Currently only suppliers with more than 250,000 domestic customers who have provided more than 400 gigawatt hours of electricity or more than 2,000 gigawatt hours of gas have legal obligations under ECO.
But Npower told the CMA that it would be fairer to allow a standard exemption to all suppliers set at 100,000 customers, saying this would be “more logical than the current scheme” which effectively exempts small suppliers from the scheme altogether.
Npower said exemption from ECO is one of the main advantages small suppliers have over the big six and is allowing them to offer lower prices, along with newer IT systems and the ability to focus on customer groups with lower service costs.
Suppliers who are obliged under the scheme must deliver energy efficiency measures to homes to meet their targets, or risk receiving penalties.
Npower said that although some economies of scale were achieved through being a large supplier delivering ECO at a lower cost, it is “nowhere near the order of magnitude of the ECO exemptions given”.
All the big six energy suppliers, and leading independent suppliers First Utility, Ovo and Utility Warehouse are obligated under ECO.
Concerns have been raised recently that suppliers will fulfil their ECO obligations 12 months ahead of the current 2017 ECO2 scheme end date, leaving a potential funding gap for insulation measures.