New Green Jack New Green Jack

30 responses to “Good (Energy) Lies – part two”

    • Chris

      So just remind me, what’s the point of Ofgem again?!

        • Paul

          Is there a simplified version of this for Homers like me?

          No idea what a ROC is or what this is about. Can you write this up as a simple top down article that assumes the reader has no prior knowledge of the discussion.

          I want to know more.

          Paul

    • JH

      Dale, I’m glad this has been re-posted, it seems it was heading down the ‘Ecotricity hate Good Energy’ road.

      I think that GE need to be investigated.

      J

    • paul

      Doh – sorry about that folks – I posted up an embarrassing typo plus the wrong table!

      I have also added some of the quotes on the evidence page FYI.

    • Seb

      “So just remind me, what’s the point of Ofgem again?!”

      I was going to ask the same question.

      Dale, I am struggling to understand why Ofgem, the energy regulator, is responding to your direct enquiries on this to confirm that Good Energy are misrepresenting their business practice but not taking action themself.

      My understanding was that a key role of Ofgem was in preventing energy companies from misleading customers. Indeed, do they not exist to act as consumer champions – protecting consumers’ best interests by keeping the reins on energy companies?

      From your blog posts it seems as though they’re effectively saying “Yes, Dale, you’re right – GE are being extremely naughty. Isn’t it dreadful… Yup……. ” and then doing nothing.

      If this is as blatant as it appears, why are Ofgem not taking action?

        • Dale Vince

          Hi Seb, OFGEM tell us that they are investigating, but what that means I do not know. I agree with you here, surely OFGEM exist to control the way energy companies behave.

          And having just launched their draft green guidelines, which are supposed to give consumers confidence in green tariffs – you might think they’d act a little faster on this.

          Though of course it may be that since they launched these guidelines in concert with Good Energy, who appear to be the biggest perpetrators of greenwash in the industry – and it was OFGEM data that highlighted that – maybe it’s a little embarrassing for them…. :)

          Cheers.

    • MechaZilla

      Nice to see that the debate has been reiterated with a more rational and logical basis.

      If you feel you have been missold to I would suggest that people contact http://www.consumerdirect.gov.uk/ which is the Government’s consumer issues website, and provides details and advice in such matters.

      Additionally if you believe GEs advertising has breached the advertising code contact http://www.asa.org.uk/asa/ and make a complaint.

      I do not believe that Good Energy have specifically breached OfGEMs rules, but I do believe that they have misled customers and been guilty of what is, in effect, a method of greenwashing, which will put their offence firmly within the remit of the Advertising Standards Authority, Consumer Direct and the Energy Ombudsmen.

      The energy ombudsman proivides a further catch-all energy related complaints resolution service and I would suggest contacting them too. http://www.energy-ombudsman.org.uk/

      For a guide on how to make a complaint please see the lik below:
      http://www.ofgem.gov.uk/Media/FactSheets/Documents1/changestoconsumer.pdf

      Please do complain as I believe that companies who mis-sell will only be held accountable if people utilise the correct channels and in great enough numbers.

      If you do not then you cannot expect action to be taken.

    • Jeffrey Lam

      There is a more recent Businessgreen news story here, for anyone who’s interested.

    • Jeffrey Lam

      Can you explain the numbers please? ROC buyout value is the price of a ROC? Or it’s the penalty for not having a ROC? Full ROC value is ROC buyout value + rebate? (rebate=recycling?)

      No, wait. I think I’ve got it. A: Full ROC value is what you would pay for a ROC. B: ROC buyout value is what you would pay for a ROC, minus the rebate you would get under legal obligation.

    • MechaZilla

      Essentially “Full ROC value” is the cost of a ROC on the open market, “ROC Buyout” is what you pay per MWh to OfGEM if you do not have enough ROCs to cover your obligation, 1 ROC is issued per MWh of renewable electricity generated, although there are some exception dependant on the type of technology.

      Jeffrey is absolutely right in that rebate does equal recycling benefit.

