22 April 1998

Paul Haley, New Business Development Manager, Eastern Electricity (Energy Retail, working on strategy and product development)

Green Energy at Eastern Electricity

I should begin by saying that we have actually made a commitment at Board level to renewables, and this is totally separate to our green tariff scheme, "Ecopower", which I will come on to later.

We are the first company, so far as I know, to commit to an actual proportion of capacity derived from renewables within a specified time scale. This is 10% of our capacity by 2010. We will be funding that completely through the part of our business called Eastern Generation. We will be investing in wind power, and other viable, renewable sources, in order to hit the target. That equates to something like an area the size of Norfolk being supplied from renewables, and so it is a big commitment.

This is something we are doing anyway, and we are not asking customers to pay anything extra for it. But on top of that, we are currently negotiating for some of the existing renewable capacity that is coming out of the Government’s first Non-fossil Fuel Obligation (NOFFO) order. Obviously I cannot go into much detail on that because we are part of a competitive bid, but just to say that we are in that process, which will help green our mix a bit.

On top of all that, we have launched Ecopower, which is a green pricing scheme. This basically gives customers a chance to do their bit. This, of course is extra, on top of what we are doing anyway. It is a chance for customers to show that there is a market for green products and that people are willing to support them. It means them paying a small premium of either 5% (Ecopower) or 10% (Ecopower-plus) on their normal domestic "general" or "economy-seven" tariff with us. We then match that money; so it is in effect doubled. The combined amount then goes into a charitable trust, which, although it includes an Eastern Electricity representative as a trustee, it is entirely independent. The trustees then will then decide how to invest the Ecopower money that has built up over time, after setting the criteria with which to evaluate potential projects. The trust will invite small independent developers of green power looking for funds and bidding for funds and back those projects evaluated by the trust and considered suitable for funding. In the long-term, once things get off the ground and become viable, the developers will pay money back to the trust so that it could be used to help further projects in the future.

It is very important to emphasise that none of the funds that are raised through Ecopower from customers and matched by us will be used to fund any Eastern Generation projects. They will all be totally independent outside projects. The big point is that Eastern Generation separately have made a separate 10% commitment for renewable energy by 2010. This will be entirely funding by Eastern. We are therefore demonstrating to customers that we are doing a lot anyway. We are not just asking customers to pay more for something that perhaps they might think we should be doing. We are doing a lot, and this is their chance to do a bit extra.

Capacity from renewables is at present very limited. Richard Rigg, our Development Manager, has a plan for a phased approach. We have already signed a deal for our first megawatt of wind generated electricity which is actually based in Northern Ireland. That is going ahead. But I think the size of the commitment means we would need something like one of those every eight days till 2010. Obviously he has bigger plans than just one megawatt wind turbine.

We are also involved with a chicken litter plant at Eye, in Suffolk. I believe we co-own Fibrewatt, the company that runs it. It is basically a biomass plant, but using straw and chicken litter.

Bill Richmond has recently been appointed as Renewable Generation Manager. His main job is to find the way of actually meeting the 10% renewables target. He will probably be recruiting a team of people and obviously looking at the best ways of investing money in the right technology to achieve it.

In addition we are doing a lot internally: we have a 50% paper reduction target in place at the moment; we are reducing our own energy use in our own buildings as well as energy efficiency to customers; and we have a business unit in the company under the name of "The Environment Business Unit" whose role is just to lobby all parts of the group to be more environmentally conscious. We have an environmental director at board level, and works with outside influences like The Environment Council and Friends of the Earth to develop our internal policies. So in all we are doing quite a lot without actually making a lot of noise about it.

Are you familiar with the schemes that other electricity companies have, offering a guaranteed renewable supply in return for a premium?

SWEB do one called Green Electro. We looked at that idea, but we felt it was not right. Because at the moment it is technically impossible to buy green energy, if you buy electricity you buy it from the pool that everyone buys it from. And in that pool, there is a mix of everything from nuclear through coal, obviously a lot of gas, and all the renewables as well. So to say that someone is actually buying green energy at the moment is technically incorrect. What they are really saying is that if you pay a premium we will guarantee to buy the amount of electricity you use from a renewable generator. This is what all the companies are doing now already. We at Eastern are contracted to buy 13 and a half per cent of all the renewable capacity available under the the NOFFO scheme. SWEB are already committed to doing that, so they are already buying a certain percentage of renewables. So really to charge some customers extra for that is not a product I would want to market.

How many people take up Ecopower scheme?

It was first made available last October. We had a press launch, and quite a lot of coverage in the national press and local television. Since then we have carried out some market testing which indicates about a hundred customers – which, on the basis that we have only targeted about five or six thousand, is quite a good percentage. What we are trying to do is to market this product in a green way as well. We have 2.8 million customers and to circulate them all would mean 2.8 million pieces of paper in the bin, and then in a landfill somewhere. So we are trying to market it in a green way. We have estimated about 2% of our customer base, from research, would want a green product and would also pay extra for it. That gives us a target of about 40,000 to 50,000 people. Now the trick, of course, is to locate the 40,000 out of 2.8 million. So what we are doing is targeting through green lists. We have advertised in Friends of the Earth magazine which so far has given us the best response, as you might expect.

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