BRONX, New York — In February 2022, the U.K.’s energy regulator, Ofgem, announced that it would increase its energy “cap price by a record-breaking 54% from April 1.” The surge in gas prices has prompted “almost every household energy supplier to raise prices to the maximum allowed.” Such huge increases in energy bills spark concern among customers who worry about their ability to afford this. With Ofgem expected to raise the price caps again in October 2022, four in 10 British people (40%) could endure fuel poverty in the United Kingdom.
What is Fuel Poverty?
In general, households suffer from fuel poverty when they “must spend a high proportion of their household income to keep their home[s]at a reasonable temperature.” The Low-Income Low Energy Efficiency definition for fuel poverty in England considers a household fuel impoverished if:
- “They are living in a property with a fuel poverty energy efficiency rating of band D or below.”
- “When they spend the required amount to heat their home, they are left with a residual income below the official poverty line.”
Estimates from March 2022 have determined that about 13% of homes in England were experiencing fuel poverty. In Scotland, this rate is 25%, while in Wales, 12% of households endure fuel poverty, and in Northern Ireland, this rate is 18%. In England, the number of households in fuel poverty rose from 3.16 million in 2019 to 6.32 million (26.7%) in 2022. Fuel poverty numbers could reach 8.5 million by the end of 2022.
Causes of Fuel Poverty in the United Kingdom
- The Russia-Ukraine Conflict: The Russia-Ukraine conflict and the subsequent sanctions on Russia are impacting the availability of gas in Europe. Earlier in March 2022, Russian President Vladimir Putin issued a warning to European leaders that Russia would stiffen its gas supplies to the EU if countries do not make payments in rubles. Being that many European countries, including the U.K., are heavily dependent on Russian oil and gas imports, the U.K. may have “to resort to rationing supplies of natural gas and diesel if Russia decides to shut off its supplies to the continent.” This has contributed to inflation in natural gas prices and volatility in energy markets.
- Increase in Cap Price: Twice a year, the U.K.’s energy regulator, Ofgem, sets price cap limits on “how much households in the U.K. can be charged for energy utilities.” On April 1, 2022, Ofgem lifted the gas price cap bills, prompting energy providers to raise customers’ energy bills to the maximum. As a result, the average household’s energy bill spiked from £1,278 to £1,971 overnight. By October 2022, when Ofgem will again raise the price cap, energy bills could reach as much as £2,600.
What Does This Mean for Britons?
- Rise in Fuel Poverty and Debt: Leaders of energy companies predict that the struggle to pay electricity bills will push about 30% and 40% of people in Britain into fuel poverty by October 2022. Moreso, the inability to afford these bills could lead to a severe accumulation of debt for many households — customer debts may increase by 50% or £800m.
- Health Problems: Considering that fuel poverty can lead to “unsafe energy rationing, where households try to use as little energy as possible,” many may have to endure cold living conditions during winter. Cold homes do not only worsen “serious health conditions such as heart attacks, strokes, bronchitis and asthma” but also cause the death of around 10,000 people each year. Furthermore, fuel poverty significantly impacts “mental health and is a known risk factor for suicide.”
- Poverty: Low-income households will bear the brunt of “the price rise, with the poorest 20% of households set to spend 10% of their budget on energy bills, while the wealthiest 20% of households would spend 4% of their budget on energy.” With close to 14.5 million people living in relative poverty in the U.K. as of 2020/2021 (when taking into account housing costs), the state of fuel poverty in the country could worsen existing poverty.
Initiatives to Curb Fuel Poverty in the UK
Modern sensor technologies can help landlords “identify those who are in fuel poverty” and “target support more efficiently.” For example, Aico’s new HomeLINK environmental sensor captures the temperature and indoor air quality of a home, thus “triggering alerts for landlords which allow them to intervene if a household is identified as being in fuel poverty.” This would support early interventions “that deliver warmer homes for residents, cost savings for landlords and environmental benefits for the nation as a whole.”
Fuel poverty grants also aim to help. Through RABI’s fuel poverty response in April 2022, agricultural households across England and Wales living in fuel poverty can apply to the agricultural charity for grants of a maximum of £1500. These grants can go toward “energy bills or for making home energy efficiency improvements.”
The establishment of wind turbines provides an alternative energy solution. A charity organization in Lawrence Weston (a housing estate in Bristol, England) called Ambition Lawrence Weston has secured £4 million in funding to build the tallest wind turbine in England. With “a maximum capacity of 4.2MW, it will be capable of generating enough clean electricity to power close to 3,000 homes” in Lawrence Weston. “The money generated from the wind turbine” would also help fund community projects that “address the historic fuel and general poverty that Lawrence Weston” faces. The organization expects work to begin in June 2022.
Overall, while “fuel poverty is often a hidden problem,” the above initiatives are critical for bringing solutions and support to address fuel poverty in the United Kingdom.
– Divine Adeniyi