Tackling the fuel poverty problem

Tackling the fuel poverty problem

As temperatures hovered around freezing or below - adding some £23m a day to the nation's fuel bills on one count - Scottish and Southern Energy this week became the latest to offer a special deal for the vulnerable, while EDF moved to bolster an already announced scheme.

The private sector is being egged on by industry watchdog Ofgem, which reckons that some 2.2m homes are blighted by fuel poverty. It has challenged the industry to produce measures to help the most vulnerable.

On Tuesday, Scottish and Southern said it will be introducing a new tariff for its most vulnerable customers, which it reckons could cut fuel bills for up to 30,000 households by around £200 a year over the next three years.

The scheme is being backed by a package including free energy efficiency measures such as cavity wall insulation and the loan of fridges and freezers. However, the new tariff will not come into operation until later this year.

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On the face of it, the scheme would cost SSE up to £6m a year - though chief executive Ian Marchant acknowledges that the net cost is likely to be lower because, if it works, SSE will keep more people out of the debt spiral which will mean it will have fewer debt write-offs.

The reason fuel poverty is roaring up the agenda is not hard to find. In recent years the number of people blighted by fuel poverty - those who need to spend 10% of their income to keep warm - had fallen from 5.5m to 2.2m as incomes rose and prices fell.

But as prices have risen sharply over the past 18 months, the trend has gone into reverse, with another 200,000 households joining or expected to join the ranks of the fuel poor. However, setting up schemes is one thing; tackling the problem another. To make their schemes work, companies must be able to identify those in need. As EDF has just found out, that is not easy.

Earlier this year, when it announced its latest price rise, EDF said it would freeze prices for the fuel poor. It wrote to the 250,000 customers who, based on the evidence of its database, were most likely to benefit. It got just 6,500 replies.

As EDF Energy chief executive Vincent de Rivaz acknowledged: "This response is smaller than we had hoped, so we have now decided to automatically apply the price freeze to a further 40,000 customers."

But Neil Ritchie, head of policy at the fuel poverty charity, National Energy Action, argues that more radical action is required. One of the problems facing those in fuel poverty is often that they live in poor housing where the scope for introducing energy efficiency measures is limited.

"Energy efficiency, getting people into well-insulated homes with modern, efficient, heating is the way you provide a long-term sustainable solution," he says.

Meanwhile, Powergen is offering free cavity wall insulation to its customers. To qualify, they must be home owners and either over the age of 60 or on income or disability-related benefits. To find out more, call 0800 479 0162.

EDF Energy and British Gas both run charitable trusts which award grants to customers most in need, to help them reduce or clear energy arrears - and in exceptional circumstances to fund other essential household costs.

Both trusts are managed by Charis Grants Ltd. To apply for a grant call 01733 330732, visit edfenergytrust.org.uk or britishgasenergytrust.org.uk

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