1. Do you agree with the proposal for the incorporation of TrustMark
into ECO3 and, in particular, for installers to have to be TrustMark registered
businesses to deliver eligible ECO3 measures, with the exception of
Demonstration Actions and certain District Heating Systems (DHS) measures? In
particular, do you agree that the increased financial protection requirements
under the TrustMark Framework should apply in respect of ECO energy efficiency
measures (except demonstration actions and certain DHS measures)?

We do not agree with this proposal.

We welcome the interest and determination in improving the
quality of installations as well as in customer protection in ECO. However, we
do not believe that approach suggested here to achieve these objectives would
have any significant impact. We appreciate that the incorporation of TrustMark
will increase data sharing between accreditation bodies, Ofgem, obligated
suppliers and other relevant government and private bodies. But this could have
been tried to achieve through other means as well. For example, Ofgem could
have been given those legal powers for data sharing or UKAS could have been
mandated to act in that capacity.

We do not think that incorporation of TrustMark will improve
quality of installation or provide higher customer protection because of the
following reasons:

  • Incorporation of TrustMark will be shifting the
    cost of running ECO scheme to obligated suppliers, and thus to millions of
    energy users.
  • TrustMark must be implemented on a trial basis first
    to ensure its effectiveness in ECO, participation to which should be strictly
    on voluntary basis. The scheme has a significant cost implication for every
    household in the country and therefore should be first trialled and tested
    before making it mandatory.
  • Current ECO3 rules have already reduced the level
    of activities under the scheme. Implementing TrustMark will only make
    installation of measures unaffordable for most fuel poor and vulnerable
    customers.
  • BEIS’s impact assessment has not covered several
    cost heads to be incurred by participants to implement TrustMark. The financial
    effect of this implementation is going to be far bigger on the industry than
    what has been guessed in the impact assessments. Note that majority of the
    participants in this industry are small and medium size businesses. These
    companies are further going to be hit hard. The previous and current ECO rates
    assumed in the impact assessment are also incorrect, and therefore
    underestimate the cost implications.
  • The impact assessment has neither listed nor
    quantified likely benefits of incorporation of TrustMark or of other changes
    proposed in the consultation. BEIS has also not explained on what grounds it is
    positive about the effectiveness of TrustMark or of the impacts of other amendments.
  • Requirements of TrustMark and PAS 2035 cannot be
    fulfilled without increasing the customer journey and number of visits to be
    paid by various ‘experts’. As a minimum, a property will be visited at least by
    a Retrofit Coordinator (who, we assume will also act as a Retrofit Advisor and
    a Retrofit Assessor) and an Installer to complete pre-install survey. The
    installation team will then visit the property to complete installation. The
    property is then likely to be visited by a technical monitoring (TM) agent,
    scheme provider (for on-site assessments), and potentially by a Retrofit
    Evaluator.
  • It seems to us that the need for incorporating
    additional standards was realised because PAS2030 failed to control the quality
    of installs. The existing consumer protection mechanisms have also not worked.
    Yet both BEIS and TrustMark have proposed to continue with PAS 2030 and the
    same consumer protection mechanisms.
  • PAS2035, a fundamental requirement of Trustmark
    has completely side-lined heating measures. No matter how much emphasis is
    given to fabric first policy (para 5.4 of PAS 2035), the reality is that no
    household prioritises investment in fabric improvement over heating and hot
    water. The red tape, increased cost and time of installation may leave
    vulnerable families without receiving a heating measure for a prolonged time.
  • PAS 2035 insists that overall scope for
    improvement by 2050 should be identified, even if only limited improvements can
    be undertaken in the short term (para 5.2.1 of PAS 2035). It suggests achieving
    this by issuing a medium-term improvement plan for every dwelling for
    implementation over a period of 20 or 30 years. This is a total waste of money,
    resources and customers time. Even EPCs expire in 10 years. Para 5.2.2 states
    that these plans should be updated to respond to changes in standards or
    availability of new technologies, and to record any improvements as they are
    made. It doesn’t specify who would bear the cost of such regular updates and
    how would they be monitored.
  • If calculations of moisture, ventilation and
    occupancy assessments are so important why not make them mandatory under RdSAP
    or come up with a similar methodology that would offer a systematic approach to
    these assessments? PAS2035 only provides overarching guidelines on what should
    be covered in each assessment/report. This is open to interpretation and would
    lead to inaccurate and less useful reports similar to what has often been
    observed with the pre-design surveys under PAS 2030.
  • The consultation and the draft TrustMark
    Framework Operating Requirements do not provide sufficient details on the
    technical monitoring processes under TrustMark, data sharing principles and
    procedures, annual audits or the complete use of Data Warehouse.
  • We do not think TrustMark is adding any value to
    the entire process of quality assurance or consumer protection. The businesses
    will still be governed by PAS 2030 rules and they will be audited as per PAS
    2031 rules. Scheme Providers will be ultimately accredited by UKAS under BS EN
    ISO/IEC 17065. What exactly would TrustMark do in addition to what is already
    being evaluated by UKAS?
  • Certification bodies will continue to be governed
    by UKAS as per PAS2031 rules, and TrustMark does not seem to have any legal
    powers to administer them above and beyond what is required under PAS 2031.
  • TrustMark’s actual role seems to be limited to
    managing data warehouse, data sharing and taking over the administrative burden
    of technical monitoring and warranty review from Ofgem.
  • There is no strategy to address certain
    monopolistic practices prevailing in ECO where a PAS certification body
    mandates its members to use only certain products, use only their cavity wall
    surveillance service and opt only for their warranty. These requirements are insisted
    on the ground that this will help the certification body to ensure higher
    quality control. Allowing such practices to continue can only imply that such
    monopolistic behaviour is officially recognised and promoted by BEIS and that
    other certification bodies and warranty providers do not have effective
    controls to ensure quality.

