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EPCs should make financial benefits clearer says Consumer Focus

Posted by Linn Rafferty on 30 June 2011 at 12:08 pm

Clarity, credibility and comparability are key if EPCs are to be meaningful for consumers, and lead to them increasing the energy efficiency of their home, according to a new report from Consumer Focus. Published today, Easy as EPC looks at the content and format of the Energy Performance Certificate.

It calls for:

1. Clarity:

Consumer Focus concludes that providing two graphics on the EPC (one for energy efficiency and one representing carbon dioxide emissions) is a mistake. Their first & simplest recommendation is 'money talks'. Consumers do not understand CO2 or kWh. As well as using money as the primary unit for communicating energy efficiency (i.e. the current energy efficiency graphic, in shades of red to green) the financial costs and benefits should be communicated more strongly.

2. Credibility:

The report praises the A to G rating, though; consumers understand that it indicates an independent assessment process has been used. However, there should only be one A to G rating not two – and the one that must go is the one that rates the home’s carbon dioxide emissions.

However, Consumer Focus also found aspects to the current EPC that undermine its credibility. For one, credibility is reliant on the accuracy of the document. This requires monitoring, and poor performance by Domestic Energy Assessors (DEAs) has to be addressed. Secondly, it criticises the validity of the certificate - currently it may legally be 10 years old and still used in a home sale or rental transaction. This, they say, could give consumers inaccurate information in a number of key areas, including the value of installing improvement measures, as fuel prices and financial incentives change over time.

3. Comparability:

The report suggests that a clearer layout, and removal of information that is meaningless to the consumer, could allow people to use the EPC to compare properties. This would be achieved by retaining the EER (SAP) A-G rating, alongside headline financial figures on the overall energy bill (for standard occupation) and potential savings.

Setting the scene

I was pleased to be asked by its author for technical input in respect of the current EPC, and some of the good – and bad – aspects of its current delivery; and now to have the opportunity to introduce it to YouGen’s readers.

An earlier study by Consumer Focus (2011) Room for improvement, showed that the current EPC has little impact on consumer decision-making. An EPC gives a rating for the home’s energy efficiency, measured using SAP. Put simply, SAP calculates how much heat, hot water and light you get in your home per pound spent on energy bills. So given that consumers are very concerned about these bills, why do they place so little importance on the energy efficiency of the homes they buy or rent? This was the question the study aimed to answer. In a world of rising energy bills, Consumer Focus wants consumers to understand what they are getting into. It therefore wants the EPC to be better at enabling this, and concludes that this mismatch could change if the EPC were improved to improve its clarity, credibility, and comparability as outlined above.

The EPC: at the heart of Government policy on climate change

It’s great that Consumer Focus has contributed this study at a time when the EPC is being reviewed by DECC (the government department responsible for tackling Climate Change) in order to make it fit for use in the new Green Deal. As the report says, policy-makers are now giving increasing attention to the EPC in a number of areas, including:

Information from EPCs to be available to help Green Deal providers market relevant services

The Renewable Heat Premium to include EPC ratings in its eligibility criteria

The Energy Bill, now completing its passage through Parliament, proposing that from 2018, no home with an EPC Band F or G can be let to tenants

 An improved EPC might support the Green Deal

The EPC may indicate the presence of a Green Deal charge on a property to future purchasers

So EPCs are here to stay, and in the future will not only be provided during property transactions.

As an energy assessor for 15 years I’m really pleased to see EPCs taking their rightful place at the heart of climate change policy. For what it’s worth, though, I think the last point may be the key to ensuring that every purchaser or prospective tenant gets to see the EPC before they choose their future home. If the property they are considering has a Green Deal charge on it, repayable via the fuel bill, and this fact isn’t disclosed to them by showing them the EPC, there could be legal repercussions. I suspect that the threat of being sued would definitely encourage the professionals involved in the transaction to make sure the law on providing an EPC is complied with.

The agent's influence

This study also includes the views of a group of property professionals, including estate agents, solicitors and mortgage advisers. The value of EPCs can be undermined their influence, and the professionals this study spoke to did not value the EPC. Too often, consumers do not receive the EPC they are entitled too, or are told to file it, as it is simply a bureaucratic exercise. The quote from a mortgage adviser says it all: 'I think EPCs are the most badly sold concept I can think of, in reality we should all be doing it'.

