Centrica has been recognised as a leader in tackling climate change following a ranking assessment of the ‘big six’ UK electricity generators.  Generating climate change, a benchmarking report for WWF-UK by Innovest, commended Centrica’s policy on climate change as going beyond the expectations defined by WWF. The study focuses on a range of criteria including actual practice, performance against regulatory standards, and coherence of carbon management and strategy. It compares the ‘carbon profiles’ of the UK electricity generation companies by assessing portfolios, emissions over time, performance against renewables and energy efficiency commitments, and company initiatives. Gearoid Lane, Managing Director British Gas New Energy, said: ‘We’re delighted to top the green league table of energy suppliers. It recognises how seriously we are taking our responsibility to manage our own carbon impacts and the lead we’re taking in providing customers with low carbon products and services. It also highlights the fact that the electricity British Gas provides has the lowest CO2 emissions of all the major UK suppliers. ‘Today’s announcement further reinforces the Carbon Disclosure Project’s recent report, which recognised Centrica among only 60 companies worldwide as a sector leader in the area of carbon disclosure and climate change strategy.’

In particular, the WWF/Innovest report commended:

• Centrica’s best-in-sector electricity generation carbon intensity and the fact that is also the only company to report a year-on-year reduction in carbon intensity
• The launch of British Gas New Energy, which confirmed Centrica as the clearest ‘first mover’ to identify demand from consumers for low-carbon energy services
• The central role of Sam Laidlaw, Centrica’s chief executive, particularly surrounding the launch of the company’s British Gas New Energy business
• Centrica for disclosing the clearest understanding of the capabilities of carbon capture and storage solutions
• Centrica’s recently relaunched environmental awareness campaign which engages employees and highlights the company’s position on climate change

Water service watchdog Ofwat is planning to fine Thames Water £12.5m for reporting and customer service failings.

Average four bedroom homes are getting an ‘E’ energy rating, according to a survey from the introduction of Energy Performance Certificates (EPCs) and Home Information Packs (HIPs). New information six weeks after the launch of EPCs and HIPs, shows that average four bedroom homes and above could save hundreds of pounds off heating, lighting, and water bills. Most homes are receiving an ‘E’ rating in their EPCs on the A-G scale, but this could potentially rise to a ‘C’ if consumers undertake measures recommended in the certificates, such as loft and cavity wall insulation. The Government is today extending EPCs and HIPs to three bedroom homes so more buyers will get the same information to cut carbon emissions and reduce fuel bills. The early findings come from a snapshot survey of energy assessors and EPCs provided since the launch of HIPs, which show average 4 bedroom homes are being rated ‘E’ and could typically save £180 on heating, £60 on lighting and £30 on hot water bills, a year. The top 5 recommendations given by assessors for improving energy efficiency have been: cavity wall insulation, changing to low energy lighting, putting thermostatic valves on radiators, loft insulation, and double glazing. The introduction HIPs is already starting to reduce costs and improve transparency in the housing market. More than 85 local authorities have reduced their search costs, in some cases by more than £100. The average pack is taking around 5 days to compile, with major estate agents charging in the region of £300 plus VAT for a HIP, on an upfront or deferred basis - £200 to £250 of which is already paid under the current system. “Families buying four bedroom homes are getting clear information which shows how they can save hundreds of pounds on their fuel bills and cut carbon emissions too. It is important that this should be available for people buying three bedroom homes as well.” Typical ‘green grants’ of £100 to £300 for energy saving improvements like loft insulation are available to many home owners from energy suppliers as part of their legal obligations introduced by government to improve energy efficiency. Consumers can now access details of green grants and offers by tapping in their postcode on the Energy Saving Trust’s website. Energy suppliers are also providing direct information about grants to home buyers when they sign up to an energy contract.

Notes to Editors

1. EPCs and HIPs were introduced for four bedroom homes and above on August 1, and are today being rolled out to three bedroom homes. A further announcement on rolling out the packs to the rest of the market will be made in due course. Our key criteria will be ensuring a smooth implementation and that the necessary energy assessors, both nationally and regionally, are in place.

