Initiatives for fuel poor deeply disappointing, says energywatch

By Tony Watts - Editor - 30/05/2008

"A missed opportunity" is how energywatch is describing the latest plans by Government and energy regulator Ofgem to assist the fuel poor.

Adam Scorer, director of campaigns said:  “There’s very little in the statements that hasn’t already been said and almost nothing new on the table.  These announcements are going to have a hollow ring to them for the millions of households who need government and regulator to respond to the true scale and consequences of fuel poverty.

“Of course we welcome the £150 million to be spent by companies on social action, but we need to know that this money is a long term commitment and that it is going to be targeted at genuine bill reduction measures for those in direst need. And if prices do rise significantly its value will be greatly diminished.
 
“We hoped that Government or Ofgem would be making a statement requiring ‘social tariffs’ to mean the lowest tariffs that suppliers offer to be made available to the hardest hit.”
 
Mr. Scorer added:  “With the threat of more substantial price rises on the way, those who are most vulnerable to high energy prices will find little comfort here.  There is an abiding sense of government unable to find a coherent and proportionate response to the growing problem of fuel poverty.

“We are at a loss to understand the reluctance of Government and the regulator to move more quickly and decisively on social tariffs and on unfair charges to pre payment meter users.”

A new survey published today by the National Housing Federation has found that:

•        14% of gas prepayment meter customers have ‘self disconnected’ over the last year because they cannot afford to top up their meter;
 
•         9% of electricity prepayment meter customers have self disconnected;
 
•         The average annual household income for prepayment meter customers surveyed is around £16,000.

energywatch and a number of social organisations had already expressed their dissatisfaction with the outcome of a Fuel Poverty summit held by Ofgem only weeks ago.

The coalition of charities, consumer groups and trades unions claimed that the summit lacked focus on the necessary actions to get the Government's fuel poverty back on target.

energywatch said the campaigners would be likely to regard the latest moves as a second opportunity missed by the failure to commit to four effective actions that would drastically reduce fuel poverty:
 
•        Get rid of excessive premiums levied on those who need to use prepayment meters

•        Require all suppliers through legislation to follow the example of the best and introduce  effective  social tariffs

•        Reinstate the funding to the flagship Warm Front home energy efficiency scheme

•        Make a permanent increase to the Winter Fuel Payment and target a package of financial support to people eligible for cold weather payments.

energywatch said that making switching easier would not put enough extra pounds in the pockets of the 4.5m households who are already struggling to pay their energy bills. The least expensive deal was still too much for a fuel poor consumer.
 
Proposing more switching as a response to fuel poverty was to misunderstand both the causes and solutions.

energywatch said that some suppliers, but not all, are doing well in providing help to ease the burden of the fuel poor.  They were joined yesterday by npower, who announced a new initiative to help the fuel poor.

But the watchdog said this kind of individual approach was too piecemeal and unco-ordinated and the new announcements appeared to compound the problem by spreading the load around even more organisations.

energywatch is concerned that with suppliers claiming that they are feeling the pinch and struggling to protect profit margins as a result of increased wholesale costs, it was likely that those companies who had shown a genuine commitment and were doing the most would reduce their investment if they feel they were being put at a competitive disadvantage by the suppliers doing the least.  

A voluntary system provided no guarantee from suppliers that these schemes were for the long run as pressure on margins might see them whittled away to nothing.

For the fuel poor to reap the benefits that were possible, the suppliers needed to be shepherded towards a cohesive plan of action.

But energywatch said that the Government had been reluctant to factor help for the fuel poor into its Energy Bill – "a sad omission".