ENERGY

The Company is committed to controlling the environmental impact from all our uses of energy and have held Energy Efficiency Accreditation, now owned by The Carbon Trust, managed by the National Energy Foundation and moderated by The Energy Institute.

During 2005 we are pleased to report that the Company succeeded, following an audit with increased score, in gaining re-accreditation.

Tenders were invited for our electricity supply from November 2005, and we have succeeded in gaining renewable electricity for 100% of our operational offices in the United Kingdom, reducing our carbon emissions from electricity use to nil as per DEFRA guidelines.

During 2005 our renewable energy use was 21% of the total electricity used by the Company and CCL exempt energy 79%. The purchase of the renewable energy resulted in an increased cost of 0.43pp kWh - a total of c. £14,839 during 2005 ex vat.

The sites where the Company purchased CCL exempt energy and certified renewable energy during 2005 are not required to pay Climate Change Levy (CCL). Based on the consumption used during 2005 a CCL saving of c.£37,3754 ex vat was made. The total amount paid in Climate Change Levy charges for gas was c.£16,613 inc vat.

All gas and electricity accounts are subject to trend analysis on receipt and where exceptions are identified, appropriate action is taken with either site management or the Area Surveyor responsible for building management.

To further improve the analysis of half-hourly data from electricity meters, during 2003 the Company subscribed to an on-line data management system, that allows analysis of energy consumption and patterns on a 1 day time lag - effectively allowing us to correct problems as early as possible. In addition the package provides the facility to provide cost benefit analysis of electrical improvements/works undertaken at these sites.

Northern Rock added The Solar House to its portfolio in September 2003. The 38,000 sq. ft of net office accommodation and 182 on-site car-parking spaces in Doxford Park, Sunderland, has been acquired on a 7-year lease to provide additional future accommodation for our Commercial Finance, Debt Management and Mortgage Service Centre activities.

The Solar House

For additional information on The Solar House please refer to Building Design and Biodiversity. In keeping with our Energy Policy and environmental aims, the Company was successful in securing a certified renewable electricity supply for the site via our existing supplier until November 2005. The site is current supplied as CCL exempt energy.

Head Office

The vending machines in Head Office sites are energy efficient machines with power-save mode.
During 2004, the Uninterrupted Power Supply system that serves part of Prudhoe and Warkworth buildings at Head Office Gosforth, was replaced with a more efficient unit designed for purpose and is now serving Prudhoe building only. The operating costs of the old UPS were estimated at £20,000 p.a.

The replacement system has a pay back period on energy saving alone of 2.5 years and with battery replacement less than 1 year. These works were completed during December 2004 and the old UPS was decommissioned during the first quarter of 2005.

Branches/Remote Sites

A full review of window and internal lighting has been undertaken and a formal report produced. Where appropriate, an upgrade programme has been initiated with fittings being selected from the proposals
The Company continues to include upgrading roof/ceiling insulation to sites requiring roofing works
In our new units VRF systems are installed where practicable.
Additional sub meters have been fitted into the Head Office site to allow us to compare water and energy use in different buildings and specific operational areas (see water).

Both

Low energy products have been purchased for use within remote sites.

General

Our internal Purchasing Group continues to review the Corporate purchasing procedure

The Northumbria Energy Efficiency Advice Centre (NEEAC) - Staff Training and Awareness

To increase staff knowledge of energy efficiency in the workplace and in the home, Northern Rock invited NEEAC into our Green Representatives meeting in September 2003. Training was provided in the area of home energy awareness being linked to good practices in the workplace, two-way discussions were encouraged and each Green Representative received a training completion certificate from NEEAC.

Further training with our Green Representatives to refresh and update knowledge took place in 2005 with the Energy Savings Trust (see also Training and Awareness)

Information Technology

The Company has continued to review the Information Technology used to operate our business. By improving existing and developing enhanced systems we are able to improve our customer service levels whilst maintaining effective use of resources. This has developed in three distinct stages:

Head Office
Branch and Service Network
E-commerce

The Head Office expansion project will ultimately result in over 2,500 more staff on the Gosforth site. The Company has taken the opportunity to implement Information Technology upgrades for staff moving into the newly developed site.

The IT function within Northern Rock is committed, through the purchase and correct configuration of computing and associated technology products, to use the energy efficiency facilities of these systems in line with the Energy Star Programme.

IT equipment is purchased from world-class, leading suppliers of technology products, such as Hewlett Packard, NEC, Fujitsu, Cannon etc who openly adopt and build in Energy Star compliancy. Other initiatives, such as the use of multi-functional devices (combined photocopiers/printers/scanners) are also being considered.

All PC's being sourced meet the energy-efficiency requirements of the Energy Star programme
Monitors and base units have built-in power management systems, which switch to low power mode after a designated period of inactivity
For energy conservation purposes staff are encouraged to switch off monitors when not needed or left unattended for a period of time.

Existing facilities are regularly being assessed and where deemed necessary, the equipment is upgraded e.g:

Printers over 3 years old are being replaced with low operational energy consumption, idle modes and duplex printing facility, which will reduce our direct management costs for stationery and energy provision and provide the environmental benefits of reducing raw materials use, minimising waste and reducing CO2 emissions

All the following graphs use the DETR conversion factors in line with the revisions contained in the Revised Guidelines for Company Reporting on Greenhouse Gas Emissions. Revised conversion factors for CCL Exempt energy have been obtained from DEFRA.

The graphs below include a small amount of estimated data, for the year, which will be revised on receipt of the verified accounts with any changes being presented in the 2006 report

*During 2005 the Head Office emergency generators were operated to use the diesel in the underground tanks, prior to building works required in the area. As a result 79 tonnes of CO2 were produced and have been included in the above summary graph.

Due to our success in energy management and being able to acquire renewable energy in November 2005 , the level of CO2 produced per head of staff for 2005 has decreased to 1.07 tonnes from 1.20 tonnes, an decrease of 11% over the year. We are still well within the Company target to reduce our energy emissions per employee from the 1996 level of 3.10 tonnes, to 2.48 tonnes in 2010. The target is in line with the UK government domestic target to reduce emissions by 20% from 1990 levels by 2010.

2005 Summary

Energy Efficiency Re-accreditation Audit passed with an increased score
Climate Change Levy exempt electricity used for 100% of operational portfolio from 1 January 2005 - 31 October 2005.
Certified Renewable Electricity obtained for 100% of operational portfolio from 1 November 2005
Over 150 Green Representatives undertook further interactive training sessions supplied by The Energy Savings Trust on domestic and business energy efficiency, how this relates to climate change and the results of global warming on climate change.
CO2 emissions reduced per employee from 1.20 tonnes to 1.08 tonnes a reduction of 10% and within the Corporate target.