Public Enquiries: 020 7944 4400; Email:News Releases: http://www.communities.gov.uk

It might have slipped your memory, but this week is national Water at Work Week, so here’s an image to catch your attention. It’s published as sustainability experts Envirowise remind employers in Worcestershire that they should involve their staff in helping to reduce the significant amount of water which still goes to waste in workplaces every day. Research has shown that UK businesses are tipping the financial equivalent of just under 40 bottles of champagne down the drain every minute in wasted water. In Worcestershire, an Envirowise poll revealed that as many as 62 per cent of employees surveyed felt their employer was doing “nothing they were aware of” to address the issue of water wastage. John Barraclough, regional manager for the West Midlands, said: “With water being wasted daily across bathrooms, kitchens and factory floors, it is vital employees are encouraged to be the eyes and ears of any business campaign to reduce water use. “More than half of those surveyed in the West Midlands said they have seen evidence of water waste around their workplaces, including dripping taps, leaking pipes, hoses left running or dishwashers being run only half-full. “Employers should ensure they make information available to staff on how they can help prevent and report incidents of waste.” The best ways to share information include using posters to raise workplace awareness, adding information to the staff intranet or newsletter, offering training on environmental topics and running staff initiatives or campaigns. To help employers get started, Envirowise is inviting firms to sign up to its water efficiency campaign, the Big Splash, where companies can access free information packs, workshops and interactive tools, as well as a confidential telephone advice line. Mr Barraclough said: “The results will be improved profitability and reduced environmental impact. Since the launch of the Big Splash in June 2004, we have helped UK businesses identify water-related cost savings worth more than £8 million. West Midlands companies should make sure they grab their share.” For more information about Water at Work Week or to register your interest in the Big Splash initiative, visit www.envirowise.gov.uk/waww or call the advice line on 0800 585 794.

Big British companies should enjoy cheaper energy next year but could miss out if they haggle any longer over annual contracts. After tumbling last winter, one of the warmest on record, wholesale gas and power prices have risen in recent weeks and those who have not yet settled their contracts could lose out as a colder winter approaches. Britain’s largest power and gas users have traditionally negotiated annual contracts with their suppliers in early autumn or spring, while more and more are buying on flexible contracts to try to cut costs. A slide in wholesale prices since new gas import pipelines boosted supplies last autumn means big consumers should be getting 10-15 percent off their bills, compared to fixed contracts signed last year, said Jeremy Nicholson, director of the Energy Intensive Users Group. “The prospects certainly for this winter coming and the one after look pretty reasonable, certainly much better than the situation we were in two winters ago… although there has been some tightening in the forward market in recent weeks,” he said. Damien Cox, a senior energy analyst at John Hall Associates said that while annual contracts should be cheaper than a year ago, consumers should grab those savings quickly. “Our advice is that if you are making a saving then you should really take that,” he said. “You hold out for the bottom of the market, but that was actually reached back in February.” Cox said strong oil prices and rising coal prices had helped push up energy costs in recent weeks U.S. light crude oil prices soared to around $82 a barrel on Thursday, a dollar below the record high seen last week. The UK’s Met office on Thursday said this winter would probably be much colder than last, meaning more gas demand for heating, while Nicholson warned that much higher prices for carbon emissions rights for next year would also probably lead to higher electricity costs. Britain’s biggest energy supplier, Centrica, said the majority of its business customers were already enjoying lower energy costs but agreed the market bottomed out in the first quarter. “Most buyers have concluded negotiations already but a proportion who haven’t may now be caught out by the volatility of the market and may not benefit from same falls in prices as those who bought earlier,” a spokesman for Centrica said. Soaring forward gas prices in the years up until last autumn, on growing concern over declining UK production, spurred companies to take the risk of buying it for themselves on spot markets. And suppliers increasingly offer customers the option of buying a portion of their energy on those markets. Around a third of Centrica’s business customers now buy their energy on flexible contracts to spread their risk, which is part of a wider trend. “For the very large industrial consumers amongst our members, particularly on gas, there has been a trend towards buying on a day-ahead basis, or at least on a contract that allows you to buy on a day-ahead basis,” said Nicholson, who represents some of Britain’s biggest energy users. Residential customers have to wait for their suppliers to pass on savings from falling wholesale markets but are also protected from price volatility. Playing the spot markets can be cheaper for companies big enough to employ people to monitor them constantly and manage the risk because they can get cheaper energy as soon as wholesale prices fall, rather than waiting for their suppliers to pass on the savings. “It has turned out to be more economic, on average,” Nicholson said. “But you don’t get something for nothing and the reason it’s cheaper is because the customer bears more of the risk.” Some companies have even decided they would rather risk having to shut down their production if short-term energy prices rise too high than be tied to uncompetitive long term contracts. And even if the spot market goes against them, big consumers are unlikely to go back to relying on fixed contracts again. “People have changed their buying strategy,” said Cox. “Once people have entered into that sort of culture, I don’t really see people going back.”

