Slide 1: Corporate Responsibility: Managing our impact
Corporate Responsibility Managing our impact Analyst roadshow 24 October 2005
Slide 2: Introductions
Introductions • Kieran McKinney, Investor Relations Manager, Centrica • Steve Mancey, Director of Procurement Strategy, Centrica Energy • Jill Harrison, Head of Consumer Affairs, British Gas • Diana Montgomery, Head of Environment Strategy, British Gas • Barry Neville, Director of Public Affairs, Ce
Slide 3: Defining our approach
Defining our approach We seek to proactively manage the social, ethical and environmental impact of our business activities, engaging a wide range of stakeholders to minimise risk, create sustainable value for our shareholders and contribute positively to wider economic development in the regions in
Slide 4: Centrica Corporate Responsibility Strategy
Centrica Corporate Responsibility Strategy • Maximise shareholder value • Underpin our values and business principles • Identify key impact areas • Consult with stakeholders • Monitor and benchmark our activities • Report and communicate our performance 4
Slide 5: Corporate governance & risk management
Corporate governance & risk management • Processes to identify, manage & mitigate business risk • Centrica Board set risk tolerance levels in line with strategy • Risk management is embedded within all business units • Integration of political, social, ethical and environmental risk • Corporate Resp
Slide 6: Key impacts
Key impacts • Managing our impact on climate change • Addressing fuel poverty and energy efficiency • Questions and discussion 6
Slide 7: Steve Mancey
Steve Mancey Director of Procurement Strategy Centrica Energy
Slide 8: Issues and opportunities
Issues and opportunities Climate change = global issue + business as usual • It has created investment opportunities • It has created new markets to trade in • It influences the way we run our power stations 8
Slide 9: Climate Change and upstream operations
Climate Change and upstream operations • Renewables Obligation - on our supply business • EU Emissions Trading Scheme - on generation, gas production and trading 9
Slide 10: Renewables Obligation
Renewables Obligation • Market based mechanism • Supply obligation - 5.5 % (2005/6) rising to 15.4% (2015) • Recycled “buyout” money increases value if shortfall grows • Current ROC price is around £41 • Centrica is meeting its supply obligation through • long term offtake contracts • equity investm
Slide 11: EU ETS
EU ETS • Phase 1: 2005 - 2007 • 6 sectors including power and oil and gas across EU25 • Impacts Centrica gas and power assets • Cap and trade CO2 allowance market mechanism • Free allowances issued to all installations for almost BAU • Market to deliver cost effective abatement • New scheme, supply/
Slide 12: EU ETS
EU ETS • Created new trading market - over 1M tonnes CO2/day • Centrica one of largest traders - 20% of volume • Operational despatch decisions take account of CO2 • Emissions purchase contract signed with Fiji hydro project • Cost impact low for Centrica in Phase 1 • Rules for Phase 2 now under con
Slide 13: Summary
Summary • Managing climate change is integral to our strategy • Market mechanisms will change and evolve • Skills to manage risks and protect our customers AND • Identify opportunities to create value for investors 13
Slide 14: Jill Harrison
Jill Harrison Head of Consumer Affairs British Gas
Slide 15: Our Environment Programmes
Our Environment Programmes Obligations Delivering our Going beyond our obligations obligations EEC products Think Energy EEC EE Advice Line Green products EE Advice Here to HELP CO Awareness Energy Labelling Energy Labelling Business EE Programme Renewable investment NA Demand Management Emissions T
Slide 16: The Energy Efficiency Commitment: a brief history
The Energy Efficiency Commitment … a brief history • Energy efficiency obligations were first introduced in 1994 for electricity suppliers (EESoP) • Key driver for programme is Government policy to reduce carbon emissions, assisting low income consumers is a secondary driver • Obligation was extende
Slide 17: Significant growth in size of obligation and programme
Significant growth in both the size of our obligation and the scale of our programme EESOP EEC1 EEC2 EEC3 2000 - 2002 20032 - 2005 2005 - 2008 2008 - 2011 Target 5 TWh’s 27 TWh’s 49TWh’s Developing our positioning/ lobbying strategy Cost £40m £205m £465m* for EEC3: Traded market? Contribution p/cust
Slide 18: Delivering commercial and brand opportunities from EEC
Delivering commercial and brand opportunities from EEC INNOVATION & DIFFERENTIATION BRAND LEADERSHIP Meeting Social Adding Value Obligations Here to HELP* Boiler Manufacturer Programme* Engaging Achieving Cost Customers Efficiency Council Tax* WarmFix* B&Q* Currys* * Examples 18
Slide 19: By the end of 2004, 3m homes had benefited from EEC
