1. CERT: Priority Group Flexibility Option Emily Flatt Energy Efficiency Manager, Ofgem 4 th September 2007

2. 2 Why do we need the PG flexibility option? Increases options for suppliers to reach their CERT Priority Group obligations Attempts to targets a portion of PG activity to the most fuel poor in this group

3. 3 What is it? The transfer of a capped percentage of a suppliers target from PG to non PG in return for undertaking additional fuel poverty activity (details coming later) Extent of fuel poverty action determined by notional cost saving of transferring activity from PG to non PG Translation factor applied to convert the carbon transferred into number of fuel poverty measures

4. 4 Eligible Fuel Poverty measures Solid wall insulation Biomass boilers (under consideration) Ground source heat pumps

5. 5 Eligible Fuel Poverty recipients Recipients A subgroup of the PG attempting to identify the fuel poor These are: Not in social housing ie home owners Off the gas grid

6. 6 Using the mechanism Proposed that suppliers apply as a normal scheme, on application pro forma Applications will include: (I will go into this in more detail later with a worked example) % reduction sought Carbon equivalent of this Which fuel poverty measures will be used Approval will be granted if all the required info is provided and is correct. (Any Qs at this point)

7. 7 A word about terminology… ‘relevant reduction’ = carbon equivalent of the % reduction in the PG target ‘specified reduction’ = carbon savings from fuel poverty measures (determined by translation factor) THESE WILL HAVE THE SAME VALUE!

8. 8 Worked example of application (1) Supplier x has a carbon obligation of 10,000 tC PG obligation of 4,000 tC Wants to switch 5% of their obligation from the PG to the non PG 5% = 500 tC New PG obligation would be 3,500 tC New non PG obligation would be 6,500 tC Overall obligation remains 10,000 tC 500tC to be achieved through fuel poverty measures

9. 9 Worked example of application (2) The application must include: % reduction of overall obligation = 5% Relevant reduction = 500tC Specified reduction = 500tC Which fuel poverty measures will be used = eg solid wall insulation How overall obligation will be achieved = brief written summary of supplier’s other schemes

10. 10 To determine the number of fuel poverty measures needed: Specified reduction = number of fuel poverty measures needed translation factor eg 50 Specified reduction = 500tC 500 = 10 fuel poverty measures needed 50

11. 11 Supplier x obligation illustrated

12. 12