Guidance

Energy Security Bill factsheet: Energy Company Obligation buy-out mechanism

Updated 1 September 2023

We estimate that ECO4 will help upgrade an extra 450,000 homes, cutting on average £300 off their energy bills, preventing 15.08 megatons of carbon emissions over the total lifetime of the measures.바카라 사이트¯바카라 사이트¯바카라 사이트¯

1. Why are we legislating?

ECO바카라 사이트¯places an obligation on energy suppliers to install energy바카라 사이트¯efficiency바카라 사이트¯and heating바카라 사이트¯measures바카라 사이트¯in England, Scotland and Wales and is focused on providing support primarily to low income and vulnerable households. Suppliers meet their obligation by contracting with a third party to find eligible households and install measures.바카라 사이트¯Â 

As committed to in the Energy White Paper, we are legislating to enable the removal of obligation thresholds under the scheme without creating significant financial and administrative burden for small suppliers. 

Currently, only suppliers with over 150,000 customer accounts are obligated, which has led to market distortions.바카라 사이트¯Smaller suppliers have been exempt from ECO as their size means the administrative costs of fulfilling their obligations would be disproportionate compared to larger suppliers.바카라 사이트¯However, these thresholds create market distortions as smaller suppliers are able to undercut other suppliers who have to pay ECO costs and recoup these from customer bills. 

This measure will therefore include smaller suppliers in the ECO scheme while ensuring they do not face disproportionate costs through a 바카라 사이트˜Buy-Out바카라 사이트™ mechanism.바카라 사이트¯This measure will achieve a more equal and fair energy market for suppliers and spread the cost of ECO amongst a greater number of domestic consumers.바카라 사이트¯바카라 사이트¯Â 

We are legislating to enable the removal of obligation thresholds under the scheme without creating significant financial and administrative burden for small suppliers. 

This measure will achieve a more equal and fair energy market for suppliers and spread the cost of ECO amongst a greater number of domestic consumers.바카라 사이트¯바카라 사이트¯Â 

2. How the Bill will achieve this

The Bill will provide powers to the Secretary of State to introduce a buy-out mechanism through secondary legislation under the Energy Company Obligation (ECO) scheme. 

The powers from primary legislation would enable the Secretary of State to:  

• Enable suppliers to make a buy-out payment;
• Set the buy-out price;
• Make the criteria for approved third parties and purposes to which a buy-out payment is made;
• Set the procedure to be followed by suppliers to make buy-out payments.

Secondary legislation will establish the details of the mechanism and will be preceded by a separate consultation.  
## Background

The Energy Company Obligation (ECO) scheme is a requirement that the 바카라 사이트 has placed on energy suppliers to install energy efficiency and heating measures to people바카라 사이트™s homes. Energy suppliers are obligated to deliver the scheme and they recover the costs of delivering the scheme through customers바카라 사이트™ energy bills. This scheme is therefore not a grant scheme, but an obligation placed on energy suppliers.바카라 사이트¯It has been in place since January 2013 and has delivered around 3.4 million measures in 2.4 million homes up to the end of February 2022.바카라 사이트¯바카라 사이트¯바카라 사이트¯Â 

As per the Sustainable Warmth Strategy, 바카라 사이트 has committed to a four-year, £4 billion successor scheme, to accelerate our efforts to improve homes to meet fuel poverty targets. ECO4 will be focused on the least energy efficient homes occupied by low income and vulnerable households in Great Britain.바카라 사이트¯바카라 사이트¯The ECO4 consultation was published last summer, and the 바카라 사이트 Response was published in April 2022.바카라 사이트¯바카라 사이트¯Â 

3. Further information

The following documents are relevant to the measures and can be read at the stated locations: