Download - Paying for the Energy Bill The hardest hit
Paying for the Energy BillThe hardest hit
Ian PrestonCentre for Sustainable Energy
3rd September, 2013
• CSE and DIMPSA• Overall distribution of impacts• Beyond the mean• The hardest hit• Potential compensation packages
CSE 3rd August 2012
• Independent national charity established in 1979• Experience of practical delivery (CERT, ECO, GD etc.) with
complimentary policy analysis and research• Work with a range of sectors on climate change and fuel
poverty issues• Example projects:
– JRF, Distribution of UK Carbon Emissions: And implications for UK energy policy (2013)
– DECC, National Housing Model (2012-13)– Ofgem, Profiling low income, high consumption households
(2011)
Policy impact = Net decrease on
average across all income groups
Impact of policies on actual household energy bills in 2020, by expenditure decile and those that receive support
Headline findings (CSE) • With product policy• Total no policy bill in 2020
£1,335• Total bill in £1,304
LOWER BY£31 or 2%
Headline findings (CSE) • Without product policy• Total no policy bill in 2020
£1,335• Total bill in £1,427
HIGHER BY£93 or 7%
Average across all
households
Losers Winners
Electric £48 £282 -£258Gas -£32 £59 -£166Lpg -£58 £6 -£220Solid fuel -£61 -£1 -£139Biomass -£150 -£14 -£371Oil -£156 -£1 -£394
Change in energy costs by heating fuel
Impact of policies on actual household energy bills in 2020, by heating fuel and those that receive support
-£258
-£500
-£400
-£300
-£200
-£100
£0
£100
£200
£300
£400
Electric Gas Lpg Solid fuel Biomass Oil
Impa
ct o
f pol
icies
on
ener
gy b
ill in
202
0
By heating fuel
Households that do not get support
Average Impact
Households that get support
Beyond the mean• On average bills go down, but not for electric heaters
– These customers represent 10% market share, carry 20% of policy costs & get 7% of the benefits
– Finding is consistent with previous DECC & Consumer Focus work• Reductions in energy costs in 2020 depend on
– The success of policy, product policy is particularly important– Need ECO and the GD to deliver – Continuing support of the Warm Homes Discount (protects a
number of elderly and low income households)• Who are the hardest hit?
– Low income, high consumers (see our work for Ofgem)
• Overall increase of £335 by 2020• 300,000 householders• Median income ~£13.2k• Sticky customers (switching isn’t enough)• High levels of Council Tax Benefit
Lower-income, but some asset-rich older people in electrically-heated 3-bed houses in less urban areas (37)
• Overall increase of £240 by 2020• 490,000• Median income ~£14.3k• Sticky customers• Higher proportions in SW and Scotland• Over half rent (LA / PRS)
Low-income, mainly older single adults in small, electrically-heated rented houses (35)
• Overall increase of £172 by 2020• 860,000 householders• Median income ~£15.9k• Sticky customers• High proportion in London and SE• High levels of means tested benefits /
Council Tax Benefit
Low-income single adults, in small, urban, electrically-heated rented flats (36)
• Overall increase of £65 by 2020• 470,000 householders• Median income ~£18.0k• No policy winners at all (inc WHD)• More female households• No children• Owners or own outright
Low-income, low-consumption single adults, nearing or retired, in small gas-heated flats (40)
The hardest hit but not lowest income• Overall increase of £476 by 2020• 340,000 householders• Median income ~£20.0k
Average-income, electrically-heated houses in non-urban areas, with high occupancy working-age families (38)
Compensation policies• Levy policies on the gas bill – The ECO and WHD should be
levied more towards the gas bill. (Very Easy & Fast) • Make all off peak units unencumbered with policy costs –
creates a real price differential to time shift energy appliance usage (Easy & Fast)
• Target the hardest hit – Ensure the forthcoming Fuel Poverty Strategy and Heat Strategy also considers policies for compensating these households (Moderate time frame)
Compensation policies• Promoting modern NSH – install storage heaters to
electrically heated flats as a mechanism to balance supply and demand (Requires detailed work & moderate time frame)
• Free DSM units from policy costs – Make all demand side management units of electricity unencumbered with policy costs. (Requires detailed work & longer time frame)