Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
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26 | 9TH - 15TH DECEMBER 2016 | UTILITY WEEK Customers Market view I n the midst of rising commodity prices, post-Brexit market uncertainty and a fuel poverty issue that could grow should energy prices start to creep up, the UK is fac- ing another utility and environmental prob- lem – energy waste. While there has been some effort to edu- cate consumers about energy waste pre- vention in recent years, new research from Gocompare.com Energy has found that the UK currently wastes nearly £1 billion a year through unused appliances and devices le on standby. In fact, standby energy waste is so prev- alent in this country that it is equivalent to heating more than 5,000 homes each year. This is especially jarring when you consider the number of fuel poor homes in the UK. When the Warm Homes and Conserva- tion Act was introduced in 2000 its goal was to tackle the issue of fuel poverty. How- ever, 16 years on, more than four million UK households are deemed to be fuel poor with many families facing tough decisions about whether they can afford to heat their homes. Fuel poverty has the potential to bring myriad issues for both the public and energy suppliers. In addition to stress and mental health-related issues, living in fuel poverty can cause serious physical illness, particularly circulatory and respiratory con- ditions, with the NHS spending £1.36 billion each year treating ailments related to being fuel poor. From the supplier side, it means many consumers are effectively being priced out of the market, either shrinking energy com- panies' potential customer pool or leading to people with large energy debts that suppliers may have to reduce or ultimately write off. In short, fuel poverty is a major issue from both sides. And yet, despite most consumers agree- ing that energy is expensive, verging on the unaffordable for some – as a country we waste such a large amount of it. To put our waste into context, the amount of standby energy wasted per year could heat all fuel poor homes on the Isles of Scilly for just under 24 years. Or the majority of affected homes in the UK's most fuel poor area, the Orkney Islands, for a year. It would be remiss to suggest that energy waste is the largest contributing factor to fuel poverty. The generally high cost of gas and electricity, the prevalence of energy inef- ficient homes, and wider socio-economic factors make heating and lighting a signifi- cant outlay for many families. However, by reducing energy waste people could be put- ting less money in their meter and more in their pocket. The roll out of smart meters, for example, could enable consumers to use energy more efficiently and reduce energy bills by £11 per household. However, it is essential that energy sup- pliers continue to invest in improving com- munication with their customers. That way, if a customer is struggling to pay their bills they can be identified more easily and helped more swily – perhaps by agreeing a payment plan they can afford. Energy com- panies have a duty of care to their customers and should provide help for those in energy debt, as well as practical ways people can reduce their energy waste. While acting in the best interests of their customers should be at the centre of any business, energy providers have an addi- tional incentive to do this. Comparison sites have changed how the industry works, with people increasingly voting with their feet if they are unhappy with how their supplier has treated them, so the suppliers that offer the best prices and customer service are attracting the lion's share of switchers. A total of 40 per cent of people use price comparison websites because they repre- sent one of the easiest ways to save money. Comparing tariffs and switching suppli- ers takes just a few minutes and can save people up to £366. While price is the most important driver when switching energy pro- vider, a fih of people stress the importance of flexible tariffs based on energy usage or circumstances. Fuel poverty is a major issue facing the UK and it is a problem that should be tack- led together. By creating a more energy- conscious society we can work to reduce energy consumption and bills. Establishing a competitive market gives consumers more options and improving the quality of customer service will empower customers to reach out when in need. Ben Wilson, energy and home services product manager, Gocompare.com Energy Waste not, want not It is time we as a society addressed our cavalier attitude to energy waste and the part it can play in the wider battle to help those households in fuel poverty, says Ben Wilson. FUEL POVERTY IN ENGLAND, 2003-2014 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1,200 1,000 800 600 400 200 0 (millions of households) (£ million) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Number of fuel poor households Aggregate fuel poverty gap in 2014 prices Source: Decc