Ofgem published its ECO3 Final Determination Report in February 2023, covering the Energy Company Obligation scheme that ran from 1 October 2018 to 31 March 2022. The report found that Co-operative Energy was non-compliant, having achieved 36.4% of its obligation by 31 March 2022, and that Ofgem agreed alternative action requiring approximately an additional £3.5m of lifetime bill savings.
Across the scheme as a whole, suppliers delivered lifetime bill savings of £8.547bn against a Home Heating Cost Reduction Obligation (HHCRO) of £8.253bn, or 103.56% of the target. A total of 1,035,868 measures were delivered under HHCRO, with a further 82,057 carried over from ECO2. The rural sub-obligation was also exceeded, at 147.29% of the £1.24bn target, through 124,863 measures plus 27,558 carried over from ECO2, with associated bill savings of £1.82bn. The solid wall minimum requirement reached 113.94% of its £0.72bn target.
The report records that 26 suppliers were obligated over the course of ECO3 and that ten exited the market, leaving 16 still operating as of 31 March 2022. Collectively the exiting suppliers had an obligation of £190m, or 2.3% of the total HHCRO obligation, leaving a shortfall of £135m, or 1.6%. Ofgem also found that the cap on broken heating replacements was exceeded by 0.35%, or £6.13m, while delivery stayed within the caps for local authority flexible eligibility and for innovation measures.
Ofgem attributes part of the delivery pattern to quality standards introduced during the scheme. The requirement for measures to be completed by TrustMark registered businesses came into force on 1 January 2020, and the report notes that the delivery rate fell around the time those standards were introduced. From 1 July 2021 the enhanced PAS 2030:2019 and PAS 2035:2019 standards, adopting a consumer focused, whole house approach, were mandated. The ECO brokerage mechanism was decommissioned as of June 2021.
"I am pleased to report that these targets were met, with all but one active supplier achieving compliance."
Why it matters for households
ECO3 was the supplier-funded route by which low income and vulnerable households received insulation and heating measures at no upfront cost, so its final numbers describe how much of that support actually reached homes. The £8.547bn figure is an estimate of lifetime bill savings, not cash paid out, and it is spread across more than a million measures rather than concentrated in any one home. The rural and solid wall sub-obligations matter because those property types are typically harder and costlier to treat, and both were over-delivered.
The Co-operative Energy finding is a reminder that a supplier's obligation is a legal duty, and that where delivery falls short Ofgem can agree alternative action instead. For households, the practical effect of the scheme's design is that eligibility, the measures available and who pays are set by the Energy Company Obligation rules rather than by the household's own choice of supplier. The successor scheme, ECO4, is the current route, and the report notes that up to 10% excess ECO3 measures per supplier may be carried over into it as surplus actions. Ofgem's role in monitoring and enforcing these duties is set out in what the Energy Regulator does and what it covers.
What happens next
The report states that up to 10% excess ECO3 measures, on a per supplier basis, may be carried over into ECO4 as surplus actions. Delivery of ECO4 is described as taking place. Ofgem says it expects suppliers to be more proactive in their engagement and will have an increasingly low tolerance for those that do not take full responsibility for meeting their obligations. No further dated steps are given in the report.
Sources1 cited
- ECO3 Final Determination Report, ofgem.gov.uk