We also do not believe that the increased financial
protection requirements under TrustMark would make any positive impacts.

  • TrustMark would not mandate insurance backed
    guarantees, lack of which has left thousands of customers without any benefit
    from their warranty cover when their insulation failed. There is no provision
    in the Framework Operating Requirements to prevent such practices.
  • The requirement of minimum six years’ financial
    protection for all measures other than cavity wall, solid wall, park home,
    underfloor and room in roof insulation (para 10.2.4 of Trustmark framework) is
    unrealistic and difficult to achieve. The protection requires to cover both
    product warranty as well as workmanship guarantee as minimum ((para 10.2.2 of
    Trustmark framework). Several energy efficiency products are offered only
    one-year manufacturer warranty (for e.g., electric storage heaters or several
    boiler parts used for repair) whereas customers pay more for extended
    warranties on certain products (for e.g., boilers). How would an installer meet
    TrustMark requirements when a manufacturer warranty is not extended to six
    years or when a customer opts for the minimum warranty offered on a product?
  • It seems odd to expect six years financial
    protection for measures that have been assigned less than six years of
    lifetime; for e.g., boiler and ESH replacement and repair measures. This will
    increase the delivery cost for such measures and achieve no additional
    protection for customer.
  • Lifetime of underfloor insulation has been
    increased from 20 to 42 years. There is no scientific justification given
    behind this decision, and therefore we assume the decision has been taken
    purely to introduce 25 years warranty on these measures. What would happen if
    the insulation does not last beyond 20 years? Would the warranty cover the
    replacement cost in such cases?
  • BEIS expects that the market would provide
    suitable guarantees where they are not already available (para 21 of the
    consultation document). Unfortunately, the experience in current and previous
    schemes prove to be otherwise. Warranties for wall insulation measures have
    been mandatory under all phases of ECO and some of its predecessor schemes.
    Yet, there are only four warranty providers functioning in the market at the
    moment.
  • TrustMark’s financial protection panel’s role and
    remit are not fully explained in the Framework operating requirements. The
    panel does not seem to have any role to play in case a warranty provider
    refuses to fulfil its commitment towards a failed insulation. However, in any
    case the panel or TrustMark do not seem to have the same legal backup as an FCA
    or insurance backed guarantee.

2. Do you agree that incorporation of TrustMark into ECO3 is
sufficient to demonstrate certification and compliance with the appropriate PAS
standards?

We do not agree with this proposal.

  • If incorporation of TrustMark into ECO3 is
    sufficient to demonstrate certification and compliance with the appropriate PAS
    standards then it would be more appropriate if TrustMark also implements PAS
    standards and supervises the certification bodies.
  • PAS standards are implemented by PAS
    certification bodies and their performance and overall impact is overseen by
    UKAS. We do not see what additional value TrustMark would add to this process.
  • It is also not clear how TrustMark would resolve
    any non-performance issues or disputes with installers or PAS certification
    bodies. Who would have a final say in case of a non-performance or dispute with
    a certification body- TrustMark or UKAS? Who would resolve a difference of
    opinion between TrustMark and UKAS regarding a certification body?

