We must tackle these false claims for domestic green power tariffs

It's time to overhaul the system that allows electricity firms to hoodwink customers trying to go green

Juliet Davenport
guardian.co.uk, Monday 9 February 2009 13.19 GMT

Ofgem's publication last week of new guidelines to clear up confusion over green electricity tariffs has caused outcry from both industry and NGOs.
As one of the original signatories to these guidelines, and having called for clear rules, regulation and transparency over green tariffs for several years, I thought I would offer some clarity.
Ofgem has published these new guidelines in order to encourage greater uptake of green tariffs from consumers after many questioned the environmental benefits that green tariffs could bring. This was perhaps unsurprising, given that a lot of unscrupulous energy retailers were simply repackaging electricity they were legally obliged to source or produce under the government's renewable obligation. In other words they were charging consumers a premium tariff for electricity which had already been paid for through additions to standard tariff bills.
In other cases, suppliers have been taking advantage of the market structure to "double count", or sell the same unit of renewable electricity two to three times due to the certificates awarded for renewable generation.
For each MW of renewable electricity produced, the generator is awarded three certificates: a Rego (renewable energy guarantee of origin), a Roc (renewable obligation certificate), and a Lec (levy exemption certificate).
This allows the more underhand operators to, for example, sell once to a domestic customer using the Rego as proof of a green tariff; and the same unit again to a business customer using the Lec as proof. Businesses pay a high price for the Lecs as this exempts them from the climate change levy. Both customers think they are getting a green tariff and suppliers make hefty profits deceiving the market.
Under the proposals in the new guidelines the only measure of "green-ness" will be the Rego. Suppliers will be obliged to hold on to the Lecs rather than being allowed to sell them. Neither will Rocs be eligible as a measure of green supply. They will return to being a financial support mechanism, so selling them on will not allow others to claim green tariffs. This should close the market in double counting immediately. And under a new, independent accreditation scheme a tariff will only be regarded as green if it brings benefits beyond the suppliers' existing legal obligations.
This will have to be transparent to the public. First, each supplier signed up to the guidelines will have to provide customers with a fuel-mix disclosure chart displaying the percentage of each energy source used by the supplier to give an idea of their environmental credentials. This information is currently freely available online, but does not have to be provided direct to customers.
Secondly, suppliers will have to give a description of the extra measures they are taking beyond their legal obligations. This could be through things like supporting community-based renewable projects or installing energy efficiency measures. Finally, they will have to carry a quality mark that certifies that the extra environmental activity will abate a minimum level of carbon dioxide equivalent emissions.
The idea behind this is to provide reassurance to the public and encourage greater uptake of green tariffs in order for improved energy efficiency and greater amounts of renewable energy to be developed. The more there is, the cheaper it will become and the greater the impact on greenhouse gas emissions.
Customers will be able to see exactly where their fuel comes from with each supplier and make choices accordingly. As each green tariff will have to show evidence of carbon savings beyond legal obligations, we hope it will encourage greater independent generation from individuals, households, landowners and small-scale developers.
The new guidelines will only be voluntary and only apply to designated green tariffs. However, it is worth asking those who oppose them what the fuel mix is in their tariff or how many times they are selling their electricity certificates.
While they may not be perfect, we feel the guidelines could shine a welcome light into some murky waters. After all, we won't reduce emissions if we're simply kept in the dark.
Juliet Davenport is CEO and founder of green power firm, Good Energy.