Buyers are sellers too

As an aside, the study also asked consumers about their reaction to the new requirement for EPC details to be included in house sale particulars, which is expected to become law in October. There were different opinions about how useful this was to them as buyers, but as sellers, realisation dawned that providing this information up front might make it more difficult to sell their (poorly performing) homes. Thinking as a seller, some participants quite openly said that they wanted only the A-G letter included in sales particulars, rather than more detailed information, because it was more vague and would make less sense to a buyer. The report suggests that if buyers/tenants decide only to view homes above a certain EPC rating, then those sellers who have not installed basic energy efficiency measures could miss out. 

Listen to the consumer

Having contributed in a small way to this useful report, I’m struck by how similar its conclusions are to the initial (2004) consumer study I worked on when the EPC was being developed. At that time, although the focus groups showed it to be the case, some professionals working on the EPC design did not accept the idea that consumers were mainly concerned with money.

Carbon emissions, environmental protection, and saving the planet were some of the other options proposed by the Energy Saving Trust, civil servants from the then Office of the Deputy Prime Minister (now Communities and Local Government) and others. Hence, we got an EPC with two messages - one about saving money, and one about reducing emissions; and two coloured graphics, one illustrating each concept. This dual message has now been shown to contribute to consumers’ general lack of understanding of the EPC.

Perhaps it’s a sign of these difficult financial times that money is now accepted as being at the heart of consumer motivation in respect of their home’s energy efficiency - or is that this study has been carried out by a consumer organisation, whose only concern is what’s good for the consumer?

We have yet to see whether Consumer Focus’ conclusions are accepted by government, and incorporated in the changes now being planned to the current EPC for homes – but I hope they are. My personal recommendation to government, taken from those in the report, would be that the three changes they must make are as follows – call them the three Rs, if you like:

  • Remove the environmental impact rating graphic, so that the energy efficiency message is not confused;
  • Reduce the validity from 10 years to one year, so that consumers always receive reasonably up to date information;
  • Resist the misinformation about EPCs put out by some property professionals, so that consumers can use the EPC to understand what they are getting into when they choose their future home.

About the author: @linniR is a consultant, a freelance writer and a Domestic Energy Assessor accredited with the NHER scheme, and she enjoys all three.  She tweets regularly on issues relating to energy efficiency and renewables and provides consultancy, especially in relation to training needs.

If you have a question about anything in the above blog, please ask it in the comments section below.

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Comments

2 comments - read them below or add one

Linn Rafferty

Linn Rafferty from JTec Energy PerformanceComment left on: 12 July 2011 at 6:09 pm

hello Stuart, thanks for the comment on my blog. Nothing new under the sun, as they say: when we first included it, we knew the EI graphic was not actually needed!

The good news is that Government has listened, and the second graphic no longer appears in the new-format EPC that will apply from next April. For more details, see the joint Cabinetoffice/DECC/CLG report, at  http://www.cabinetoffice.gov.uk/resource-library/behaviour-change-and-energy-use

I entirely agree with you that a massive education/publicity push needs to occur, to refute the misinformation put out by some property professionals. 

Thankfully, that's one of my 3 Rs dealt with - I wonder how long before they implement the other two? 

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StuartF

StuartFComment left on: 1 July 2011 at 11:51 am

Very Interesting – having worked on that original EPC project with Linn, we all knew that consumers were going to be motivated by money and indeed it has been proven again. I am glad to see that they have finally come around to the original singular idea to grab people with a financial energy assessment of the property.

I believe the key is how property professionals (agents & solicitors) interact with purchasers/sellers/renters in regards to an EPC. Unfortunately it is not in the interest of the estate agent to promote the vast majority of inefficient homes as they act on behalf of the seller. A landlord will similarly not be too keen to mention that their property is expensive to heat, cold and inefficient. The solicitor only role is to ensure one is present.

Will the public ever demand to know what the item they are about to purchase or rent, will actually cost them to run? (after the council tax, and mortgage it is usually the next largest bill to pay). I know with rising petrol prices that most sensible people will want to know what the MPG of their current or next car will be! The unfortunate reality is that home fuel bills will continue to rise as the UK runs out of fuel and demands more power and the EPC needs to move up the agenda, to help people make informed choices.

It is revealing in the analysis that home owners look for A-G scales on appliances because they know it helps saves money – but they have no concept of this approach on a whole dwelling basis. This is the nut to crack!

I sincerely believe in the EPC. As an idea why not just put the A-G scale (as a sticker) on all ‘For Sale’ or ‘To Let’ signs and let the public decide to question it. The public will continue to be under pressure when entering into what is for most people an extremely stressful time (buying/renting process). I hope the changes help, but a massive education/publicity push needs to occur.

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