3. Do you agree that incorporation of TrustMark into ECO3 is
sufficient to allow all solid wall, cavity wall and park home insulation
measures delivered under the scheme to receive the relevant standard applicable
lifetime?

We do not agree with this proposal.

  • It is not clear whether this proposal is to free
    Ofgem from the administrative responsibility of ensuring that each wall
    insulation measure is covered by a warranty or whether it is to imply that
    incorporation of TrustMark itself means that TrustMark would take the
    responsibility if any wall insulation measure fails.
  • The type of financial protection offered under
    ECO till date has proven to be highly ineffective. We have witnessed thousands
    of cases of failed insulation where customers have been left without any
    support from the warranty providers. Those warranties did nothing to protect
    customers, simply because they were not insurance backed guarantees.
  • TrustMark has adopted the existing standards for
    warranties, which will not protect the customers in destress. If cost is a
    reason to stay away from insurance backed guarantees, note that two of the four
    appropriate warranties currently available for wall insulation measures are
    insurance backed.

4. Do you agree that underfloor and room-in-roof insulation measures
should be accompanied by a 25 year or more guarantee under the scheme which not
only meets the TrustMark financial protection requirements that apply to all
ECO energy efficiency measures but also as a minimum meets the TrustMark
“appropriate guarantee” criteria?

We do not agree with this proposal.

  • None of the consultation documents explain how
    the proposed lifetime of 42 years is derived for underfloor insulation. Unlike
    most insulations, underfloor insulation is often more exposed to weather elements
    and rodents (in EWI the insulation material is covered by plaster and paint).
    Would the warranty provide protection against damage caused by such elements?

5. Are there any other complex ECO measures that you think should be
accompanied by a 25 year or more guarantee which as a minimum meets the
TrustMark “appropriate guarantee” criteria?

  • No, we do not think any measures other than wall
    insulation measures and room in roof insulation require a 25 year or more
    guarantee.
  • Besides, we do see limitations in TrustMark’s
    criteria defining “appropriate guarantee”. The draft Trustmark Framework
    Operating Requirements clause 10.1.3 states “Acknowledge well-established
    financial protection mechanisms, for example: those supported by insurance
    backed guarantees and THOSE SUPPORTED BY SCHEME PROVIDER PRACTICES.” How
    can those guarantees supported by scheme provider practices be treated the same
    as insurance backed guarantees? What legal backing would they provide to
    customers in distress when an installation fails? Such guarantees have failed
    massively in the past and has brought a lot of criticism to the entire sector
    and embarrassment to the government as well. How could such poor practices be
    continued on the assumption that such things would never happen again and that
    any assurances offered by these guarantee providers are sufficient to protect
    customers?
  • Some guarantee providers are also acting as
    self-certification scheme operators as well as PAS certification body. In case
    of a failed installation how would TrustMark and BEIS ensure that these
    companies would be neutral and act in favour of customers rather than saving
    their own reputation and financial interests? Does TrustMark’s independent
    Financial Protection Panel hold more legal backing to take action against
    failed warranties than an insurance backed guarantee?

6. Do you agree that, to the extent they would apply to demonstration
actions and certain DHS measures exempt from the TrustMark requirements, the
current ECO3 requirements should be updated to move to the new PAS standards
(PAS 2035:2019 and PAS 2030:2019) subject to similar transitional arrangements
to those set out in paragraph 15 above?

We do not agree with this proposal.

  • The existing as well as previous versions of PAS
    2030 haven’t achieved the expected outcomes in terms of quality control and
    consumer protection. The issue here was not with its intensions, but was with
    its implementation. Certification bodies often followed their own
    interpretation of what is required of them and also made their own rules. To
    give you a few examples, some certification bodies were offering installer
    accreditation for room in roof insulation at a time when PAS didn’t even have a
    separate table specifying installation requirements. Another certification body
    has made it mandatory for installers to use their cavity surveillance system as
    well as wall insurance warranty to ensure quality when these conditions are not
    mentioned in PAS2031 nor are they endorsed by UKAS.
  • There is no provision in the revised PAS
    2030:2019 to restrict such practices.
  • PAS 2035 is not trialled and tested for its
    effectiveness. Mandating it in ECO3 without any trial would disrupt the already
    bottom low delivery and would cost millions of pounds to the industry for
    initial preparations.
  • The transitional period of 19 months explained in
    the consultation document does not mention that installers will have to
    register with TrustMark even before their PAS accreditation is renewed under
    PAS 2030:2019. This does not give installers any time to understand and adjust
    to TrustMark.
  • TrustMark procedures are not fully set yet. There
    are many aspects of their procedures, including timelines and rules for
    notifying measures to their Data Warehouse, are under development. This will
    create a chaos and increase the risk of installers being penalised by suppliers
    and Ofgem for situation beyond their control.
  • Each measure installed under ECO would require a
    warranty ranging from 6 to 25 years as soon as TrustMark is incorporated in the
    ECO Order. BEIS has left it up to the market to come up with warranties. The
    consultation document has not mentioned about how BEIS, Ofgem and TrustMark
    would deal with a situation if a market cannot be ready with appropriate
    warranties on time.

