Guidance

ECO4 Flexible Route 4 Bespoke Targeting guidance

Published 16 December 2022

Overview

This guidance has been designed to help applicants complete the Route 4 Bespoke Targeting Application form. This guidance is separate to Ofgem’s ECO4 Local Authority guidance and is for the sole purpose of helping with the application only.

ECO4 Flexible Eligibility, known as ECO4 Flex, is an optional delivery mechanism, which allows energy suppliers to deliver up to 50% of their obligation through specified routes. There are four different routes which fall under this element of the scheme: Route 1 Household Income Cap; Route 2 Multiple Proxy targeting; Route 3 NHS Referral; and Route 4 Bespoke Targeting Households. This guidance relates specifically to Route 4 Bespoke Targeting Households. Alongside this guidance, BEIS has also published an application form for those wishing to apply under this route.

Executive Summary

Route 4 Bespoke Targeting allows Suppliers, Local Authorities and Devolved Administrations an alternative way of identifying and offering energy efficiency measures to low income and vulnerable households, who do not meet the eligibility criteria that already exist under ECO4. All proposals under this route need to demonstrate how low income and vulnerable households will be identified by using the proposed methodology which needs to be distinct to any of the routes already accessible under ECO4. Any proposed method under this route must be able to demonstrate how households will be identified, the proportion estimated to be fuel poor and clearly illustrate the benefits of using the proposed mechanism as set out in the Policy Summary.

To help encourage participation under this route, projects which are approved via a BEIS panel will be awarded a 10% uplift, upon the completion of the project, providing all the criteria have been met.

A BEIS panel will assess all applications based on whether the application has exceeded the Fuel Poverty target (minimum percentage ratios) and met the route 4 requirements. Applications should provide the number of households identified as being in fuel poverty using existing ECO4 eligibility methods for comparison alongside the new proposed method, plus the data sources they have used in their analysis to identify households. If the data sources are publicly accessible, then links should also be provided.

Policy Summary

BEIS will be looking for applications that improve the current fuel poverty targeting for either owner occupied or privately rented homes. Social housing is not eligible under ECO Flex.

Our impact assessment published on 1st April 2022 along with our government response shows that owner occupied householders in receipt of means tested benefits are estimated to achieve a 44% fuel poverty hit rate, with a fuel poverty hit rate of 71% for private rented householders (see the ECO4 Final IA).

The Bespoke Targeting route’s primary aim is to incentivise targeting of households who are on the lowest incomes. Applications will need to demonstrate, underpinned by evidence, that the proposed methodology would target households where the premises is occupied by at least one person living in fuel poverty as defined in section 15(2) of the Energy Act 2010 and the following minimum percentage ratios are met: at least 75% are low income living in owner occupied homes and/or 90% are low income households living in private rented homes. This will be known as the Route 4 minimum ratios. Targeting should demonstrate that over 50% of the homes are primarily not in the help to heat group (see Schedule 1  for a list of benefits in The Electricity and Gas (Energy Company Obligation) Order 2022).100% fuel poverty targeting of low income households is not proposed as government recognises that a balance must be struck between accurate targeting and costs. Applicants will also need to demonstrate, underpinned by evidence, that the proposed methodology is more effective at identifying premises than:

(i) the Route 1 Household Income Cap, i.e., requirement of gross income less than £31,000 per year,
(ii) any combination of two of the criteria specified under Route 2 Multiple Proxy targeting, and
(iii) the specified requirements which apply when measures are accompanied by a declaration from a participant in debt, discretionary credit or self-disconnection.

However, targets need to be challenging to benefit from incentives, which are in the form of uplift through the full project scores or partial project scores. All tenures must follow the scheme’s general rules which requires owner occupied premises to be in a SAP band D-G and private rented homes in SAP E-G.

Key Dates

Below are the key application and panel decision dates for the duration of ECO4. Please note that BEIS has the right to change these dates at its discretion.

Table 1: Key Application Dates

Application submission deadline 1st Thursday of the month shown below	BEIS Panel Date 3rd Thursday of the month shown below
April 2023	April 2023
July 2023	July 2023
October 2023	October 2023
January 2024	January 2024
April 2024	April 2024
July 2024	July 2024
October 2024	October 2024
January 2025	January 2025
April 2025	April 2025
July 2025	July 2025
October 2025	October 2025
January 2026	January 2026

Outcome decision
BEIS will aim to notify applicants within 2 weeks of the panel date.

The following sections relate to questions asked in the Route 4 Bespoke Targeting Application and are intended to aid applicants when completing the application form to ensure all relevant information is provided in order for the panel to assess submitted applications.

Question 1: application consent

Only persons with the appropriate level of delegation may submit an application under the Route 4 process. In doing so, the person is confirming they have the consent of their CEO, Director, Cabinet Secretary in Scotland, Office of the Secretary of State for Wales or equivalent person of authority. This person may also be contacted by BEIS to query the application.

Question 2: application checklist

Applicants should be aware that where the answer to a question is ‘no’ under any condition in Question two, the application if submitted to BEIS will not proceed to the BEIS panel and will be rejected. All applications must ensure properties meet the relevant tenure rules and EPC requirements across the scheme. Homes will need to have both a pre and post retrofit assessment to ensure that the minimum requirements under this route have been met.

