August 29 2002 – Some UK electricity suppliers are charging business customers twice for their renewable power, according to a report released earlier this week by environmental group Friends of the Earth and energy information group Platts.
“Business customers in the UK could pay twice for renewable, or ‘green’ electricity by choosing to source some of their power through green-only tariffs,” said the report said.
Under the UK’s Renewables Obligation, suppliers must get three per cent of the power that they sell to customers from renewable sources by 2003.
Green power is more expensive to generate than conventional power. Some electricity suppliers say that is why they haven’t fully passed on to consumers the price savings they have seen under the New Electricity Trading Arrangements, that came into effect last year, said the report’s author, Paul Whitehead.
“But then some suppliers also charge a high premium to their business customers who buy only green power,” said Whitehead.
In effect, suppliers hold onto the three per cent that they legally have to buy for their customers, spreading the costs among all their customers, and then sell that 3% to their green-only customers at a still higher price, thereby receiving compensation twice.
“It’s double counting,” Whitehead said.
For example, business customers who get a standard power supply to some of their manufacturing plants, and then pay for a green-only power contract for other plants are paying once for the suppliers’ cost to acquire the green power and a second time to buy the green power.
Spokespersons from the U.K. power and gas market regulator, the Office of Gas and Electricity Markets, or Ofgem, and from the Department of Trade and Industry, said that passing on the costs of supplying green power is an acceptable practice.
“We would expect companies to pass on reasonable costs to their customers, but what is being charged and why should be transparent,” an Ofgem spokesman said.
“There is a competitive market for supply so the business customers should shop around to get the best rate for their power,” he added.