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PwC helps EDF to spread the word about green energy tariffs

When looking for a way to communicate how it was meeting its promise to source low-carbon electricity to its customers, EDF Energy plc approached PwC to deliver straightforward assurance reporting.

EDF Energy appreciates the benefits of nuclear power and it wants its customers to do likewise. Harnessed safely, nuclear power makes a positive contribution to the UK and the world at large, says Simone Rossi, CFO at EDF Energy. She believes that  as part of a diversified energy mix, nuclear will ensure that society continues to benefit from affordable, secure, low-carbon energy. 

The more people understand and engage with the source of their electricity the more they will become aware of the carbon contribution and the choices that they are making in determining the future energy mix through electricity generators and suppliers,& he adds.

Assuring consumers

The range of Blue products from EDF Energy has tariffs based on low-carbon generation sourced from its nuclear power stations and these are backed by a promise that EDF Energy will match electricity supplied to its customers with the levels of electricity sourced from nuclear generation. But as the processes that underpin these products are complex, EDF Energy wanted to ensure that the Blue offer was transparent.

This called for rigorous assessment of the associated procedures and management controls, and the delivery of straightforward assurance reporting that would be easy for EDF Energy’s Blue customers to access and understand.

Designing the assurance process

EDF Energy chose the accountants PwC to bring this assurance to life. PwC has extensive experience of electricity industry processes and working with energy suppliers, and of providing assurance advice. 

The PwC UK performance assurance leader, Richard Porter, and his team spent 12 months working with marketing, operational and legal teams at EDF Energy to create the vision of how the assurance would work and how it would be shared with customers on the EDF Energy website.

Public trust in the energy industry has been diminished by price rises and investigations into market practices, so as Andy Sinclair, a risk assurance senior manager at PwC says: ‘It is really exciting that a major energy supplier sees the potential for assurance to build trust with their customers.

Undertaking the work

PwC delivered the assurance using the framework provided by the International Standard on Assurance Engagements (ISAE 3000) and the ICAEW Code of Ethics.

The following assertions were subject to independent assurance:

  • The matching of the volume estimated to have been supplied to EDF Energy’s Large Business ‘Blue’ customers to nuclear sourced generation for the year ended 31 March 2012.
  • The design of controls put into operation as at 30 June 2012 to enable EDF Energy to ensure that they obtain enough electricity generated from a nuclear source to match the volume of electricity estimated to have been supplied to Large Business ‘Blue’ customers.

PwC planned and performed the following procedures to obtain the evidence it considered necessary to reach its assurance conclusion on the assertions above:

  • made enquiries of relevant EDF Energy management;
  • assessed the disclosure and presentation of the management assertions;
  • evaluated the design of the key processes and controls for managing, recording and reporting in to fulfil the management assertion in respect of volume generated and estimated to have been supplied for the year ended 31 March 2012;
  • performed substantive testing on a selective basis of the supplied and generated volumes of nuclear sourced energy for the year ended 31 March 2012; and
  • assessed the risk that the description of controls as at 30 June 2012 is not fairly presented and that the controls were not suitably designed to achieve the related control objectives stated in the description.

The procedures did not include testing the operating effectiveness of the controls stated in the description and PwC did not an express an opinion on these.

Communicating to EDF customers

PwC’s work guided EDF Energy’s ‘Management Assertion’ report on its offering to Large Business Blue customers (to match supplied volumes to nuclear generated volumes) for the year ending 31 March 2012.

The EDF Energy Management Assertion report also included details on the key control objectives and assessment criteria and how these support the commitment to customers.

Sid Cox, B2B director, comments: ‘The Blue initiative is all about making nuclear power simpler and easier to engage with, but the processes underpinning these products are extremely innovative and complex.

For that reason the role of the external assurance provided by PwC, in simply conveying the rigour with which the products are delivered, was a critical component of the work and has played an important role in its success.

Main assurance services available to organisations not subject to a statutory audit:
Accounts compilation
Agreed-upon procedures
Assurance review
Voluntary audit engagement