British retailers are to phase out traditional incandescent light bulbs and offer customers only low-energy fluorescent bulbs by 2011. The plan, which will cut UK carbon dioxide emissions by five million tonnes a year, was announced by Hilary Benn, the Environment, on the last day of the Labour Party conference this morning. Mr Benn said that the move was the result of a voluntary initiative by major retailers and energy suppliers “with the strong support of the lighting industry and the government” to phase out old-fashioned light bulbs. “We need to turn them off, for good” he said. “So our aim is for traditional 150W light bulbs to be phased out by January next year, 100W bulbs the year after, 40W the year after that and all high-energy light bulbs by 2011. “This will save five million tonnes of CO2 a year and take us closer to our 2050 target.” Retailers said that the initiative was an attempt to pre-empt EU-wide rules expected to be introduced some time after 2011. In a statement, the Co-Op said that it would stop selling incandescent - or tungsten filament - bulbs will start next month at 50 of its supermarkets. They will be phased out across the group’s 2,300 food stores by 2010. Around 80 per cent of bulbs sold in UK stores are high-energy bulbs, even though fluorescent bulbs use 75 per cent less energy and last up to 12 times longer. Retailers said that they can reduce electricity bills by £9 per yer per bulb, or £100 over the bulb’s lifetime. The Government has already set a target to reduce carbon emissions by 60 per cent by 2050 and Gordon Brown, the Prime Minister, announced earlier this week that he had called for a review on whether that target was sufficiently ambitious. Mr Benn said today: “Britain can either lead the world in a low carbon transformation of our economy, in protecting our countryside and wildlife, and in renewing our cities, with new jobs in new environmental industries, or we can be left behind. “As individuals, we can either learn to live more sustainably today or, in a few years’ time, face having to tell our grandchildren why, as a generation, we did not act while we still had some time.” But Mr Benn’s announcement was dismissed as a publicity stunt by his opposite number on the Conservative front bench, Peter Ainsworth, who asked: “How many ministers does it take to change a light bulb?” He added: “In a ten-minute speech about the environment the only thing Hilary Benn has announced is a policy we’ve heard before re from other ministers. If this is the sum of Labour’s commitment to the environment it is clear why they have consistently failed to meet our emission targets.”

The UK should have enough gas to get through this winter after benefiting from increased investment in pipelines and storage facilities, a report has said.National Grid revealed that the outlook for gas supplies has improved by more than 70 million cubic metres of gas a day - the equivalent to around 15% of the gas used on a cold winter’s day.But consumers are unlikely to see any benefit this winter, with energy firms set to leave prices on hold because of the increasing cost of wholesale gas. Forwards gas prices for January to March 2008 are currently around 49p a therm amid record oil prices, continued risks to production from the hurricane season and the threat of higher demand in a colder winter in Europe. Energy regulator Ofgem also added that the improved supplies had already been factored into gas prices for the winter. British Gas owner Centrica reiterated that it is unlikely to implement further cuts to fuel bills, following similar comments from chief executive Sam Laidlaw at the group’s interim results last month. National Grid warned there were still risks and uncertainties relating to imports from Europe and how international gas price movements might affect imports of liquefied natural gas (LNG). A cold winter in Europe could curb imports for the UK, while events like hurricane Katrina which destroyed gas production facilities in the US can also disrupt imports and increase prices in the UK. Centrica added that while the improvements to infrastructure would help boost gas supplies for now, the UK needed to maintain its investment in importing gas as the UK’s reserves in the North Sea continue to decline. Significant improvements this year include the connection of the Langeled pipeline from the Ormen Lange gas field in the North Sea to the UK. Gas storage facilities also increased with a new facility at Aldbrough in East Yorkshire and the expansion of an existing facility at Hole House Farm, Cheshire.

