Energy firms told to improve green tariffs

17 July 2008

Energy suppliers that offer “green” tariffs must be clearer about the environmental benefits their deals offer, or face the wrath of energy watchdog Ofgem.

Around 350,000 domestic customers have signed up to green deals, but research shows there is a significant amount scepticism regarding the environmental claims made by suppliers. In response, Ofgem has put forward new guidelines that aim to increase consumer confidence and clean up the sector.

As part of the proposal, suppliers will have to prove their deals’ environmental credentials in order to be awarded with a gold, silver or bronze accreditation.

Ofgem has set a deadline of September 2008 for firms to sign up to the guidelines, and an independent body will be appointed before the end of the year to accredit green tariffs.

Ofgem chief executive, Alistair Buchanan, says: “With our revised guidelines we intend to shine a light onto suppliers’ green offerings to show the customer why a tariff is green. Suppliers must tackle customers’ scepticism by providing much clearer information about their green tariffs to customers, so they can easily understand the extra environmental benefits the tariffs provide – our guidelines will help them to do that.”

Currently, all electricity customers help fund advances in environmentally friendly energy, with between 8% and 10% being redirected from their bills to generate renewable energy and reduce carbon emissions.

In order to meet Ofgem’s new requires, green tariffs must go above and beyond what standards tariffs invest in green advances.

Another key concern about green tariffs is that not all customers fully understand the environmental benefit their money has. In order to tackle this, Ofgem says suppliers must provide more information to their customers.

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