      At first glance it looks like a poor business decision to submit ROCs rather than paying the buyout but every company that fulfills its obligation by submitting ROCs gets a share of the rebate from OfGEM. This rebate is made up of the money paid to OfGEM by those companies who pay the buyout fees rather than by submitting ROCs. In this way money is redistributed to companies who are themselves renewable generators, or who support renewable generators by purchasing ROCs.

      The theory of retiring ROCs is intended to increase the amount of buyout that has to be paid and ,therefore, the amount of rebate each renewable generator receives. However, this system only applies if the company doing the retiring has purchased the ROCs at near full value from a generator, rather than being the generator themselves- in which case retiring the ROCs wouldn’t really help anyone.

      Retiring ROCs sounds good in theory but businesses will always look for the cheapest way to fulfill their obligations so ROCs will never be retired in enough quantity to make a meaningful difference to the buyout. Much better to directly support generators and enable them to secure finance based on this income for future build by guaranteeing to purchase any ROCs they are issued with.

      Bit of a technical one…but reading the rest of the posts I’m not sure it has ever been explained why Good Energy believe that ROC retirement is the way forwards.

    • Grilla Login

      Getting ya ROC’s off sure beats getting ‘em retired!!

    • Jeffrey Lam

      Mechazilla, I think what you say is slightly different to what I’m thinking. I’m thinking that “ROC buyout value” is the price of the ROC minus the rebate, while you’re saying it is what you pay for each ROC that you don’t have but are legally supposed to (which I will call the “penalty).
      I imagine the price of a ROC minus the rebate will gravitate towards the penalty under market forces, though I am unsure whether they will actually equal each other. In any case, what you say and I think may well be more or less the same numerically.

    • Jeffrey Lam

      “Much better to directly support generators and enable them to secure finance based on this income for future build by guaranteeing to purchase any ROCs they are issued with.”
      I’ve got a question about this sentence MechaZilla. A supplier will need to buy their legal obligation in ROCs and these will be submitted for rebate, but what about once the legal obligation is met? If one buys more ROCs then and holds them, is that not retiring them? If one buys ROCs and sells them on, is that not the same as not buying it in the first place?
      I do agree with you saying that ROC retirement is not the way forward. But I just thought I’d ask about what you said there.

        • Dale Vince

          Guys, thought I’d just jump in here on ROCs.

          The buy out value or price is a set price. It’s a price that rises with RPI each year and is therefore well known. This is the price that you pay to OFGEM for each ROC you don’t have (to meet your compliance level)

          The ‘market’ estimates how many ROCs may be generated each year and therefore how big the shortfall will be in ‘compliance ROCs’ – the ones suppliers need to submit to meet the obligation.

          The market therefore calculates the likely ‘recycle value’ of each ROC. If you add that to the ‘buy out value’ you get the ROC price in total (minus some fees of course).

          Suppliers prefer to buy ROCs to try and comply with the RO, as it makes them look better, they pay the ROC total price but receive the recycle back – so net cost is just the Buyout price (more or less).

          The government makes sure that the ROC target is ahead of possible compliance each year and so the market is always short of ROCs. Always.

          When you retire a ROC you don’t get recycle value.

          There is no official retirement process in the legislation, but OFGEM keeps a register for those that do it.

          5% ROCs means one thing, the financial equivalent of 5% ROCs if you retire at full price but calculate ROC value as buy out value only – is another thing altogether. Very complex, and serves only to reduce the headline retirement level.

          Hope that helps.

          Cheers.

    • Richard

      Their independent auditor’s report states that they did retire enough extra ROCs for 2004/05 and 2005/06 and frankly I’m much more likely to believe their figures than yours.

      Your evidence shows that GE could have been a little clearer in some of their publicity, but it doesn’t come even vaguely close to justifying the claims you made in the previous post (eg “fraud”). You were also very selective in your quote from the NCC report, given that the pages on GE clearly refer to equivalence!

