Agenda item

            The Committee considered the undernoted report:

 

“Relevant Background Information

 

      Fuel Poverty continues to be a significant problem for a growing number of households. It is associated with serious impacts on health and social wellbeing, with vulnerable groups such as the elderly, children and people living with disabilities and chronic illness, most affected.  A household in fuel poverty is defined as one where, in order to maintain an acceptable level of temperature throughout the home, it would have to spend more than 10% of its income on all household fuel use.

 

      The Fuel Poverty Task Force, which was convened by the Minister for Social Development, has requested the Utility Regulator to assist with the formulation of policy options in relation to the introduction of ‘social tariffs’ in the energy sector in Northern Ireland.  The Utility Regulator has therefore produced a consultation paper on the introduction of extra help with energy costs for vulnerable customers.  The paper is entitled ‘Assisting with Affordability Concerns for Vulnerable Energy Consumers’.

 

      The Regulator proposes a staged approach to the development of policy options as follows:

 

Stage 1   -   setting out, what they suggest are, some of the broad policy questions that must be addressed before Northern Ireland can turn to more detailed consideration and design of specific options for interventions to deal with energy affordability for vulnerable customers.

 

Stage 2   -   subsequent work by and with stakeholders, Government Departments and other interested bodies to fully develop and analyse best options for going forward.

 

Stage 3   -   seeking to implement the selected option.

 

      The consultation paper however focuses on stage 1 and sets out, what the Regulator refers to as, ‘a set of key base questions’ in relation to energy affordability tariffs that need to be considered before moving to stage 2.

 

      The Utility Regulator has limited influence on fuel poverty in that it only regulates the gas and electricity sectors. It does not regulate the heating oil sector and, as around 70% of the population of Northern Ireland use oil for domestic heating, its contribution in assisting with affordability for vulnerable people must be considered in this light.

 

      Although the consultation paper lists 18 detailed questions for response the Council is not obliged to adhere to this method of reply. It is recommended that the Committee agrees to provide a general overview of its concerns and suggestions in respect of Fuel Poverty, including how the Regulator, as a member of the Fuel Poverty Task Force, can constructively influence affordability concerns for vulnerable energy consumers.

 

Key Issues

 

·         Fuel poverty is a growing problem.

 

·         Vulnerable people, such as the elderly, are most affected.

 

·         The Consultation paper seeks views, in particular, from Northern Ireland’s political leaders.

 

·         The Utility Regulator’s consultation paper is focused on Stage 1 of what it considers to be a three stage process.

 

·         A three stage process may be prolonged yet there is an urgency to deal with fuel poverty.

 

·         The Regulator does not have a statutory remit to address fuel poverty.

 

·         The Regulator has a statutory role for the regulation of the electricity and gas sectors but not for oil.

 

·         The Regulator’s remit may need to change if it is to be able to lead initiatives on affordability tariffs so that there is equity for all consumers.

 

·         Social tariffs could result in higher prices for a significant number of households and businesses and therefore they may not be the most effective way of addressing affordability problems.

 

·         There are concerns around the current arrangements for cold weather payments, such as the fact that they are not effectively targeted at those in fuel poverty.

 

·         According to the Institute of Public Policy Research this year’s cold weather contributed to the deaths of 36,000 people across the UK, 49% more than last year.

 

·         Targeting energy inefficient properties perhaps on an areas basis, as an alternative or complementary approach, may allow for a more effective method of dealing with fuel poverty.

 

·         Councils will have greater powers to promote energy efficiency and provide funding or other assistance to improve energy efficiency if the recommendations in the draft Regeneration and Housing Bill are enacted.

 

Recommendation

 

      It is recommended that the Committee endorses the attached draft response to the Utility Regulator’s consultation paper - Assisting with Affordability Concerns for Vulnerable Energy Consumers.

 

COUNCIL RESPONSE

 

Assisting with Affordability Concerns

for Vulnerable Energy Consumers

 

Introduction

 

      BelfastCity Council welcomes the Utility Regulator’s Contribution to the debate on the options for the introduction of extra help for vulnerable customers in relation to their energy costs.  In particular, the Council is very concerned about current levels of fuel poverty and is keen to facilitate any efforts designed to reduce the number of people, particularly vulnerable individuals, who are fuel poor.

 

      The Council notes that this consultation is specifically in response to the Minister’s Fuel Poverty Task Force request to the Utility Regulator to assist with the formulation of policy options in relation to the introduction of ‘social tariffs’ in the energy sector in Northern Ireland.

