Gas & Electricity


Ethical shopping guide to gas and electricity suppliers, from Ethical Consumer.

Ethical shopping guide to gas and electricity suppliers, from Ethical Consumer.


This is a product guide from Ethical Consumer, the UK's leading alternative consumer organisation. Since 1989 we've been researching and recording the social and environmental records of companies, and making the results available to you in a simple format.


Holding power to account

 

The report includes:

  • Ethical and environmental ratings for 20 electricity & gas tariffs
  • Best Buy recommendations
  • Which companies back fracking?
  • Energy prices
  • Political donations
  • Green gas - biogas

 

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Our ratings are live updated scores from our primary research database. They are based on primary and secondary research across 23 categories - 17 negative categories and 6 positive ones (Company Ethos and Product Sustainability). Find out more about our ethical ratings

 

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Best Buys

as of July/August 2017


As our ratings are constantly updated, it is possible that company ratings on the score table may have changed since this report was written.

 

Our Best Buys for green electricity and gas tariffs are Ecotricity and Good Energy, as both of these companies do something that makes a difference to the world.

 

Our Best Buy for socially ethical electricity and gas companies is Ebico, a non-profit that structures its pricing so as not to penalise the poor.

 

Out of the Big Six, our recommended company is SSE, which is supporting renewable energy more than any of the others.


Places
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Image: Good Energy

 


Ethical Consumer makes a small amount of money from your purchase. This goes to fund our research and campaigning. We ethically screen all the sites we link to.
Last updated: June 2017 

 

 

 

Ethics of Gas & Electricity suppliers

 

Electricity supply was responsible for 29% of total greenhouse gas emissions in the UK in 2015 – still the largest amount of any sector, even though it has been falling.

Coal is in decline throughout the whole world due to being undercut by cheap shale gas and by the falling cost of renewables.

In the UK, an additional factor is the 2015 introduction of an £18-per-tonne carbon floor price, a tax on carbon emissions that is paid by electricity generators. As coal is the most carbon intensive of the fossil fuels, this is brilliant news. 

 

Image: UK electricity

 

Looking at UK generation figures over time, you can see coal’s dramatic collapse:

As a result of the changes shown on the graph, CO2 emissions from UK electricity generation in 2016 were approximately half those in 2010.

 

Graph: Annual electricity generation

 

Globally, wind and solar are taking half of all investment in new electricity generation capacity.[1] Renewables generate close to a quarter of global electricity, and a similar proportion in the UK. While this is poor compared to countries like Spain and Denmark, we are the world leader in offshore wind, our key resource.

 

Climate Policy  

 

The bad news is that UK climate policy is being gutted.

Over the past six years the Tories have unleashed a torrent of anti-renewables and anti-climate legislation. In 2011 they introduced a harsh cap on all subsidies to renewables, in what they said was an effort to keep down consumer bills.

In 2015, they cut the rate of the solar PV feed-in tariff, and announced that it would be closing altogether in 2019. In the same year, they removed the exemption that renewable electricity had on paying the Climate Change Levy, a tax on commercial energy users.

They scrapped the plan to build new houses carbon neutral, and the Green Deal home improvement fund which helped people insulate their houses. They also started to lay waste to onshore windfarms, the cheapest renewable technology. They axed all subsidies to them, and the law was also changed to give local residents a veto over their receiving planning consent.

To round things off, in November 2015 the government made a shock last-minute decision to cancel a £1 billion carbon capture and storage development competition, which had been promised as a way of kickstarting the technology in the UK.

There have been a few policy initiatives in the opposite direction. The Renewable Heat Incentive was one of them. The carbon floor price was another. But overall the picture is not looking good. The Green Alliance claims that investment in renewable energy is likely to decline by 95% by 2020. For the first time in many years, a smaller proportion of our electricity came from renewables in 2016 than the year before.

 


 

 

Changes in the Market

 

There have been a couple of changes in the electricity and gas suppliers market over the past few years. First, although the Big Six (EDF, British Gas, SSE, ScottishPower, E.ON & Npower) still supply about 85% of customers, the number of small companies has exploded. Second, the Big Six have all dropped their ‘green’ tariffs in response to Ofgem rules limiting them to four tariffs each. To what extent these tariffs are meaningful is one of the main topics of this guide.

 

 

Political donations

 

Ecotricity is one of the largest corporate donors to both the Labour and Green Parties. In the last five years it gave £450,000 to the Labour Party, £70,000 to the Lib Dems, and £20,000 to the Greens. Dale Vince, the company’s owner, says that the company is trying to fund other political parties because of the dire threat that the Tories pose to renewable energy development.

