On 10 October, to much dismay, SSE announced what will amount to an average 8.2% increase in energy bills to it domestic customers. The topic is firmly in the news, with an increasingly bitter spat over Ed Milliband’s pledge to freeze energy bills for 20 months should Labour come to power – a tactic dismissed by David Cameron as a “con”, but obviously one troubling to the Conservatives given its intuitive appeal to voters. A source quoted in The Times described Mr Milliband as having “a rubbish policy but a good slogan”. Undoubtedly, the other major energy companies will be following SSE’s lead which will exacerbate the pressure on Government to be seen to be doing something for consumers. The energy suppliers have been complaining for some time that a significant part of the cost to their customers is that of complying with the “green obligations” to improve energy efficiency, now the energy companies’ obligation as part of the so-called “Green Deal”. They say that such costs amount to some 10% of customer bills. So could rowing back on those obligations be an answer for the Government?
Not according, apparently, to the Fuel Poverty Advisory Group, which The Times has today (11 October 2013) reported as having written to Ministers warning that cutting back the scheme would derogate from the Government’s statutory obligations on fuel poverty and would risk judicial review. Under the Warm Homes and Energy Conservation Act 2000, “fuel poverty” is defined as being a member of a household living on a “lower income” in a home which cannot be kept warm at a “reasonable cost”. Needless to say these vital goalposts are not defined in the Act and can be moved by the regulations which set out what is “lower income”, what is “warm” and what is a “reasonable cost”. Section 2 places a duty on the Government to prepare a strategy setting out policies for ensuring, by means, including the taking of measures to ensure the efficient use of energy, that as far as reasonably practicable people do not live in fuel poverty. A target date must be specified, which may not be more than 15 years after publication of the strategy, so we are looking at eradicating fuel poverty, so far as reasonably practicable, by 2016.
Needless to say, this will not be achieved. Whilst Governments should of could seek to alleviate what is a serious social and health problem to the extent they can, it is ultimately out of their control. Since 2001 the world has entirely changed in terms of a major and persistent recession, and in terms of fuel supplies and prices. Both these factors might be expected to have rather a large impact on the numbers of people having serious difficulties with their energy bills. Inadequate home insulation is a factor, but probably pales into insignificance compared with the effect of the other two – low incomes and high fuel prices. In 2009, the Government’s response to the Select Committee report on energy efficiency and fuel poverty acknowledged that despite the clear statutory target, far from eradicating fuel poverty, there had been a sustained increase in numbers experiencing it.
The Green Deal, which was supposed to be “game changing” but appears to have changed very little at the moment, of course focuses on energy efficiency improvements. It is not only geared at helping reduce fuel poverty but reducing carbon emissions. It is the latter which is likely to have the greater cost and the greatest adverse effect on energy bills. It is perfectly possible in principle for the Government to focus the ECO on the alleviation of fuel poverty, as per the previous CESP and CERT schemes which it replaces. Insulating the homes of those who are not in the low income bracket, whilst it no doubt improves the country’s housing stock and makes a contribution to carbon-saving, is a different issue entirely. There seems no reason why there could not be a re-think of the impact of the cost of that aspect of the scheme without compromising the Government’s fuel poverty duty. Indeed, if the impact of the ECO is as serious as the companies claim in driving up fuel bills, there is a argument surely that the Government’s section 2 duty requires its reappraisal as to whether the costs which it imposes on lower income households can be justified.