By the end of 2004, 3m homes had benefited from EEC CUSTOMER EXPERIENCE MIDAS EE Audit Price Promise Condensing Currys Boilers Energy Services Motability Warm 3 million PARTNERS Zones Council INNOVATION Tax homes Lighting Retail Charities Energy Schemes B&Q Savers Club Here to HELP Home Securing Ser
Slide 20: Supporting vulnerable customers
Supporting vulnerable customers means addressing a complex mix of issues – getting this right strengthens our brand reputation, and will enable us to address some of our wider commercial issues - Hard to reach people - Socio-demographic profiling - Housing and quality of life - here to HELP - Low in
Slide 21: Programme to protect most vulnerable customers
With our recent price increase we announced a programme to protect our most vulnerable customers through this coming winter • 250k of our existing ‘most in need’ vulnerable customers offered a rebate of up to £60 (£40 gas, £20 elec) • Customers identified through socio-economic profiling - must also
Slide 22: Supporting vulnerable priority customers under EEC
One of the key components of EEC is the requirement to support vulnerable (‘priority’) customers • 50% of the EEC target has to be delivered to the priority customer group – this is driven by the desire to achieve social equity • Meeting this part of the target will cost c.64% of the total EEC spend
Slide 23: Turning the priority customer obligation into an opportunity
So our challenge was to turn the priority customer element of the EEC obligation into an opportunity Opportunity Challenge Build Brand Solution Regulatory obligation to improve energy Innovate and differentiate efficiency in fuel poor households Develop and build relationships 23
Slide 24: here to HELP fuel poverty programme
here to HELP award-winning, flagship, fuel poverty programme • Unique collaboration of the private, public and voluntary sectors tackling fuel poverty Social Housing Providers • £283m nationwide programme: • commenced late 2002 • ambition to help 1m homes • Delivering: • Energy Efficiency -insulatio
Slide 25: here to HELP progress towards 1m homes
‘here to HELP’ continues to make real progress towards our ambition of 1m homes Results ….. Into Year 3 • 860 here to HELP communities • 433,000 homes covered • 139,000 home assessments completed, giving: • 33,500 charity partner referrals • over 90% receiving help for the first time • 18,200 benefi
Slide 26: Diana Montgomery
Diana Montgomery Corporate Responsibility Manager British Gas
Slide 27: Energy Labelling
Energy Labelling fuel mix where does our electricity come from? 4s part of our commitment to doing the right thing for our customers, we are now giving our electricity customers details of the energy sources British Gas uses to generate electricity. This table and pie chart below show the percentage
Slide 28: Extending our green product portfolio
Extending our green product portfolio In September 2005 British Gas launched 3 new green products: Climate Aware Customers can make their home more energy efficient and offset their homes CO2 emissions for as little as £20 Renewable Electricity Offering up to 200k customers renewable electricity fro
Slide 29: Think Energy Education Programme
Think Energy Education Programme • Launched in 2000/2001 to provide national curricula resources for key stages 2 and 3. • Extended in 2002/3 to include GCSE students, and to A Level students in 2004 • Think Energy website includes all resources and case studies online. www.think-energy.com and has
Slide 30: Carbon Monoxide Awareness - Nag Your Landlord
Carbon Monoxide Awareness - ‘NAG YOUR LANDLORD’ Carbon Monoxide (CO) kills up to 50 people each year. As the UK’s largest energy supplier British Gas is committed to raising awareness and ensuring gas safety within the home The Campaign Targeted at students our ongoing ‘Nag Your Landlord’ campaign w
Slide 31: British Gas Business
British Gas Business • Supplies green energy to major customer such as Vodafone and BT • Runs innovative Business Energy Efficiency Programme to improve energy use by industrial commercial and local authority customers • Provides information and energy advice to customers via PR and energy magazines
Slide 32: Business Energy Efficiency Programme
Business Energy Efficiency Programme 32
Slide 33: Investment in new technology
Investment in new technology New technology can fulfil part of our commitment to deliver renewable energy and provide superior service to deepen customer relationships British Gas is pursuing opportunities across a range of technologies to: • Improve and deepen our proposition /service relationship
Slide 34: Broadening our green product portfolio
Broadening our green product portfolio • A range of innovative renewable technologies will be launched from 2006 to complement existing energy efficiency products Domestic Wind Micro CHP Solar Thermal Fuel Cells 34
Slide 35: Conclusions
Conclusions • Managing key impacts • Integral to delivery of strategy • Governance structure in place • Stakeholder engagement is key • Turning obligations into opportunities 35
Slide 36: Questions and discussion
Questions and discussion