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Paying for the Energy Bill The hardest hit Ian Preston Centre for Sustainable Energy 3 rd September, 2013
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CSE and DIMPSA Overall distribution of impacts Beyond the mean The hardest hit Potential compensation packages
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CSE 3rd August 2012 Independent national charity established in 1979 Experience of practical delivery (CERT, ECO, GD etc.) with complimentary policy analysis and research Work with a range of sectors on climate change and fuel poverty issues Example projects: – JRF, Distribution of UK Carbon Emissions: And implications for UK energy policy (2013) – DECC, National Housing Model (2012-13) – Ofgem, Profiling low income, high consumption households (2011)
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Policy impact = Net decrease on average across all income groups Impact of policies on actual household energy bills in 2020, by expenditure decile and those that receive support
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Headline findings (CSE) With product policy Total no policy bill in 2020 £1,335 Total bill in £1,304 LOWER BY £31 or 2%
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Headline findings (CSE) Without product policy Total no policy bill in 2020 £1,335 Total bill in £1,427 HIGHER BY £93 or 7%
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Average across all households LosersWinners Electric£48£282-£258 Gas-£32£59-£166 Lpg-£58£6-£220 Solid fuel-£61-£1-£139 Biomass-£150-£14-£371 Oil-£156-£1-£394 Change in energy costs by heating fuel
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Impact of policies on actual household energy bills in 2020, by heating fuel and those that receive support
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Beyond the mean On average bills go down, but not for electric heaters – These customers represent 10% market share, carry 20% of policy costs & get 7% of the benefits – Finding is consistent with previous DECC & Consumer Focus work Reductions in energy costs in 2020 depend on – The success of policy, product policy is particularly important – Need ECO and the GD to deliver – Continuing support of the Warm Homes Discount (protects a number of elderly and low income households) Who are the hardest hit? – Low income, high consumers (see our work for Ofgem)
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Overall increase of £335 by 2020 300,000 householders Median income ~£13.2k Sticky customers (switching isn’t enough) High levels of Council Tax Benefit Lower-income, but some asset-rich older people in electrically- heated 3-bed houses in less urban areas (37)
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Overall increase of £240 by 2020 490,000 Median income ~£14.3k Sticky customers Higher proportions in SW and Scotland Over half rent (LA / PRS) Low-income, mainly older single adults in small, electrically-heated rented houses (35)
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Overall increase of £172 by 2020 860,000 householders Median income ~£15.9k Sticky customers High proportion in London and SE High levels of means tested benefits / Council Tax Benefit Low-income single adults, in small, urban, electrically-heated rented flats (36)
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Overall increase of £65 by 2020 470,000 householders Median income ~£18.0k No policy winners at all (inc WHD) More female households No children Owners or own outright Low-income, low-consumption single adults, nearing or retired, in small gas-heated flats (40)
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The hardest hit but not lowest income Overall increase of £476 by 2020 340,000 householders Median income ~£20.0k Average-income, electrically-heated houses in non-urban areas, with high occupancy working-age families (38)
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Compensation policies Levy policies on the gas bill – The ECO and WHD should be levied more towards the gas bill. (Very Easy & Fast) Make all off peak units unencumbered with policy costs – creates a real price differential to time shift energy appliance usage (Easy & Fast) Target the hardest hit – Ensure the forthcoming Fuel Poverty Strategy and Heat Strategy also considers policies for compensating these households (Moderate time frame)
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Compensation policies Promoting modern NSH – install storage heaters to electrically heated flats as a mechanism to balance supply and demand (Requires detailed work & moderate time frame) Free DSM units from policy costs – Make all demand side management units of electricity unencumbered with policy costs. (Requires detailed work & longer time frame)
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