Question 3: previous applications submitted

Where an application is submitted by the same applicant which uses the exact methodology that has previously been approved under this route, BEIS reserves the right to fast track the new application ahead of the next panel date. This is applicable when the only changes between the two applications is the addresses of the recipients. Should any changes apply to the methodology itself, or there are any concerns with the existing methodology which are potentially causing detrimental impacts to households or the reputation of the scheme, the application will need to follow the standard route. New Applications should also provide the details of who submitted the application: either the LA, Supplier or DA name along with the BEIS reference number.

Question 4: evidence requirements

It is the applicant’s responsibility to be able to provide robust evidence that the households identified meet the fuel poverty minimum requirements. Applicants can use publicly available data or use their own data sources which clearly illustrate how results have been analysed and conclusions reached. Links to all data should be attached. Where an application is using their own identification tool the application should include an explanation of the data and algorithm used.

Question 5: methodology history

In assessing the application, BEIS would be keen to understand whether the methodology proposed has been used previously, either for a BEIS or non-BEIS scheme to identify low income households. If so, details of the scheme and how successful the methodology was in helping identify fuel poor households should be provided. Links can be used alongside a brief description of the scheme and approximate number of households assisted using the methodology, if known.

Question 6: methodology - how does it differ

Applications must demonstrate why the proposed methodology is a better alternative for identifying households under ECO4 than methods already available under the scheme as set out in table 2. This should include why households identified are not eligible under existing routes, and how households will be targeted under the proposed methodology. This may include things such as direct targeting through using publicly available or own data sources.

Table 2

Applicants will also need to demonstrate, underpinned by evidence, that the proposed methodology is more effective at identifying premises than any existing eligibility criteria already available under ECO4.

(i)	existing Benefits within the Help to Heat Group
(ii)	the Route 1 Household Income Cap, i.e. requirement of gross income less than £31,000 per year
(iii)	any combination of two of the criteria specified under Route 2 Multiple Proxy targeting, or
(iv)	the specified requirements which apply when measures are accompanied by a declaration from a participant in debt, discretionary credit or self-disconnection

Question 7: methodology tool

Applicants must provide full details of how their methodology works in practice. Descriptions should avoid technical jargon where possible, as the aim is for the panel to be able understand from the information provided how the methodology will work in a live setting. Applicants may find it useful to provide a flow diagram or similar which demonstrates where data is sourced from, how this is used to identify eligible households and how they will be contacted.

Question 8: monitoring and evaluation

Once approved projects commence work, applicants should collect and collate a minimum level of management information across the project. Details should include the number of homes helped versus the original target along with corresponding percentage ratios against the 75% owner occupier or 90% privately rented fuel poverty requirements, as well as any key observations. The findings should be returned to BEIS within 2 months of the final measure notification to Ofgem. As outlined already, measures can only be counted under route 4 and uplifts applied if the minimum percentage rules and minimum requirements have been met.

LAs, energy suppliers or DAs may be asked to participate in interviews led by evaluation teams appointed by BEIS. These interviews help capture households’ overall experience of ECO, which gives us a greater insight of the managing, delivering and receiving of measures using the different available routes.

Question 9: data credentials

Details of any data sources used and their credentials such as links to government data sources should be provided to evidence how the methodology works.

Question 10: properties identified

Each application should state the number of households they anticipate delivering measures to, how they will be identified and whether these are owner occupied or private rented tenures, alongside the proportion of these in terms of a percentage used to meet the minimum targeting requirement.

Details should also include what steps will be taken to try and mitigate potential drop-outs which may impact the minimum percentage being met.

Question 11: costs

Applicants should report the costs of their proposal broken down to establish the approximate costs of the methodology itself along with the cost of finding each home through this route. This should be set in the context of the BEIS impact assessment estimates for search costs.

Question 12: General Data Protection Regulation (GDPR)

BEIS is committed to ensuring the protection of all personal information and data held by the applicant, is protected. Applicants are reminded of their obligations in meeting the requirements of General Data Protection Regulation (GDPR). As BEIS will not be assessing any individual householder data, it asks applicants to ensure they do not to send any personal householder data with their applications.

Applicants should also read the ECO4 Privacy Notice developed by Ofgem through the ECO Reporting Working Group. Households should be issued with the Privacy notice Privacy Notice Form.

Question 13: householder safeguards

Householders have the right to know how their data will be held and for how long. Applicants should set out what mechanism they have in place to ensure they have robust and effective data protection processes in place which comply with the existing demands of the GDPR and the UK’s Data Protection Act.

Question 14: applicant declaration

See question 1, person signing the declaration should be a person with suitable levels of responsibility, this may differ between LA, Suppliers and DAs.

Submitting applications

Applications should be sent no later than 5pm on day of the submission deadline, see table 1 for dates. Applications should be submitted via email to [email protected] and clearly labelled in the email title should be the submitting organisation and which panel meeting the application is being submitted under. For example: Apple Rose Local Authority - Route 4 Application July 2023.

General enquiries

If you have any further questions relating to ECO4 Route 4 process, please send your queries to BEIS ECO team at [email protected].