We at Ethical Consumer are engaged in an internal discussion about whether to continue marking companies down for donating to left-wing parties. We currently do, so Ecotricity gets marked down for these donations, although some readers may view them as a perk rather than a bug.

Other companies give smaller amounts to political parties. Over the last few years ScottishPower gave the Labour Party £42,000 and the Tories £26,000; and E.ON and EDF gave the Tories £8,400 and £2,500 respectively.

 

 

Excessive director’s pay

 

Octopus, ENGIE, Greenstar and all of the Big Six except EDF got marked down for paying at least one director over £1 million. EDF may do so too, but the information wasn’t available.

 

 

Tax
 

This market is exceptional in that two companies actually have the Fair Tax Mark, which gives them a clean bill of health tax wise: Co-op Energy and SSE.

ScottishPower is also in the clear on tax, as it does not seem to have any high-risk subsidiaries in jurisdictions that Ethical Consumer considers to be tax havens. The other four of the Big Six received our worst rating for likely use of tax avoidance strategies, as did ENGIE.

 


 

 

Biogas

 

Another of the major changes that has occurred recently is that several “green” electricity and gas companies have started selling ‘green gas’ – biogas.

Biogas is made by decomposing organic matter like food waste or grass in the absence of oxygen. Once cleaned up it is chemically identical to natural gas. Indeed, natural gas was made exactly the same way, just a lot longer ago.

The problem with biogas is the same as any other biofuel: where to grow the feedstock. However, it is possible to get some from waste, and at the moment we are probably not utilising the full sustainable UK potential in that regard. The Committee on Climate Change’s most recent report on heating argues that biogas could sustainably provide about 5% of our heating needs.[2]

 

Why biogas now?

Biogas has been used to generate electricity in the UK for many years, and has been promoted through the RO. However, in 2011, an additional subsidy was added in the form of the Renewable Heat Incentive (RHI), to incentivise its use for heat as well. This was a generous subsidy and the industry has exploded. In 2015, the UK was the fastest growing biogas market in the world.

As the market has grown, biogas has increasingly come from dedicated crops rather than waste. In 2016, the government changed the rules so that new biogas plants will only receive support if at least 50% of the biogas is derived from waste. Levels of support have also been cut, meaning that the growth may start to tail off.

 

How are companies contributing?

The structure of the RHI is different from the RO. In the case of the RHI, there is no mandated quantity of biogas that companies must use, there is just a fixed subsidy paid per MWh that they inject into the grid. This suggests that, unlike with electricity, you should be able to get a subsidy in one place without reducing it somewhere else. And that means that, although the biogas boom is still largely being driven by the government, when you buy biogas you slightly increase the demand for biogas, just like you do when you buy any normal product.

The only crucial question is to what extent this is a good thing. It is definitely the case that not all of the biogas being supplied is coming from waste. And because they need so much land to grow on, all fuels from dedicated crops raise very complex issues.

Even if the actual land they are grown on was not being used for anything important at the time, maybe it would otherwise have been used for something in the future, and instead those future activities may be pushed into forests or onto good agricultural land.

One thing is certain: biogas is not a solution for everyone’s heating. It is not ‘scalable’.


 

 

The Vital Statistics

 

Electricity generation capacity owned by the companies

There is considerable difference in the capacity that companies own, even among the Big Six. Figures are shown in the table below:
 

Table: Electricity generation capacity

 


 

 

The grid mix of the different suppliers

 

The fuel mix of the electricity supplied by the different suppliers in 2015 is shown in the box below – if you want updated figures at a later date, they are easy to obtain from the electricityinfo.org website. However, as described in our feature on Green Tariffs, how meaningful this is with regard to renewables is very debatable. 
 

Table: grid mix of the different suppliers

 


 

 

Energy Prices 

 

Per kWh, the cost of electricity has been steadily rising for over a decade, but this has been offset by the fact that we are now using less energy as a result of improved appliance efficiency standards, and the average bill has stayed about the same.[3]

Over the past few years, the Big Six have been repeatedly accused of profiteering and price fixing, and the Competition and Markets Authority (CMA) spent two years investigating the sector between 2014 and 2016. Eventually, however, it did not find evidence of price fixing, and back-peddled on previous claims about how much the Big Six had been overcharging customers.

Many people have called the investigation a whitewash. The CMA agrees that the smaller suppliers generally charge substantially less. This is rather odd considering that, in most cases, the product is basically identical, and you would expect the Big Six to also be benefiting from economies of scale. So there surely must be something going on.