It is all systems go for the single electricity market which comes into effect in Northern Ireland and the Republic on November 1, the utility regulator said today. Iain Osborne said that, although customers would notice no immediate change, efficiencies of scale and enhanced competition would eventually produce savings north and south. He said: “We expect that there will be a net benefit to customers across the island of £100m over the next 10 years. “In addition, if we get the competition we are expecting, we should also stand to get a further benefit of £150m over the same period, north and south.” The system, which is known as the SEM, will create a single trading arena throughout the island which will then enable supply companies to shop around for the cheapest source of electricity available. The mechanism has been market tested over the summer and, when it goes live in five weeks’ time, it is expected to lead to active trading of more than £1.3bn a year. The move has already attracted the interest of British supply company Scottish and Southern, which applied six weeks ago for a retail licence in the Republic and is also exploring the potential of the Northern Ireland market. Mr Osborne said: “We estimate that there will be a marginal fall in end-user prices in both Northern Ireland and the Republic. “Consumers will capture the majority of net benefits of SEM implementation, with a fairly even split between Northern Ireland and Republic of Ireland consumers.” Mr Osborne said that SEM would provide greater security of supply, especially once a second cross-border interconnector between Armagh and Monaghan is opened in 2012. He said the system would make the market in Ireland less volatile than in Britain, and help protect it against tariff fluctuations. This, Mr Osborne said, was because a “capacity cost” would be incorporated into customers’ bills to cover the payback over 30 years of the cost of infrastructure improvements in the north and south. But he denied that this meant that consumers in Northern Ireland would be subsidising infrastructure upgrades in the Republic. Mr Osborne insisted that the benefits would grow over time and flow both ways as long-term infrastructure investments such as new power stations were required north and south. He said that, with demand for electricity growing by 2% per annum, Northern Ireland would need new generating capacity by 2012/14. In June AES, the American company which owns Kilroot power station, unveiled plans to open a new, £150m, gas-fired power station on its Carrickfergus site in 2010. AES’s supply contract is up for renewal in 2010, but Mr Osborne said he was entitled to terminate the contract if the terms were not beneficial to customers. Kilroot, which provides the Northern Ireland grid with a third of its needs, is undergoing a clean-up thanks to the installation of a £40m flue gas desulphurisation (FGD) plant which will reduce emissions. Northern Ireland Electricity says that the installation of FGD kit at Kilroot is adding the equivalent of £11 per annum to the bills for each household.

Novera Energy, the AIM market’s only UK focused renewable power company, is to dramatically inrease its scale. CEO David Fitzsimmons tells James Hurley why the balance at the AIM market’s only UK focused is shifting as it dramatically increases its scale. Founded in 1998, Novera Energy is a precocious example of what may become a growing breed: an established UK focused renewable energy company. Since Fitzsimmons joined Novera as CEO in October 2005, the company has completed a dramatic transformation. Formerly a dual-listed, Australian incorporated company with a joint venture that it didn’t operate as its primary asset, Novera Energy is now a dynamic and ambitious UK renewable company with a strong portfolio of development opportunities, in both wind and Energy from Waste. Novera Energy generates electricity from renewable sources of power using a portfolio of three businesses: wind, waste & water and landfill gas, although as David Fitzsimmons tells me, the balance between these technologies is shifting. Having spent 27 years with BP - where he held senior positions in all core businesses, including CEO of BP’s oil trading, President of BP Asia and Commercial Director for BP’s Gas, Power and Renewable business why the shift to a growing, modestly sized renewable company?