        • Dale Vince

          Hi Richard, the figures that you are referring to as ‘ours or mine’ actually belong to OFGEM the industry regulator and the body that issues and receives ROCs – there is no higher authority on the matter. The auditor (of GE) would appear to be either confused or working to a different set of rules – which are now emerging.

          You say GE could have been a little clearer in their marketing – the fact is for five years they claimed to retire 5% ROCs while secretly (I say that because the policy has never been published or publicised) they retired on a different basis. The 5% was not the truth, it was knowingly so. Now we have the ‘equivalence claim’ and that is also not the truth.

          The truth of this is Good Energy could not have been any less clear as to their real ROC practice, what they claimed was a long way different to what is still emerging. Cheers.

            • dale Vince

              Quick PS Richard, you refer to the NCC report and say we’re being selective. The NCC report actually uses the word ‘equivalent’ in it’s normal English context. I don’t believe they knew any better at the time, if they did, then they have been selective with the truth in not being clear that the retirement policy is nowhere near the 5% it appears to be. Consumer champions should do better – their report was intended to clear up consumer confusion after all. Fact is they were duped. Cheers.

                • Richard

                  Dale

                  This nicely summarises exactly the problem I have with your posts: it’s all about your beliefs, and not about evidence. That’s fine if you use appropriate language, but if you’re using words like “fraud” and “duped” you need much better evidence, particularly if you’re talking about a direct competitor.

                  You believe they use the word “equivalent” in it’s normal English context, you don’t believe NCC knew any better and you believe they were duped (although you call this a “fact”, which is a strange use of the word!) – but what evidence do you have?

                  You believe (or at least very strongly imply) that their recommendation would have been different if they had known better – but you haven’t shown any evidence of this either.

                  It’s absolutely fine to point out problems with your competitors. It’s completely unethical and inappropriate to do it in the way you’re doing it.

    • Michael King

      You guys are having a good ol’ bun fight here: http://www.goodenergy.co.uk/?page_id=4332

      I support what Ecotricity are doing however. It is definitely better to have a bit of healthy and robust debate – I’m sure both sides aren’t enjoying it that much at the moment though. Much more preferable than a mainstream journo picking it up and tarnishing the whole sector – “environmental leaders line their own grubby pockets” and all that sort of hyperbole. Let’s face it this is a sector where nuclear is a green fuel -.- Not saying that to open the nuclear can of worms – just to point out that the marketing messages are already pretty confusing.

      A test I often use is whether my Mum would understand this! If a retired teacher has to get a spreadsheet out to decide who to buy her fuel from it ain’t gonna happen :P

      This is where the various brands like FOE, NCC and the Ecologist come in. If they are recommending one supplier over another it takes away the complexity and you trust their recommendation. Even that’s confusing though when the Ecologist support Ecotricity and FOE go GE.

      In end I think both Ecotricity and GE are helping to bring some additionality to the market and so you pays your money etc. For my part I was with GE ages ago (when they first appeared I think) but moved to Ecotricity after a few years for 2 reasons.
      1. I had a really poor perception of GE’s customer service when i called up a few times with moving house etc (the only real time a utility has to sweat with customer service)
      2. I bought into the ecotricity idea of building infrastructure and valued the Ecologist’s recommendation. I can understand people who buy into GE’s approach though.

      Finally, if any GE people read this then I’d also point out that I don’t think your PR agent did you any favours in this chain. Sending in blog responses like “GE are the best…” -.- Not helpful imo.

      Michael

        • Martin

          Hi Michael

          I also used to be with GE and moved to Ecotricity partly because of poor customer service (when I moved house).

          I became annoyed because GE also claimed that if I signed up to them that I would reduce my carbon footprint by receiving 100% renewable electricity.

          What they didn’t mention was that because I would then be using more renewables from the grid, everyone else would in effect have slightly less, the net effect being zero.

