Up to 300,000 have fallen into difficulties over winter, while scheme to cut energy costs could take 30 years to succeed
About 300,000 more households could be in fuel poverty by Christmas, according to reports published on Monday, which warn that a government scheme to improve the energy efficiency of homes could take 30 years to succeed and add to energy prices in the meantime.
The reports are being published as the energy secretary, Ed Davey, attends a summit with electricity and gas company bosses, regulators and consumer groups to discuss rising energy prices and how the industry serves its customers. At the Fair Energy Summit, organised by Policy Review Intelligence, Davey will meet the heads of British Gas, E.ON and Co-operative Energy.
Spiralling energy prices have added about 7% to average annual fuel bills recently. More pain is due in the new year, when price increases announced by E.ON take effect.
Estimates suggest that for every 1% increase in energy prices, about 40,000 households are pushed into fuel poverty – defined as when consumers spend more than 10% of their income on heating.
The Fuel Poverty Advisory Group (FPAG) said 300,000 more homes had fallen into difficulty this winter and millions could follow without urgent government action. Its annual report said government moves to reduce the impact of environmental costs on industrial energy users were unfair to domestic customers, who are facing rising costs associated with green measures.
It claims that over the next 15 years about £63bn will be added to consumer energy bills through the carbon floor price and EU emissions trading system, on top of other price increases.
Derek Lickorish, the FPAG chairman, said: “A toxic cocktail of rising wholesale prices, the high cost of energy reforms and cuts in incomes for many households, means fuel poverty levels are set to sky-rocket without radical action.
“Time is running out for the government to fuel poverty proof the homes of those on the lowest incomes.”
A report by the Institute of Public Policy Research (IPPR) said measures to help fuel poor households could backfire.
The Energy Company Obligation (ECO), designed to cut bills of poor households by forcing suppliers to fit solid wall insulation, offer energy efficient boilers and other energy-saving measures, could add up to £116 to the average bill and push families that did not receive support further into fuel poverty. It said that while there were 2.7m fuel poor households in England alone, it expected the measure to help between 125,000 and 250,000 households out of fuel poverty by 2023.
The ECO will run alongside the Green Deal, which is designed to encourage homeowners to make their properties more energy efficient by allowing them to spread the cost of installing measures such as loft insulation and draught-proofing.
Will Straw, associate director at IPPR, said: “The government’s ambition with the new Energy Company Obligation is the right one. Improving the energy efficiency of Britain’s housing stock is the most cost-effective way to tackle fuel poverty and bring down carbon emissions.
“Nonetheless, ECO, working alongside the Green Deal, will barely scratch the surface of Britain’s fuel poverty problem and may not deliver what is needed for emissions reductions.”