“I think it is a very personal thing and it’s a switch that doesn’t work for everybody. When I was deciding what to do and where to go, I realised that I wanted to get into renewable energy companies. “I looked around for the big renewable companies but there weren’t any. They tended to be small divisions of companies that, in themselves, were a lot smaller than BP, and that wasn’t where I wanted to be.” He spoke to a number of FTSE mid-cap companies about a CEO role, but this process led him to hunger for an involvement in a less mature company. “I realised in those conversations that people were looking for big company process which I’ve done a lot of and BP is very good at.” “But I realised that I didn’t really want to do any more of it. That was the key. Getting back to something that’s smaller, nimble and entrepreneurial has been refreshing. I am able to enjoy being closer to the frontline, getting back to some of the pleasure of earlier jobs I’d had in BP. One of the big plusses is getting out and meeting people in a vibrant and growing industry.”

Novera has an established portfolio of 46 landfill gas and 10 hydro sites around the UK, which form the company’s solid foundations. It has long term contracts with the relevant waste operator or local authority for each site to collect and manage the gas and generate renewable electricity, with the landfill owner paid a royalty. Novera is the second largest landfill gas operator in the UK, and there are opportunities to consolidate some of the smaller players in the sector. But in the long term, landfill is unlikely to figure significantly in the company’s growth. “These sites give us a reliable base, but with the growing focus on recycling and doing things with waste other than putting it in holes in the ground, landfill gas is unlikely to grow.” This provides an opportunity in itself, however. The company has planning approval from the Thames Gateway development corporation for the East London Sustainable Energy Facility (ELSEF) based at Ford’s site in Dagenham.

“Waste is often put in holes in the ground and it can either be incinerated or refined into a material. One of the streams of materials from that kind of process can be used by us as a fuel. We’re planning on a plant that takes fuel from a Shanks waste facility in East London, gasifies it and then burns the gas to turn into electricity for Ford. The facility will utilise technology developed by the Canadian company Enerkem Technologies, which Novera has an exclusive license for in the UK.”
With a total of 58 operating assets providing solid and reliable cash flow, the next phase of the company’s growth will come from onshore wind. It already has one site operating -the Mynydd Clogau project in Wales, which was developed in a joint venture with Renewable Energy Systems (RES). “With landfill, hydro and one windfarm our current capacity is 122 MW. Our 100 percent planning success is unlikely to continue and so we are developing a potential capacity in excess of 700 MW to keep us well on track to reach our aim of 250 MW of wind capacity by the end of 2011. ” With planning approvals currently running at around 50 percent in the UK, even a conservative estimate would almost double Novera’s current generating capacity. “At this stage, we have one site in production in Wales and one that we got planning consent for in February (the 12-turbine Lissett Airfield wind farm in Yorkshire) which we’re hoping to sign all the commercial agreements on shortly. We have one more in the planning system, and beyond that a portfolio of 20 or 30 different sites that we’re developing. We’ve got three more sites that we’re hoping to have planning applications in for by the end of the year and another crop next year,” Fitzsimmons says. The company is looking at a variety of sites across Northern England and Scotland which are being assessed for suitability as potential wind farms. Ideal conditions combine a strong wind regime, available grid connectivity and remote or self contained sites to minimise the chance of planning objections. As this side of the business develops, Novera is looking to develop a comprehensive interest in wind farms, from early development through to operating life and de-commissioning. As energy needs and prices increase, and concerns over energy independence, pollution and global warming persist, UK renewable energy may prove to be a smart place to occupy for Novera. So what does Fitzsimmons make of the oil industry’s argument that our reliance on oil and gas is set to rise by 2020, not fall? “I don’t necessarily think it’s a case of an argument for and against renewable. Worldwide there is a massive challenge over energy security and the Government’s target for 2020 is 20 percent of our electricity from renewable sources. Electricity is roughly a third of the total energy mix, so in the grand scheme of things it’s relatively small, but is still has an important contribution to make.” What about the European wide target of 20 percent of total energy by 2020? “That’s a bigger challenge - and opportunity - for this industry. I think in a world economy that’s still growing and has massive new energy needs, from China and India in particular, there’s room for everyone. “But I think the overarching thing needs to be concern about climate change and governments around the world are recognising the importance of laying out a framework that recognises the cost of the price of carbon. As public understanding of this grows, people will want to have some green in their portfolio, and that will be a benefit for us.”