          I think a lot of us (myself included), like to feel better about what we do or don’t do (pretty natural feeling). I have now realised that even if Ecotricity supplied me with a 90% brown tariff in a way it doesn’t matter as long as all their profits go into new renewable build. There is a finite amount of RE in the grid what we need is more, not the small amount that is there given to a select few….

            • Michael King

              Hi Martin

              I’m not a PR agent for GE :P and I don’t claim expertise in the structure of the elec industry, so this question is out of interest as much as anything.

              Are you saying that GE bring no additionality at all beyond the Renewables Obligation? That’s not a loaded question – I don’t know.

              I thought the theory behind the GE business model is that they effectively create or aggregate some demand for green fuel. Like a lot of ‘elec companies’ they don’t do the generation and transmission bit, but they work at the supply end. They allow the “green segment” (like me and you – lot of ppl just go for the uswitch cheapest ofc) to buy ‘green fuel’ or ‘do our bit’.

              So they create no additionality? Or does the RO system simply overwhelm any effect other efforts have?

              Without reading the RO act I wouldn’t know how they’ve defined the targets exactly. However a fagpacket check on the DUKES data http://www.berr.gov.uk/energy/statistics/source/electricity/page18527.html
              …shows 2007 looks like 5.2% renewables for all fuel used in generation whereas the RO act say 6.7% target. Calculation and timing differences make this an apples and pears comparison probably.

              Enlightenment and views appreciated :) Checks signed by Mickey Mouse in the post :P

                • Jeffrey Lam

                  Hi Michael,
                  as a long time follower of this blog I could try and answer your questions, but I need to have a good think about the answer first.

                  In the meantime, I suggest you try reading some of Dale’s older posts.

                  Here’s a couple of places to start:
                  ROCs, REGOs and wind-powering GB
                  Does Good Energy cause new generation to be built

                  There may be further answers on ecotricity’s website and on whichgreen, but I’m not 100% certain.

                  Best regards
                  Jeff

                • Martin

                  Hi Michael

                  My unserstanding, is that there is chronic under supply of RE in the market place, and that the ROC target is always going to be higher than the amount supplied.

                  As the output of most generation capacity cannot be increased just because someone signs up to a green tariff (except maybe biomass by burning more – although I imagine most biomass plants generate to maximum capacity), the only way to increase RE percentage is to increase the RE capacity on the grid. Delabole wind farm for example was built before GE ever existed, just buying the RE from GE instead of the previous owner of Delabole has no effect the RE percentage on the grid.

                  GE claim that they stimulate demand for RE but because there is chronic under supply, if GE don’t buy your RE someone else will. eg Westmill Wind Farm could sell their RE to another suplier if GE stopped buying their supply….Westmill will have gone ahead whether GE existed or not.

                  Also instead of hypothecating that GE do or do not increase supply, the good thing about Ecotricity is that they ARE increasing supply, so there is no debate, and their profits pay for it. More customers generally mean more profit = more new RE!

                • Jeffrey Lam

                  I think Martin has answered that better than I ever could!

    • Armin

      So, I email FOE with this and here is their reply. It is pretty much in line with what you have been saying: FOE are happy to take the word of Good Energy:

      Good Energy refute the allegations made by Ecotricity and have explained their retirement of additional ROCs:

      http://www.goodenergy.co.uk/?page_id=4332

      Friends of the Earth is happy with the explanation and will continue with its partnership of Good Energy. We decided to enter this agreement not just because they supply 100% renewable electricity, but also because of their policy on nuclear power and the support they are giving to microgeneration, i.e. people who generate their own energy (domestic and community).

      However, we do not tell people to change their green tariff if they are already on one. For example, if someone is signed up to Ecotricity we do not try and persuade them to join Good Energy. We no longer run a league table on the best green electricity supplier so we do not tell people that Good Energy is the best. We simply say why we use Good Energy and why we have entered into a partnership with them. We also make it clear that we will receive a donation for people who sign up, e.g.

      If you haven’t already switched to a green tariff why not make the switch today? You’ll be reducing your home’s CO2 emissions, supporting long term solutions to climate change, and also gain a £50 donation to Friends of the Earth. Businesses can secure an even bigger donation – up to £120 – by switching now.

