Agenda item

(1)          Both Robert Jeffery and Cian Fitzgerald were welcomed to the Committee by the Chairman. Robert Jeffery introduced himself as the Government Relations Lead for OVO energy. He had been in this post for 18 months and prior to this was advising energy clients as a consultant. Cian Fitzgerald introduced himself as an Economist for OVO energy who had been working there just under a year and had previously been employed by SSE.

Q - How do you ensure that use of nuclear energy is avoided?

(2)          Robert emphasised the impact OVO energy had on actual energy generation was limited as they are a supplier as opposed to a generator themselves. OVO can however control the fuel make-up of the tariffs they offer customers. For example, OVO pays renewable generators a top up to ensure that a set proportion of their fuel mix comes from renewable sources. Customers can purchase a 100% Green Tariff to ensure that 100% of their electricity comes from renewable sources. OVO’s core, and cheapest tariff also has a minimum 33% renewable electricity content. An announcement was made in August 2015 which removed coal from their fuel mix, replacing this with more gas. This ensured that the carbon intensity of OVO’s fuel mix was dramatically reduced (gas has half the carbon intensity of coal) and the tariffs remained competitive. . OVO believes gas is an essential transition fuel to a carbon free world, acting as a reliable and flexible back up to variable renewable generation.

(3)          On nuclear energy specifically OVO believes the one planned future nuclear project, EDF’s Hinkley Point C does not represent a  good deal for consumers.

Q - Your USP at OVO energy is ensuring electricity provided has a high element of renewable resources as its source. However, surely all the actual electricity comes off the grid and is the same as any other provider?

(4)          Robert confirmed the physical electrons are the same as this all comes from the grid. However, by paying top payments to renewable and gas generators, OVO can send a market signal to these forms of generation over others (for example coal).

Q - Is OVO energy essentially a more expensive provider for the customer to ensure more renewable energy in the market? If OVO energy was to be searched on the internet do you believe you would be recommended supplier?

(5) Robert confirmed the green tariff OVO energy offer is more expensive. But the core tariff at 33% renewable is still one of the cheapest. In the UK OVO is consistently in the top 10 of the pricing list and was the first supplier to offer a sub £1000/year tariff last year. Robert said that a 100% green energy system isn’t realistic at this time, at least while some forms of low carbon technology are too expensive and thus not representing a good deal for the consumer.

(6)       In regards to the USP mentioned in the previous question; if OVO has a USP it is their emphasis in excellent customer service, evidenced by them being the first and only “Which” Recommended Energy Provider. OVO also recognises that value for money is important

Q - If as a customer one would be receiving the same electricity as our neighbour would we just be paying more for a better conscience?

(7) Customers choosing 100% renewable or 33% renewable tariffs are sending a market signal to generators to build more of that type of generation at the expense of other forms of generation. They therefore are indirectly helping to decarbonise the electricity system.

Q - Where is the gap in the market for this middle man role? Is there an aspect that adds value over your rival suppliers?

(10) Robert explained unlike the Big Six suppliers who inherited staff and sites from their state owned predecessors, OVO is much more efficient and dynamic, investing in the latest technology and systems. They have had the freedom to innovate and offer new products in the changing energy market and it is one of the reasons they have grown over recent years.

Q - Please establish what is Green electricity? I get my gas from Sainsburys and get nectar points alongside that. Can you beat that?

(11) Robert explained that Sainsbury’s Energy was simply a ‘white label’ of British Gas. White labels enable organisations like Sainsbury’s to partner with licensed suppliers and offer tailored products with additional benefits associated with that specific brand.

(12) Through OVO Communities, OVO has offered a local white label service to councils and housing associations. Robert stated that OVO welcomes more players offering innovative products that engage customers in the market.

Q - I am interested in the scalability of your model, presumably there is a lot of demand. As demand scales up what happens if you cannot provide 33%? How do you audit and confirm you are meeting the 33% customers are paying for?

(13) Cian explained there is an audit procedure. They are required to show a matching amount of certificates to the amount of electricity consumed from renewable sources. There is an annual calculation to confirm these are matched. Whilst OVO is paying a slight premium for guaranteeing that a set proportion of the electricity they supply comes from renewable sources, they are confident that for the foreseeable future these prices will not fluctuate significantly and they will be able to buy the necessary top certificates from renewable generators.

(14) Robert explained that from the very start OVO has invested in scalable systems. They are very conscious of having the processes and staff in place for growth spurts. OVO is confident that they can meet demand as their community partnerships grow. These partnerships can be tailored to a Council’s specific needs to ensure it is sustainable. OVO has been able to cope with growing demand. For example, through their Cheshire East Council partnership, the amount of customers has grown significantly since the launch in March and the systems have coped. (15) Each community partner can choose how they market their tariffs locally – from ward by ward campaigns, to advertising banners, radio adverts, to stalls at community events.

Q - Could you give us a general outline of projects with other Councils?

(16) Robert explained since March 2015 the Cheshire East partnership has attracted almost 3,000 customers. Average savings for switchers to Cheshire East are currently around £250 a year. The Southend and Peterborough partnerships have seen similar average savings and a large number of the switchers are over 65.

Q - Is that average actual customer data?

 (17)    It is the average of actual savings from switching, comparing their old tariff with their new tariff.

Q - In Kent we have had energy champion projects where the public are advised at events by representatives of energy companies. Do you have anything like these projects?

(18) Robert confirmed that OVO has supported similar events in the past. Southend have also partnered with CAB and other groups that advise the public on energy switching. MPs have also held energy advice surgeries which OVO has attended.

Q - How have you chosen the Councils you work with? Also how many jobs are guaranteed by the renewable energy sources that you promote compared to nuclear power such as those provided by the Dungeness Nuclear Power Station?

(19) In regards to which Councils OVO work with Robert confirmed they wrote out to every Local Authority and asked for feedback before launching the offering. Potential partners then approached OVO who ensured they had an appropriate business plan before confirming the partnership.

(20)  In regards to the issue with nuclear power it was emphasised OVO is opposed to Hinkley Point C specifically as it is too expensive. Cian said he imagined over time that renewable energy and gas would be more beneficial across the UK and offer more jobs as well as being cost effective.

Q - Energy champions mentioned earlier, just how qualified are these energy advisers to give this advice?

(21) OVO doesn’t have energy champions that solely attend these external events. Robert explained that as and when local groups or MPs approach OVO to set up one of these events they ensure they send a trained customer service adviser who all know switching inside and out. They undergo an intensive training process before even going on the phones to advise customers.

Q - What can KCC do?

(22) Robert stated that Kent could look to building or investing its own local energy with the potential opportunity to link this local generation to local supply. As soon as you can link these two together you can start to realise the benefits for local homes and see the direct impact on people’s energy bills. OVO’s local supply model is one way that communities can start to do this.

(23) Cian advised that it could also benefit KCC to invest in electricity storage which can be used to generate revenue by buying electricity while it’s cheap and selling it when it is in demand.

(24) Robert also advised it would be beneficial to encourage residents to install ‘smart meters’ that would help them control their energy use. By seeing the cost of energy use customers will be incentivised to control their energy consumption to save money. This will reduce overall consumption.

(24) The Chairman thanked Robert and Cian for attending and answering questions from Members.