You are probably paying more than you need to

What the CMA did say unequivocally was that many people are paying far more than they need to. Differences between tariffs can amount to 20% of an average bill. This is quite a new development, and many people may not yet have caught on that they can save a substantial amount of money by shopping around.

Companies must now produce a Tariff Information Label and a Tariff Comparison Rate to allow customers to see key information about their tariff and compare it with others. This should mean that finding the best deal is easier, however, watch out for price hikes in year two.

You’re unlikely to be losing customer service by switching to a cheaper tariff. The CMA say, “we have seen no evidence to suggest that suppliers offering the cheapest tariffs have worse quality of service than those offering more expensive tariffs”.

The whole thing also has large social justice implications. The CMA found that those who don’t switch are likely to be people who are struggling financially, without qualifications, over 65, on low incomes, living in social housing, disabled, or single parents.

They also found that the people who would gain the most from switching, those who are currently paying the highest prices, tend to be those with incomes below £18,000, in rented accommodation, or in receipt of a Warm Home Discount rebate. In other words, the energy companies are milking the most vulnerable members of society.

 

Addressing the social issues around bills

A few companies are explicitly trying to address the anti-poor nature of the gas and electricity market. Ebico, a tiny supplier with Christian roots, charges all its customers the same price regardless of how they pay, meaning that it uses the extra income from direct debit customers to keep down prices for pre-pay and quarterly consumers, who are generally the poorest.

Robin Hood Energy makes a point of saying that it does not switch customers onto expensive tariffs when their old contract expires, as the Big Six often do. And the companies which have only one tariff, such as Ecotricity, can’t do this anyway.

In terms of the wider issues, you could argue that the level of concern about energy bills is an argument for prioritising investment in the cheapest renewables, as they give the biggest bang for their buck. However, low-carbon policies, including subsidies and carbon taxes, currently only account for about 9% of an average energy bill,2 while, as described above, the difference between different tariffs can itself amount to 20%. In other words, it is not low-carbon policies that are the cause of fuel poverty.

 


 

 

Which Companies back Fracking?


If you’re concerned about the expansion of fracking in the UK you might want to avoid companies that are involved. Many are keeping quiet. The information we have found on the companies in this guide is below. Note that the first shipment of US fracked shale gas, imported by Ineos for manufacturing, arrived in September 2016. See our feature on fracking for the latest campaigning efforts.

 

Table: Which companies back fracking

(click to enlarge

 

Barclays fracking campaign win

 

Barclays is withdrawing its investments from fracking company Third Energy, according to a response by Chairman John McFarlane to a 70,000-strong petition against fracking that was presented to him at the company’s AGM in May.

Third Energy is licensed to frack in Ryedale, North Yorkshire: the only site other than Preston New Road which currently has permission in the UK. It is majority owned by Barclays.

 

Image: Toxic Bankers

 

Barclays was targeted by activist network RisingUp! during the Global Divestment Mobilisation week in May with people openly graffitiing branches with anti-fracking messages in Bristol, Stroud and Huddersfield. A #StopBarclaysFracking week of action in October saw 100 actions targeting the bank in a single week.

“This is... a testament to the strength of people power and tireless campaigning from people all over the country,” said Fossil Free UK.

But it’s not the end. Barclays is the UK’s biggest bank backing fossil fuel extraction globally, with over $65 billion invested in new fossil fuel infrastructure. It is also the banker for, and 4th largest investor in IGas Energy, the company with the most oil and gas exploration licences in the UK. The fight goes on.

 

 

 

Company behind the brand
 

Ecotricity was started in 1995, which makes it the father figure of the specialised green suppliers. It has built the most renewable capacity of any of them, mostly wind. The 70 MW that it now owns is about 0.5% of the UK’s total wind capacity.

Ecotricity is owned by the reportedly eccentric Dale Vince, who is interested in a lot of environmental ideas, and the company runs various side-projects such as building an electric sports car called ‘Nemesis’. Vince blogs on climate issues. In 2010, he bought much of Forest Green Rovers Football Club, was appointed chairman and persuaded the whole club to go vegan.

 

 Want to know more?

If you want to find out detailed information about a company and more about its ethical rating, then click on a brand name in the Score table. 

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References

1 UKERC Energy Policy Review 2016
2 Committee on Climate Change, 2016, Next Steps for UK Heat Policy
3 Committee on Climate Change, 2017, Energy prices and bills – impacts of meeting carbon budgets

 


 

 


 

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