      Friends of the Earth is campaigning for more support for the renewable energy market in general. Please see our latest campaign actions:

      http://www.foe.co.uk/campaigns/climate/press_for_change/index.html

      Thank you for contacting us, we do take these concerns very seriously. Our Energy campaigner did meet with Good Energy and, as mentioned above, was satisfied with their explanation.

    • Jonny Holt

      Hello Everyone,

      I see from the GE web page link from Armin’s post that:

      “We have operated the same system over ROC retirement for the past seven years and not received any customer complaints.”

      I think customer complaints or the lack of them is not the issue. This is rather similar to MPs claiming that everything they did was sanctioned by the House of Commons fees office.

      One overarching characteristic of this saga is the staggering and off-putting complexity of the ROC system. Surely it must be possible to have a mechanism to encourage green capacity that is simple, straightforward – and above all, transparent – so that the public can have more empathy with the green power generation sector.

      Has anyone got any ideas?

      Best regards,

      Jonny.

    • Alexandra Deegan

      As we like to collectively be head-in-sand avoidant regarding inconvenient truths us Hermann Beins…

      (And Ze Neue Labour team in particular)

      And it would (sadly) seem that only Caroline Lucas of the Green Party is actually savvy/vocal about peak oil and its serious impacts…

      Interesting to note too….that our Right on Earth Friendliest types… like to keep 110% schtum on that particular topic… but runway HRW – 3 uber dumb no less – with oil heading back to $73pb+ straight back into the airline killing zone and Tony Hayward (BP) feels $90 is just fine…lol

      (That should kill any economic recovery really nicely)

      So onto the interesting part – regarding understanding social inertia for the awesome force that it is – simples… follow this here link to a fab essay… not suitable for any folk suffering from ADHD though…

      http://cluborlov.blogspot.com/2009/06/definancialisation-deglobalisation.html

      (So under 25 year-olds-best-avoid)

      For those that do read it all… it will defo help you think through… and get fully focused and up-to-speed on what’s happening, right here. right now… as we get close to exiting this first decade of our 21st Century…

      Resilient community start-up anybody?

    • Adsolar

      This appears to be a ‘juvenile’ spat ? Between one ‘green’ supplier (Ecotricity, who build renewable generation but supply fossil, nuke & renewable energy) and another ‘green’ supplier (Good Energy, who do not build any generation but claim to supply 100% renewable energy). Forget about all the alphabeti-sphagetti (Regos, ROCs, blah) and focus on renewables: Ecotricity supply ~35% and Good Energy supply ~80%. Ecotricity should get some credit for being a developer of wind farms as well as a supplier, but surely the vitriol should be levelled at Npower who supply at less than their legal obligation (3% instead of 5%). I’m sure Dale can correct these figures, but the point is the vague notion of ‘green’ and Ofegm trying to clarify what is green. (I hate that BG ad showing worlds, one of which has an olde-worlde windmill). Lets credit Ecotricity x2 for being a major developer (compared with their customer base): Ecotricity=70% and Good Energy ~70%, coz they are a bit ‘economical with the truth’. Its a draw. Now, set sights on Npower ;-)

        • Alice

          I couldn’t agree more. The pain of sifting through playground ‘green verses green’ was getting all too much.

          I am completely in line wanting to know that the company I am throwing money at is honest and does what it says on the tin. This has been achieved though- Good Energy ahve been made aware of the discrepancy and have changed their manifesto. What more is wanted here – an apology?? I’m not sure how this stands to benefit anyone.

          For now it seems we are forgetting that we fight for a common cause. A true green warrior would now leave their pride and work together with their rivals to attract people to switch to renewables. At the end of the day, if people can be persuaded to sign up to the idea, then we have a hope of showing the government that their voters want more money and resources invested in green. Individual companies are small fish in a big concept, I think we should remember that.

          Alice