Utility Week

UTILITY WEEK | FEBRUARY 2023 | 27 Talking Points… Treasury must recycle energy bill support savings T he government has provided unprecedented support for households across the UK during the energy crisis. This support has been vital but in many instances it has not been enough to support the most vulnerable households. New research from NEA, the Fuel Poverty Monitor 2021-22, has shown that households living on the lowest incomes, in the least e cient homes, are being hardest hit by the crisis, and concludes that they require deeper, targeted support. It also found that those using prepayment meters have faced the biggest challenges accessing support and are at acute risk due to self- disconnection. And that challenge in accessing sup- port could lead to the government spend- ing less than it thought it would on the Energy Bill Support Scheme (EBSS). As of the end of November, 35% of EBSS vouch- ers for prepayment customers had not been redeemed. If that trend continues, the EBSS scheme would have an under- spend of £280 million. The Energy Price Guarantee (EPG) is set to be less costly for HM Treasury too. Analysis from BFY Group has shown a substantial decrease in gas use by resi- dential and small business consumers in December (when compared to historical behaviours based on temperatures the country experienced). This is estimated to have saved the government £260 million. Additionally, wholesale energy prices are thankfully dropping, and from July onwards, the EPG will likely not require any HMT funding based on current projections. This begs the question – what should HM Treasury do with that underspend? The temptation from the government will be to take the money back into the co™ ers and simply apply it to the balance sheet. But a di™ erent approach is needed. Instead of bagging the di™ erence at the same time as looking to reduce the support given by EBSS and the EPG from April, these savings should be being used to ensure the most vulnerable households receive deeper support and address the di™ erence people pay due to how they pay their bills – prepayment users and those who pay on receipt of bill unfairly face substantially higher energy prices than those who pay by direct debit. Without re-investing these savings, we know the consequences of the looming cli™ edge in April will be devastating to some households; particularly for low-income working age households that aren't on means tested benež ts or for peo- ple with medical conditions which could be badly exacerbated by the cold. Citizens Advice has recently found that over the past year, a household self- disconnected for a™ ordability reasons once every 10 seconds. That is unaccepta- ble. And it would be entirely unaccepta- ble for prepayment customers to miss out on EBBS support, only for that funding to go back into the government balance sheet. The amount of underspend will not be insigniž cant. But recycling it towards low-income and vulnerable energy cus- tomers will not be the ultimate solution to the energy crisis. For that, we need struc- tural market reform, whereby vulnerable energy customers, beyond those who receive means tested benež ts, can access a™ ordable energy – a social tari™ . And in the longer-term, decarbonising homes is the best way to shield low-income house- holds from future price spikes. Matthew Copeland, head of policy and public a airs, National Energy Action Comment: Money underspent in the current energy support initiative must be recycled towards the most vulnerable households. "Keeping more expensive generation on the grid for an artifi cially long time is keeping people's bills up. The faster we can invest in the grid, the faster we can get renewables on the grid and drive gas off . Let's design the system for future technologies and not the ones being retired." Chris Hewett, chief executive Solar Energy UK "We've already missed the summer's crucial window of opportunity to stamp hard on the accelerator for greater energy effi ciency… The money that was promised won't be seen until 2025 – eff ectively kicking the can down the road until after a general election." Michael Lewis, chief executive, Eon UK "Even after reducing leakage and water usage across our region, we will still need an extra one billion litres of water every day for customers by 2075 to accommodate climate change and population growth." Sarah Bentley, chief executive, Thames Water Quote, unquote eff ectively kicking the can down the road until after a general election." Michael Lewis executive, Eon UK to accommodate climate change and population growth." Sarah Bentley design the system for future technologies and not the ones being retired." Chris Hewett Solar Energy UK

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