How will the £1bn ECO+ energy efficiency scheme change the price cap?

Ofgem is seeking views on how the cost of suppliers’ obligations associated with the scheme will be recouped through customers’ bills

Ofgem has launched a consultation on its proposed approach to reflect the government’s planned expansion of the Energy Company Obligation (ECO) scheme in the price cap.

A month ago, the government announced it would make £1 billion of public funding available for an energy efficiency scheme, named ECO+, to help households reduce their energy bills.

As the ECO+ scheme is expected to place obligations on suppliers, the energy regulator needs to consider how this will be reflected in the energy bills.

The changes are likely to be seen from April 2023.

In the official documents outlining its proposals, Ofgem stated: “In view of the additional obligation ECO+ places on eligible suppliers and the planned delivery timescales for the scheme, we propose to include an ECO+ allowance from cap period April 2023 – June 2023 onwards.

“We consider this is appropriate to ensure the cap reflects the notional supplier’s underlying efficient costs of supplying default tariff customers. It will also secondarily support quick delivery of the scheme.”

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