When Fitzsimmons joined Novera, the company was in a 50 percent joint venture with Australian company Macquarie Bank Group. The JV controlled one of the UK’s leading renewable portfolios and was established in December 2004 as a vehicle for operating and acquiring landfill gas and biomass renewable projects. “We listed on AIM in 2005, but our most significant step on the market came last December when as a company with a market cap of £32 million, we raised £38 million which funded our acquisition of the Macquarie share of the joint venture. This demonstrated that the market was there for us and that we have access to fresh equity to support good deals in an attractive sector,” says David Fitzsimmons. “Since doing that, we’ve put particular emphasis on relationships with key players in the supply chain – both waste companies whose landfill sites we extract the gas from and companies who maintain and operate some of our core generators. In both cases our approach has been to move the dialogue towards working together to solve problems and that’s working well.” In summary, the acquisition of the joint venture has transformed the company, giving it sole control of its 122 MW of generating capacity. It is projected that this will bring in a turnover of £34 million this year, and Novera has identified a number of operating synergies that have the potential to boost the gross value of the deal by 16 percent. “We left that partnership as friends. The key to it was establishing the fact that we’re both very supportive of the sector but that our different sizes and financial structures gave us different strategies, and neither of us was going to be able to satisfy our strategic ambitions in the joint venture,” he says. Fitzsimmons explains that as the renewable industry matures, it will reward scale and consolidated companies. “Having a decent market share and sufficient scale is crucial. Like any new sector, the renewable sector began with a cottage industry mentality, but the importance of scale is quickly becoming clear.” The company is now looking to bed down with strong organic growth. It will certainly be interesting to see where the company is in 2011. “We’re in this position where we’ve got this platform of established operations, we’re bringing in good people and we’ve got a growth pipeline that’s making strong progress. We’re ready to take advantage of the growing opportunities in this sector.”

Electricty is “too cheap” and prices will have to rise if Britain is to meet tough targets for reducing greenhouse gas emissions, Scottish and Southern Energy has warned. Brian Smith, the utility group’s head of projects, said the price of electricity gave consumers little incentive to cut down their usage, for example by switching off lights. “Energy is too cheap to be efficient. The way to reduce demand is to increase prices because people would use less,” he said Smith urged the UK Government to abandon its policy of regulating electricity prices to keep them low. “Affordable energy is not consistent with climate change and saving energy,” he said. Smith’s comments are likely to worry some consumers who have seen rising energy costs eat into household budgets at a time when mortgage payments and food prices are also rising. Gas has doubled in price over the past three years and electricity is 50% more expensive than it was. Smith told the Scottish Parliament’s economy, energy and tourism committee that the need for a secure supply and pressure to help the environment would lead to upward pressure on prices. He said: “There is this eternal triangle between prices, security of supply and the environment.” Power companies have been accused of failing to pass on the full benefits of falling gas prices despite having cranked up their tariffs when gas prices started rising. But despite Smith’s comments, SSE has succeeded by being a tough competitor on price. It added more than one million new customers last year thanks in part to its policy of keeping bills down. Those extra sales helped to push its annual profits through the £1bn barrier for the first time. The company’s website claims that its electricity and gas customers paid £320 less over three years than customers of British Gas, owned by Centrica. And the Perth-based group, which owns the Scottish Hydro Electric power company in northern Scotland, offers customers air miles which can be exchanged for flights. The group is one of the UK’s biggest generators of renewable electricity, thanks mainly to its legacy of hydroelectric power stations built while the industry was in state hands. This month the company signed a deal with Carbon Trust Enterprises to support InSource Energy, a bio-waste to energy business. SSE will invest up to £2.7m to acquire up to 40% of InSource Energy plus up to a further £10m to fund the company’s projects as it enters its next phase of development. SSE is mulling over plans to get involved in nuclear electricity generation once the Government has indicated when a building programme for new power stations can begin. Smith’s comments also appear to run counter to the thrust of European policy. The European Commission last week put forward proposals to split energy companies from their transmission networks in an effort to drive down prices in countries such as France and Germany where competition is limited.