet been implemented. It is presumed this is primarily due to inertia, annual statements require a change of practice to procedures that have been in place for many decades. And government and supplier policies have until very recently been primarily concerned with energy security and costs rather than the quantity of consumption. Thus this response advocates regulation to ensure the provision of annual energy statements to all electricity and gas customers. Serious consideration should be given to carrying out a robust evaluation of the consequent savings that arise from annual statements and thus allowing suppliers to credit those towards the Energy Efficiency Obligations.

6 6/8 Question 5.3 Efficiency Information 5.3 What energy efficiency information would be most useful to (a) domestic and (b) business customers? Energy efficiency information is too varied in detail to provide fully with bills. This should be limited broad advice along with sources of on-line and printed advice. Efficiency information The statements should refer to a portal web site from which customers can find various sites that they can use for benchmarking and energy efficiency advice. The statements will also enable energy advisors to provide more precise efficiency recommendations. The statements should also refer to sources of printed material on energy efficiency (there is a huge amount of information available) and key organisations to provide this are the Energy Savings Trust and the Carbon Trust. Question 5.4 Frequency of accurate bills 5.4 How can the Government cost effectively improve the frequency with which customers are provided with accurate bills? If it can be reliably shown that more frequent and accurate bills bring about energy savings then allow these to be included in the EEO. Otherwise regulation is likely to be the most effective instrument. Graphical representations should include an error bar for estimated readings, this in itself may encourage fewer estimated readings. Question 5.5 Benchmarking 5.5 What forms of comparative benchmarking might provide useful information to domestic or business customers? Quantitative information accompanied by graphical representations. It is important for customers to be able to compare their consumption with others in similar situations, both by personal communication and by reference to appropriate statistical data. The national aim should be for energy users to become as familiar with the energy consumption of various types of dwellings and business properties as they currently are with miles per gallon for cars. The annual statement should mention that the most common means of evaluating the energy efficiency of a dwelling or non-industrial property is to divide the total annual energy use by floor area. Thus for example, total household energy consumption can become common parlance. The UK mean annual household consumption is in the order of 20,000 kwh, providing an initial benchmark. Separating that consumption into gas and electricity provides further insight into a customer s own energy use. Taking account of house size provides further insight again, thus it is desirable that it become generally known that an annual consumption of 100 kwh/m2 for a house is very good while 200 kwh/m2 is in the range of typical and 300 kwh/m2 is quite high. There may be rational factors determining high or low consumption. Many drivers know that a car rated at 50 mpg will achieve perhaps 30 mpg in congested urban conditions. Similarly energy customers can come to understand that occupancy patterns and internal temperatures correspond to driving habits, they will drive consumption up or down. There may be good reasons for a given consumption pattern, but customers should be able to make those choices on an informed basis.

7 7/8 All this requires easily accessible consumption information expressed in commonly understood units so that customers can develop a widespread understanding of the energy statement; and the evaluation of energy consumption can become part of social discourse in the same way as car efficiency, call costs and many other technical attributes of goods and services we all purchase already are. For further benchmarking information statements should refer to a portal web site from which domestic customers can find typical and benchmarking consumption data for houses of their type and age, and consumption data with costs and approximate savings resulting from various measures they could implement. A site should also allow them to enter data from their annual statement, along with location, house or building type, and simple usage data, to thus obtain various useful information and energy ratings. Commercial customers should also be able to find typical consumptions and benchmarks appropriate to their business and property type and carry out the somewhat more complex evaluations they will generally require. What constitutes domestic It is not necessary to distinguish domestic and commercial customers for annual statements. To maximise clarity the statements should retain a largely common layout for all customers, with modifications to that layout according to technical factors such as the magnitude of consumption, numbers of meters for the customer, provision of 30 minute data, the prescence of smart metering and so forth. Comparators for business customers The determinants of energy consumption in nondomestic premises are numerous and complex. Consumption may be normalised by floorspace, services types, non-standard uses, climate, number of employees, (table) covers, beds, classrooms and so forth. Comparators need to be developed so that customers can use them to evaluate their own consumption but this should be done on a national basis with suitable research and consultation. This should not be required of suppliers, it places an inappropriate burden on suppliers to expect them to perform a task which is exercising some of the leading energy research personnel and organisations in the UK. Sectoral vs historical benchmarking The consultation document notes that customers prefer comparisons to their own past cf. (Consultation document p18). A study by the Centre for Sustainable Energy on behalf of Ofgem in 2003 ( ), based on discussion with focus groups, found that, while customers liked to compare their own energy use compared with earlier periods, they disliked their use being compared with that of average homes. One should be clear here. The purpose of informative billing and metering is not to make electricity and gas customers of electricity and gas feel good in the short term. The purpose is to provide them, and their advisers with the information they need to make informed decisions about their energy use and the activities and investments that can effectively and economically reduce that consumption, thus reducing costs for customers and assisting UK to meet climate change commitments. This purpose needs clear and precise quantitative information. The recent EU energy end-use efficiency and energy services directive (Article 13, paragraph 3, reproduced below) also requires benchmarking information to be provided where ever possible. Standard year for annual statements Like with like comparisons may be misleading if they refer to year periods with different starting points. Annual consumption by dwellings and many business properties will be substantially higher in a cold winter such as occurred in 2005/06. Many businesses and a few domestic consumers will experience markedly higher consumption in unusually hot summers. Annual consumption data according to the calendar year will split the increased consumption of a cold winter between two annual energy statements. Annual statements with variable starting points will reduce the capacity to make effective comparisons of properties (which people would undoubtedly do with annual statements, and this is

8 8/8 very much to be encouraged). Therefore consideration should be given to defining a standardised year over which the annualised consumption is presented. Ideally this would correspond to the financial year with the benefit of basing the annual statement on one complete summer and winter and advantages to businesses managing energy costs within standard financial cost periods. Other notes Relationship to Home Information Packs While it should not be compulsory to include annual statements with Home Information Packs it could be encouraged for the owners of energy efficient properties to provide annual statements as direct evidence of the energy quality of their properties, thus providing proof of value to potential purchasers and tenants. Article 13 (3) of the EU Directive