A fundamental precept of the Green Deal is that repayments should be collected through energy bills. These repayments will appear on the customer’s electricity bill as a separate charge. This maximises the number of households and businesses able to access Green Deal finance and facilitates automatic transfer of the charge to a new occupier.
I am a small supplier, do I have to be involved in the Green Deal?
Electricity suppliers with less than 250,000 domestic and non-domestic customer accounts will not be obliged to collect the Green Deal charge. The Green Deal will be an attractive proposition for households and businesses that want to improve the energy efficiency of the properties. This will create a strong incentive for smaller electricity suppliers to opt into the Green Deal charge mechanism. Electricity suppliers that have chosen to remain outside the scheme will be able to opt in at any time.
What happens when the Green Deal charge is collected as part of the energy bill?
The electricity supplier will be collecting the Green Deal charge as agent and trustee of the Green Deal provider. On receiving the payment from the customer we are proposing that the Green Deal portion of the payment is passed to the relevant Green Deal provider or nominated finance provider within 72 hours.
Is there going to be an administration fee?
The Government is proposing an administration fee of £3 per year per Green Deal plan payable by Green Deal providers to electricity suppliers. This is intended to defray the cost of collecting and remitting Green Deal payments.
We are proposing to hold a review of the level of the administration fee three years after launch of the Green Deal. At this point, the cost incurred by electricity suppliers in collecting and remitting the Green Deal charge can be reassessed and adjusted if necessary.
Will the Green Deal affect competition between energy suppliers?
The ability of a customer to switch electricity suppliers will not be affected by the Green Deal, provided the new supplier is participating in the payment collection mechanism.
The Green Deal is a market led initiative which will enable people to make energy efficiency improvements to their homes and businesses at no upfront cost. An innovative new finance mechanism sits at the heart of the Green Deal, enabling people to repay the charge through their electricity bills. We commissioned Deloitte to look at the possible accounting treatment of the Green Deal charge in further detail.
This report considers the possible accounting treatment of the Green Deal for energy suppliers, focusing on the range of default and liability scenarios we considered. The Energy Act 2011 now makes it clear that Electricity suppliers will be acting as agents of Green Deal providers and any revenue collected will be passed to the Green Deal provider on a proportionate basis. The Green Deal consultation document sets this out in further detail.
The report is not intended to cover an exhaustive list of considerations but highlights some of the key issues likely to be relevant.
This report was commissioned by DECC from Deloitte and contains theoretical accounting treatments. The report is not intended to form advice to anyone other than DECC and therefore DECC does not accept any liability or responsibility if the report is relied upon in any way.