Plan for energy co-ops to cut fuel bills by 20%

Nicholas Watt, chief political correspondent
The Guardian, Saturday 12 September 2009
Gas and electricity bills will be cut by up to 20% under a scheme that will also cut carbon emissions by encouraging an increase in environmentally friendly technology.
Ed Miliband, the climate change secretary, will today back the scheme, which is designed to answer climate change sceptics who say tackling global warming will mean higher energy prices.
Under the plan, to be launched in Edinburgh by the Co-operative party at its annual conference today, local residents will join schools, community organisations and businesses to form consumer energy co-ops. These would negotiate with wholesale energy groups to supply gas and electricity at between 10 and 20% less than the normal domestic price.
A modest step towards reducing emissions would occur at this first stage because the co-ops would install smart meters in members' homes.
A bigger step in cutting emissions would occur later when co-ops install environmentally friendly technology, including combined heat and power systems (CHP), heat pumps or biomass boilers. CHP is the process by which heat generated at power stations while creating energy supplies is captured and used to heat the homes of local people.
The co-op plan is closely modelled on a scheme in the coal-producing Belgian province of Limburg, where residents joined forces after fuel prices rose after liberalisation of the Belgian energy market in 2003. In all, 15,000 families each save an average of €250 (£218) a year in the scheme run by the ACW charity.
The Co-operative party is interested in the Limburg scheme because Belgium's energy market is similar to Britain's. The party says a series of pilot schemes in the UK have been successful. One of these involved the Reddish Vale Technology College in Stockport, the Co-operative movement's first trust school.
The consumer co-ops would fund their projects by raising capital from schemes such as the Emissions Reduction Target (Cert), which are designed to help environmentally friendly projects. They would also use their status as mutual societies to raise capital from the community, in the way building societies raised funds in the 1980s to compete with high street banks.
Michael Stephenson, the general secretary of the Co-operative party, said: "There is a false choice that we have to kill: that is you can't be green without it costing. People want to be environmentally sensitive, but they see it as punitive. The virtue of this scheme is that it says you can be environmentally sensitive, but save money. The key to reconciling those two objectives is you take a co-operative approach."
Miliband will say today: "Communities should be able to work together to generate clean energy in their own area. We're bringing in guaranteed feed-in rates so local wind or hydro power gets a cashback. We want communities to be able to work together to show their area can lead the way on climate change."