Until June 2013, a household was defined to be in fuel poverty if more than 10 per cent of household income was spent on fuel use and adequately heating the home. The definition was re-written by the Department for Energy and Climate Change, which was closed in July 2016. Energy issues are now under the auspices of the new Business, Energy and Industrial Strategy department. The 2016 revision uses the Low Income High Costs indicator (using household income, household energy requirements and fuel prices) to define whether a household is ‘fuel poor’.
Government statistics show that most fuel poor households are in privately rented accommodation (20 per cent) and in the 16-24 age bracket (24.3 per cent). Older people are now much less likely to be fuel poor (5.1 per cent). Employment was also a significant factor, with 28 per cent of unemployed households being fuel poor.
We discussed the government’s ECO scheme in our June 2016 Newsletter. Following consultation in April, new measures are in now place to extend the scheme, with some revisions, until at least September 2018. Much of the money will go towards helping customers to reduce their bills and heat their homes.
The government is supporting its District Heating Network Unit, grant funding up to 67 per cent of local authority costs to progress the development of heating network projects. It hopes the scheme will help reduce fuel poverty and carbon by providing a more efficient way of supplying heat and hot water. The system would provide heat and hot water from one shared system to multiple homes through underground pipes, and could perhaps be fuelled by recycling or factory waste.
One estate in Lambeth has followed the initiative by installing its own power station, known locally as ‘the submarine’. The system provides heat, managed by E.on, through smart meters.
While some schemes are believed to work efficiently, the Lambeth system has been fraught with issues, including unreliable service and technical faults. The residents’ association has reported problems with the smart meters, leaving people with incorrect estimated costs and has been the cause of distress for some residents. Some were so concerned about their bills that they were going to bed early to stay warm, rather than putting on the heating.
The government has agreed funding to encourage more heat networks across England and Wales, and there are currently 2,000 heat networks supplying 210,000 dwellings. The government believes that by 2030, 14 per cent of UK heat could be provided through heat networks, rising to 43 per cent by 2050.
Ofgem does not currently regulate district heating networks, and customers are being asked to enter into long-term contracts, some as long as 80 years. With little protection, some people have chosen to move house rather than struggle to pay mortgages and high heating charges.
Director of the Association of Decentralised Energy, Tim Rotheray, said that the scheme had taken people out of fuel poverty, and that a new ‘task force’ of consumer groups, investors and developers ‘observed by government and Ofgem’ was launched in March.
He said: “The group is examining both industry and regulatory options, to ensure all aspects of consumer protection can be an integral part of enabling new investment.”
For information and advice on property in the Lambeth area, contact us at LambethSurveyors.co.uk