7. Do you agree with our proposed amendment to remove the 400% uplift
for replacement boilers delivered outside of the broken heating system cap?

We do not agree with this proposal.

  • We do not see the current 400% uplift going
    against the policy intent of ECO3. The policy intent in ECO3 is to promote
    ‘fabric first’ policy and to promote installation of dual measures with a
    combination of one insulation measure installed along with a boiler
    replacement. This policy intent is fully achieved under current rules.
  • If the intent behind this proposal is to
    discourage boiler installs except FTCH then it can be achieved only by removing
    boiler replacement and upgrade as qualifying actions.
  • BEIS had to introduce 400% uplift on boilers to
    support their decision of reducing boiler lifetime to 12 years, and not to
    acknowledge a particular policy intent. Removal of this uplift makes a stronger
    case now to re-introduce the 12 years lifetime to boilers.

8. Do you agree with our proposal to change the measure lifetime
assumption for first time central heating measures to 20 years?

We do not agree with this proposal.

  • The proposal of increasing the lifetime to 20
    years is not supported with any scientific reasoning. Previous energy
    efficiency schemes had established lifetime through extensive technical studies
    which were representing the actual life expectancy of energy efficiency
    measures. Based on the outcomes of those studies and industry knowhow boilers
    are expected to last for up to 12 years and heat pumps for about 15 years.
  • In a situation where a boiler is out of order,
    what purpose would the remaining parts of a heating system serve? The lifetime
    of a heating system therefore, should be based on the boiler and not on the
    life expectancy of the pipework or radiators.

9. Do you agree that first time central heating (FTCH) should be
eligible in PRS EPC Band F&G rated properties?

We agree with this proposal.

  • However, we do not believe that allowing FTCH in
    PRS EPC band F & G properties will have any significant impact on its
    uptake. We have not come across many properties qualifying for FTCH during our
    works in the current and previous phases of ECO.
  • Additionally, FTCH are an expensive measure. The
    installation cost would now further increase due to introduction of TrustMark
    and extended warranties. This would make the measure unaffordable for most
    households and/or landlords.
  • BEIS should have presented their analysis behind
    this decision to give some insights on the likely uptake expected from this
    policy change.

10. Do you agree that first time central heating (FTCH) should be
included in the LA-Flex in-fill?

We agree with this proposal.

  • We believe that BEIS should have published their
    analysis for the stakeholders to understand the likely impact of this policy
    change.

11. Do you agree with our transitional arrangements for all proposed
changes?

We do not agree with this proposal.

  • As we have mentioned in our response to question
    6 above, the transitional arrangements have only taken in to account the
    transition from PAS 2030:2017 to PAS 2030:2019. The arrangements are proposed
    keeping in mind the time PAS certification bodies would need to get certified
    under PAS 2031:2019 and then transfer their members to PAS 2030:2019.
  • The proposed arrangements do not take in to
    account the time installers, warranty providers and other stakeholders would
    require to prepare and implement the new requirements.
  • There is no consideration given to the fact that
    besides recertifying themselves under PAS 2030:2019, installers will also have
    to brace themselves to implement PAS2035 and TrustMark.
  • The consultation document does not cover
    transition of installers to TrustMark and its new reporting requirements.
  • It also does not mention about how the installers
    would be assisted in case the market fails to provide newly introduced warranty
    requirements for various measures in due course.
  • The proposed transitional arrangements do not
    provide any scope for running a trial period for PAS 2035 or TrustMark.

12. The Government invites views on the general requirements set out
in this consultation and the illustrative draft of the amending ECO3 Order,
once available.

