Companies buying green energy need to beware

The report, by energy information provider Platts and environmental campaign group Friends of the Earth, reveals that some power companies are charging business customers extra for ‘green’ energy that they have to provide anyway under new Government rules.

“Business customers need to ask why they are buying green,” said Paul Whitehead, Editor of European Utility Retail, published by Platts. “If their main goal is to save money by gaining an exemption to the climate change levy, there are plenty of levy exempt products to choose from. But if they are prepared to pay extra for the environmental benefits of green energy, they need to choose carefully. Too many of the suppliers we surveyed charge a premium for green energy that they would have to generate or buy in any case, to meet their obligations.”

The new Renewables Obligation requires energy suppliers to source 3% of their power from new renewable sources, with the requirement rising to 10% by 2012. Suppliers with insufficient green power have to buy Renewable Obligation Certificates (ROCs) from suppliers with surplus green energy.

The report reveals that many suppliers have increased their conventional energy prices to cover the cost of the Renewables Obligation, and yet still charge a premium to customers who want 100% green power – the sale of which helps them to meet their 3% quota. Some even charge a premium for energy from large hydro plant that has been supplying power under the standard tariff for decades.

The researchers could find only one green tariff offered to business customers in Britain that created additional demand for green energy above the 3% requirement.

Other suppliers offer tariffs that allow customers to gain exemption from the Climate Change Levy, which are allowed to include power from existing large hydro, high quality combined heat and power, and the incineration of municipal waste.

The top green power suppliers are – with the best first: Unit[e], Ecotricity, Viridian, Scottish Power, Scottish and Southern Energy, and London Electricity. The best producers of Climate Change Levy-exempt tariff energy are: Bizz Energy, Scottish and Southern Energy, British Gas, Npower, Energia, and TXU.