The Electricity and Gas (Energy Companies Obligation) Order 2012

EXPLANATORY NOTE

(This note is not part of the Order)

This Order applies in Great Britain and places an obligation on electricity and gas suppliers who have more than 250,000 domestic customers and who supply more than a specified amount of electricity or gas to achieve a carbon emissions reduction obligation, a carbon saving community obligation and a home heating cost reduction obligation (collectively referred to here as “the obligations”). The Order is administered and enforced by the Office for Gas and Electricity Markets (“the Administrator”).

Article 3 sets out the overall carbon emissions reduction target, the overall carbon saving community target and the overall home heating cost reduction target which must be achieved by electricity and gas suppliers between 1st January 2013 and 31st March 2015.

Article 4 defines a supplier. Article 5 describes how matters under article 4 are to be determined in the case of group companies. Article 6 defines the overall obligation period within which suppliers must achieve their obligations. Article 7 places an obligation on a supplier to notify the Administrator of the number of the supplier’s domestic customers and the amount of electricity or gas supplied.

Article 8 requires the Administrator to determine for each phase of the obligation period a supplier’s obligations and provides the date by which a supplier must be notified of its obligation for a particular phase.

Articles 9 and 10 specify the formulae which the Administrator must use to determine obligations. Article 9 sets out the formula to be used for a supplier who is not a member of a group. Article 10 sets out the formula to be used for a supplier who is a member of a group.

Article 11 describes how the amount of electricity or gas supplied for the purposes of articles 9 and 10 should be determined.

Article 12 provides that a supplier’s carbon emissions reduction obligation must be achieved by carrying out carbon qualifying actions to domestic energy users and describes the circumstances in which a particular type of measure constitutes a qualifying action.

Article 13 provides that a supplier’s carbon saving community obligation must be achieved by carrying out carbon saving community qualifying actions to domestic energy users living in areas of low income and, subject to compliance with article 14, in areas adjacent to areas of low income. The article describes the circumstances in which a particular type of measure constitutes a qualifying action. Article 14 sets out when a supplier may carry out carbon saving community qualifying actions in areas adjacent to areas of low income.

Article 15 provides that a supplier’s home heating cost reduction obligation must be achieved by carrying out heating qualifying actions to householders who are members of the affordable warmth group and describes the circumstances in which a particular type of measure constitutes a qualifying action.

Article 16 requires suppliers to notify the Administrator of each qualifying action which it has completed, sets out how carbon and cost savings are to be calculated (except for boiler repair or replacement) and allows the Administrator to extend the notification period in particular cases.

Article 17 specifies the methodology for determining savings that should be attributed to the repair or replacement of a qualifying boiler. Article 18 allows a supplier to apply to the Administrator for an appropriate methodology for calculating the savings of a qualifying action to be approved by the Administrator. Article 19 requires the Administrator to determine the savings that should be attributed to a qualifying action.

Article 20 provides for the transfer of completed qualifying actions between suppliers. Under article 21 a supplier may apply to credit towards its obligations any excess action which the supplier achieved under the Electricity and Gas (Carbon Emissions Reduction) Obligation Order 2008 or the Electricity and Gas (Community Energy Saving Programme) Order 2009.

Article 22 requires the Administrator to determine whether a supplier has achieved its obligations. The Administrator must submit monthly reports to the Secretary of State during the course of the obligation period, commencing in March 2013, and a final report at the end setting out whether each of the overall targets set for suppliers in article 3 has been achieved.

Article 23 enables the Administrator to request from suppliers information relating to the requirements imposed under this Order.

By article 24, requirements of this Order are a relevant requirement for the purposes of Part I of the Electricity Act 1989 and Part I of the Gas Act 1986 and may be enforced accordingly.

A full impact assessment of the effect that this instrument will have on the costs of business, the voluntary sector and the public sector is available from the Department of Energy and Climate Change, 3 Whitehall Place, London, SW1A 2AW and is published with the Explanatory Memorandum alongside the instrument on www.legislation.gov.uk.