 

The Role of the Utility Regulator

 

      The Council notes that the role of the Utility Regulator is limited to electricity consumers and the gas industry.  Fuel oil, on the other hand, which is the main energy source for domestic premises in Northern Ireland, is not regulated.  Recent evidence, however, of increasing oil prices at a time of falling temperatures (January 2010) has graphically illustrated the impact of a non regulated energy sector and demonstrates how exposed vulnerable people are to the problem of fuel poverty in this non-regulated sector.

 

Staged Approach

 

      The Regulator has suggested that the consultation should proceed through a staged process involving the setting out of broad policy questions (Stage 1), an analysis of the options for going forward (Stage 2) before implementation (Stage 3). The Consultation paper however concentrates specifically on Stage 1.  The Council does not disagree with the logic of a staged approach to affordability policy/scheme development, however there is an imperative to take action sooner rather than later to address fuel poverty and the Regulator’s proposed staged approach brings with it the possibility of a protracted process. Urgent and effective action is required and the Council would be concerned that the development of social tariffs may simply take too long.

 

Social Tariffs

 

      If the objectives of the Fuel Poverty Task Force around the formulation of policy options in relation to the introduction of social tariffs are to be achieved then the Regulator would require the appropriate statutory remit to begin to tackle affordability issues.  The Utility Regulator Board has stated that it could not proactively lead initiatives on affordability tariffs as it may not be in the interests of all consumers.  Also, the Regulator has acknowledged that, with regard to fuel poverty, it has limited influence as it does not have a specific statutory remit to address fuel poverty.  The Council would therefore support the view that the Utility Regulator should not be constrained in seeking to address fuel poverty by virtue of a limited remit and should be able to consider all consumers. Clearly statutory authorities, such as the Utility Regulator, should have sufficient mandate to deliver initiatives that directly benefit the fuel poor.

 

Options

 

      The focus on the development of social tariffs should not of itself presume that this is the principal or best means for addressing fuel poverty.  The development of social tariffs for the poor will presumably result in an additional cost to others which in turn could move some, who are currently not fuel poor, into fuel poverty.  Also, whilst the current approach of cold weather payments does benefit many of the fuel poor, its universal application means that some of it goes to people who do not fit the definition of ‘fuel poor’.  In effect, much of the finance made available to help the fuel poor is not reaching the right people. The Council is therefore concerned that the focus on fuel poverty is too concentrated on income and on people’s ability to pay their heating costs.  The Council would therefore suggest that a more pragmatic and permanent approach, focusing on energy efficiency, should also be considered.  This could be done by targeting the homes of people in fuel poverty and those who are on low incomes as a priority.  This approach would also help to reduce carbon emissions with the added benefits of improved air quality whilst contributing to the battle against global warming.

 

      According to the Institute of Public Policy Research, this winter’s prolonged cold weather contributed to the deaths of 36,000 people across the United Kingdom, which is 49% more than the year before. Improving thermal insulation, particularly for the elderly and vulnerable, allows people to remain in their own homes and out of hospital thus reducing health costs as well as being good for the environment.

 

      Whilst BelfastCity Council would support the principle of affordable social tariffs as a tool in the fight to reduce fuel poverty it is important that the approach of the Fuel Poverty Task Force does not preclude detailed consideration of targeting energy inefficient homes.  This could be done on a phased basis, focusing on those on low incomes or in specific geographical areas, as a practical, effective and permanent method of dealing with this important and growing problem.

 

Conclusion

 

      The Council notes that the Regulator recognises that fuel poverty is multi-factorial and suggests that a more specialist category be used to define those that need support, such as ‘fuel poverty vulnerable’, is required.  The Council would suggest that the issues raised by  Question 14 (Chapter 5) in the Consultation document, ‘Respondents’ views are welcome on the issues raised in relation to identifying eligible customers’ goes to the heart of the issue.  The views therefore expressed by the Council seek, in the main, to provide an answer to this.

 

      Although the Council currently has no specific remit to address fuel poverty it is important to point out that, under the DSD’s recently published draft Regeneration and Housing Bill, there are proposals to provide all Councils with powers to promote domestic energy efficiency, including powers to provide funding or other assistance and produce action plans to improve domestic energy efficiency.  Belfast City Council therefore anticipates that its influence in assisting in the development of policy options in relation to energy efficiency, and therefore in fuel poverty, will increase significantly in the future.

 

      The Council hopes that these comments will help to inform the debate around fuel poverty generally, and the use of social tariffs in particular, and would request that it be included in any future consultations around this issue.”

 

            During discussion, a Member highlighted a programme of energy efficiency measures being undertaken in Great Britain by the National Consumer Council and stated that Councils in Northern Ireland should be working proactively with that organisation to implement similar schemes.

 

            The Committee approved the foregoing response to the consultation document, subject to the inclusion of the aforementioned comment.