  • With several changes not included in the
    consultation questions and such narrowly conducted impact assessments, ECO
    consultations are becoming more of a formality rather than an opportunity for
    BEIS and ECO supply chain to engage in a meaningful exchange of ideas and
    viewpoints.
  • Lifetime of measures should always be based on
    their expected lifespan rather than assumed policy intent or to introduce
    extended warranties.
  • We are highly disappointed with the upfront cost
    analysis presented by BEIS in its impact assessment. The study has assumed that
    changes proposed in this consultation would impose an upfront cost to
    businesses of about £3.1 million. Our analysis suggests that the upfront costs
    to the industry (for 2300 installation companies) would be at least £11 million
    (see Annex 1 below). Note that this cost is in addition to the cost of extended
    warranties.
  • It is even more frustrating that the impact
    assessment expects the benefits from these changes to outweigh the costs of its
    implementation, yet it has not produced any benefit analysis!
  • We believe that BEIS missed an opportunity in the
    form of this consultation to help improve market delivery. Low rates are not
    the only reason behind slow delivery. Other factors like reduction in deemed
    scores (some even without a consultation), difficulty in finding eligible
    customers, reduced focus of solid wall insulation and over emphasis on
    insulation measures have significantly affected the delivery. Many respondents
    to BEIS’s ECO3 consultation in 2018 had highlighted these risks. BEIS’s
    reluctance to amend the scheme rules and commitment to incorporating TrustMark
    and additional warranties will only make the scheme more difficult to deliver
    and prone to fraud and mal practices. We appreciate the need for policy longevity
    and stability, but they are of no use if they are achieved through inactivity
    and denial.
  • BEIS’s hesitation to amend the rules to support
    higher activity on the basis of 9 months’ worth data is in contrast with its
    insistence to incorporate two new standards that haven’t gone through any
    trials.
  • The change in boiler lifetime from 12 to 3 years
    in ECO3 has given an excuse to many rouge installers to replace four-five years
    old boilers. Lack of duplicate checks from Ofgem against the existing and previous
    ECO phases has only exacerbated the situation. Reversing these two practices
    will be more effective and cost-efficient than introducing new quality
    standards.

Annex 1: Analysis of
preparation costs for implementing TrustMark and PAS 2035 for businesses

  • Based on our observation of various sources we
    have prepared a table of costs of implementing PAS 2030 and Trustmark for
    businesses. The costs in red in the table below are our assumptions, the rest
    are taken from actual sources. The table does not take into account the costs
    of training, registration and renewal costs of licenses/certification under
    building regulations, business insurances, equipment and materials, salaries,
    administration costs, travel, technical monitoring, lead generation or payment
    of fees to third party expert services (such as Retrofit Designers). These
    costs are essential for businesses working as installation companies and would
    not be directly affected by the introduction of PAS 2035.
  • we have taken into account three types of costs:
    Type 1 is initial registrations with PAS and Trustmark, and accreditations.
    Type 2 is lodgement fees per measure (please note this doesn’t take into
    account the cost of preparing lodgement documents/reports, TM or PAS monitoring
    & evaluation documents). Type 3 is annual costs for renewing PAS,
    Trustmark, and accreditations required for implementing PAS 2035 (this doesn’t
    include accreditations of operatives or renewal of other installer licenses).
Resourcematics’ response to BEIS’ consultation on Energy Company Obligation (ECO3): improving consumer protection

(data
sources: BEIS Impact Assessment document for this consultation, Elmhurst
website for retrofit trainings, registration and lodgement fees, and NEICE and
Stroma websites for PAS 2030 registration and renewal costs.)

  • BEIS has estimated that there are around 2,300
    businesses engaged directly in the delivery of ECO measures. If all of them
    have at least one Retrofit Coordinator and a Retrofit Assessor they will
    together spend over £11.06
    million
    on initial registration and lodging their first
    measures (£4,810.30 multiplied by 2,300 businesses). If we add in the annual
    renewal costs, those 2,300 businesses will together spend over £15.83 million in a
    year. This is far higher cost than the £3.14 million estimated in BEIS impact
    assessment.
  • BEIS has also indicated that only a small number
    of professionals will train themselves to become Retrofit Coordinators, and
    that these Coordinators would work with several organisations. This assumption
    is contrary to what has been witnessed in similar accreditation schemes like
    SAP, RdSAP and GreenDeal Assessments. The number of trained assessors under
    these schemes is much higher than the demand for their services.

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