London, United Kingdom — (METERING.COM) — April 18, 2007 –Prepayment meters and a social tariff are among measures proposed by the government advisory Fuel Poverty Advisory Group (FPAG) to reduce fuel poverty in England.
In its annual report for 2006 released yesterday the FPAG says that some 2.5 million households in England are expected to be in fuel poverty in 2007 – more than twice as many as in 2004, due to average domestic energy price increases of 35% since that year.
While prices have now started to fall again since the start of the year, the average 2007 prices are expected to be still around the average 2006 levels and more than 30% above 2004 levels. And with current consumption costing around £1,000 (US$2,000) per annum, which is a huge proportion of the income of those on benefit, usually well below £10,000, approximately half of all households in fuel poverty are pensioner households.
A household is in fuel poverty if it has to spend more that 10% of its income to meet all its energy needs.
According to the FPAG the resources required to meet the government target of eradicating fuel poverty by 2016 are estimated at £1 billion, and it believes this is “challenging but attainable”, providing expenditure on existing programs is maintained at current levels.
Measures proposed include capital measures to improve energy efficiency and heating, such as the deployment of insulation and central heating, as well as special measures to increase incomes and to reduce prices for certain customers.
Noting that a particularly worrying trend has been the increase in the gap between the prices paid by prepayment and direct debit customers, up to 16% or £120 in 2006 and significantly up from around £75 in 2004 and previous years, the FPAG says that further efforts need to be made to reduce the cost of payment methods for low income customers, either by prepayment meters or through other payment arrangements.
In addition, price discounts (social tariffs) for a small number of customers, especially where energy efficiency or similar measures are impractical or very expensive, will also play a role and any energy legislation should contain an enabling clause for social tariffs.
The FPAG says that more generally, it will be extremely important to keep electricity and gas prices as low as possible and it calls for the energy regulator, Ofgem, to be sufficiently empowered to properly protect customers in the future.
The FPAG also calls for more efficient targeting of customers in need through existing government records as well as through a high profile cross-departmental program.
Looking forward the FPAG says the next few months will be critical for fuel poverty, with the size and nature of programs to be determined by the forthcoming Energy White Paper and any resulting legislation, as well as by the decisions on the levels of funding for existing programs.
The Fuel Poverty Advisory Group is an advisory non-departmental public body sponsored by Defra and DTI, with the primary task of reporting on the progress of delivery of the government’s Fuel Poverty Strategy and proposing and implementing improvements to regional or local mechanisms for its delivery.