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Utiliko is a British energy supply company and distribution network operator supplying electricity and gas to just over 5.2 million households and businesses across the UK. With 6,000 employees in England, Scotland and Wales, the company is one of the largest energy suppliers in the UK. Size notwithstanding, Utiliko represents an interesting research case because of its public commitment to reduce the company’s carbon footprint by 40% by 2030 and its aim to be carbon neutral by 2050:

“We have set out a commitment to reduce our carbon footprint by 40% by 2030 and we aim to be carbon neutral by 2050.” [Robert, Managing Director for Offshore Business, Utiliko]

Interestingly, in its 2010 Annual Review of Corporate Social Responsibility, Utiliko

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fuel-dominated energy generation portfolio. In 2010 the company generated over 90% of its energy from fossil fuels (39.1% coal and 52.2% gas) and only 8% from renewables. In an effort to increase the share of renewables, in 2012 Utiliko planned to invest £7 billion until 2020 to become the leading developer of wind energy generation assets. Robert, Utiliko’s Managing Director for Offshore, was seemingly excited about the company’s drive towards renewables and decarbonisation:

“For a utility that is a very big commitment because obviously, 25% of all carbon emissions come from the electricity sector.” [Robert, Managing Director for Offshore, Utiliko]

At the same time, however, the MDfE altered the design of a regulation, namely the ECO scheme. While supplier obligation models, such as the ECO scheme, had been around for more than 20 years, the latest revamp of the scheme focused particularly on reducing the emissions of low-income households and harder-to-treat properties, i.e. dwellings in which it is most difficult to fit wall insulation. Through this, the MDfE

aimed at addressing two of the department’s key performance indicators: mitigating energy-related emissions and addressing fuel poverty.

By way of contextual information, the ECO scheme required all energy supply companies with more than 250,000 customers to install energy efficiency measures to collectively generate lifetime carbon emission savings of 28 megatons. Although energy supply companies had the freedom to choose their approach to installing the energy efficiency measures, the MDfE had designed the regulation in a way that it would stipulate a focus on solid wall insulation in vulnerable and harder-to-treat homes. This meant that in 2013 alone, Utiliko was required to insulate 100,000 solid walls. Solid wall insulation, however, is a very complex task that requires skilled insulation specialists. Furthermore, specifically targeting vulnerable households made it difficult to identify eligible households. While this increased the administrative costs associated

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with fulfilling the ECO scheme requirements, non-compliance was no option for Utiliko

as the MDfE threatened a fine of up to 10% of the company’s annual turnover; based on its 2012 revenue of £5.9 billion, this meant that Utiliko would have faced a fine of £590 million.

In the process of responding to the ECO scheme, Thameswide, Brixwell Council and

Isotec played a crucial role. Thameswide is one of the UK’s oldest and largest social housing associations owning over 50,000 properties across London, Brixwell Council

is an administrative body responsible for the strategic regional administration of London and Isotec is a leading British wall insulation specialist. Most pertinent to his study, however, is Thameswide’s and Brixwell Council’s knowledge about eligible households and Isotec’s expertise in solid wall insulation.

Another important consideration for Utiliko were the consumers living in eligible households. Roughly 800,000 of Utiliko’s consumers were living in fuel poverty and the majority of these lived in properties with an energy efficiency rating of C or below; meaning that the fuel poor live in the most energy inefficient properties and face high running costs. Many such eligible households, however, made use of their right to reject

Utiliko’s effort to implement energy efficiency measures in their houses because solid wall insulation was deemed to be too intrusive as it usually involves scaffolding and takes at least two weeks to complete.

Furthermore, Utiliko’s competitor The Energy Bjird, a small energy supply company, played an important role. As a result of having less than 250,000 customers, The Energy Bjird was not obligated to comply with the ECO scheme and since it did not have to bear the costs of installing energy efficiency measures in vulnerable households.

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Unsurprisingly, The Energy Bjird was able to offer its customers a 20% lower energy price than Utiliko’s average energy price.

Lastly, the role of Exxelo UK, a British energy industry association, cannot be ignored.

Exxelo UK held regular meetings with all of its 118 member companies in order to establish industry positions on the key energy regulations (such as the ECO). Exxelo UK’s close engagement with the MDfE allowed them to push back on aspects of energy regulations.

Scrutinising the interactions within and across the network of actors that influenced

Utiliko’s attempt to comply with the ECO scheme in a cost-effective way, enabled me to develop a holistic understanding of the issues I sought to engage with in terms of how companies respond to climate change. Indeed, it was clear that, for Utiliko, the business network was a key component to install the required quantity of energy efficiency measures in order to achieve the required reduction in carbon emissions.

The remainder of this case focuses on this by outlining the contextual changes that triggered Utiliko’s response to climate change, by describing the interactions within and across the company’s business network and by reviewing the outcome stemming from

Utiliko’s interactions in response to climate change. The case closes with a brief conclusion.