Energy crisis: UK consumers face increased energy poverty this winter

Colwyn Bay, Wales, UK – David Peacock is a 70-year-old man with a disability who lives alone in a flat in Llandudno, a Victorian resort town in North Wales, UK.

You collect a small state pension, which is supplemented by a pension credit and an Independent Personal Payment from the UK government. In the past year, you’ve seen your electric bill nearly double.

David wants energy companies to offer flexibility to customers in difficult situations like his.

“Due to mobility and balance problems, combined with arthritic hands and other health problems, I cannot always take a meter reading. [when asked]”He told Al Jazeera. “Time will tell how reasonable they will be.”

Wholesale natural gas prices have soared as global energy demand recovers with the easing of restrictions due to the coronavirus pandemic and trillions of dollars in stimulus money.

That power price surge has triggered a wave of failures among UK power providers, affecting nearly two million customers.

But activists and experts warn that it is also leaving the most vulnerable consumers at risk of falling further into energy poverty, while hampering the UK’s green energy transition strategy.

Market swings

During the height of the COVID-19 measures that undermined business last year, electricity consumption plummeted around the world, along with natural gas prices. In the UK, many smaller energy providers used this market swing to attract new customers with lower prices.

But high natural gas prices this fall have made that business model unfeasible because UK energy providers can only pass on a portion of the wholesale price increases to domestic customers.

As a result, more than a dozen small UK energy providers have gone bankrupt since September, leaving millions of customers with the administrative headache of being switched to a new provider by the government regulator, the Office of Gas and Markets. Electricity (Ofgem).

“Ofgem’s number one priority is protecting customers. We know this is a worrying time for many people, ”a spokesperson told Al Jazeera.

“The maximum price of energy covers around 15 million homes and will ensure that consumers do not pay more than absolutely necessary this winter.”

But what is absolutely necessary depends on who you ask, because the limit is adjusted regularly.

The latest one, which went into effect on October 1, raised the limit by £ 139 ($ 191) for customers paying via direct debit and £ 153 ($ 210) for those with prepaid plans.

Millions of people are desperate.

Ruth London, Fuel Poverty Action

Before that increase, more than four million UK households lived in energy poverty, unable to afford to keep their homes warm and dry, according to the End Fuel Poverty Coalition, which warned that nearly half a million households are now at risk of joining. them.

Also, some customers are totally at the mercy of market forces because energy limits, despite leaving millions of homes still in distress, only apply to homes with a standard variable rate. The rest have little protection. And those who rely on prepaid meters are particularly vulnerable.

What activists want

“Millions of people are desperate, not knowing how they can handle this winter, with rising fuel prices plus an unprecedented cut in welfare payments. [Universal Credit], more cuts in public services, rising food prices, COVID and a kneeling health service in one of the richest countries in the world, ”said Ruth London, spokesperson for the campaign group Fuel Poverty Action.

London said the government could take immediate action, such as extending energy price discounts beyond retirees to other households in need. He also advocates for longer-term solutions, such as full funding of emergency programs to insulate and modernize UK homes to make them more energy efficient, and changing the energy pricing framework, which currently charges’ a higher rate to those who have the least, and who use the least amount of energy ”.

The latest government budget, presented by UK Finance Minister Rishi Sunak, promised to boost public spending, but did not contain specific provisions to help households pay for rising energy bills, an omission that drew strong criticism from activists against energy poverty.

Adam Scorer, CEO of National Energy Action (NEA), an energy poverty charity, tweeted: “The Chancellor had the additional tax revenue and specific mechanisms to provide support before winter. He chose not to. The cost of living will continue to affect the most vulnerable. “

The NEA has noted that the government’s piggy bank could get an additional 100 million pounds ($ 137 million) net directly through revenue from the value-added tax (VAT) on rising energy prices. Another windfall of 1 billion pounds ($ 1.4 billion) is headed to the UK Treasury thanks to ‘carbon tax’ revenues that have risen sharply due to the natural gas crisis, totaling four billion pounds ($ 5.5 billion) already earned in 2021, putting Sunak in the power seat.

“This gives you the resources to help more than 2.4 million households across the UK who are struggling with the cost of keeping warm,” Scorer told Al Jazeera.

The bonanza for the Treasury would more than pay for winter fuel payments to vulnerable working-age households, providing direct and automatic relief to help with energy bills, the NEA argues.

“This emergency support will help millions of households get through this winter,” Scorer said. “Without it, they will simply go into more debt or be forced to turn off the heat, leaving them at serious risk of serious health problems as we approach winter.”

The Ofgem spokesperson told Al Jazeera: “Any customer concerned about paying their energy bill should contact their supplier to access the range of support available.”

How do people less fortunate than us feel?

Iwan Williams, Retired UK

Any such support may be in high demand, says Chaitanya Kumar, head of environment and green transition at the New Economics Foundation (NEF).

“There is increasing pressure on households that are already struggling,” he told Al Jazeera. “With the increase in energy bills, the Universal Credit cut, the National Insurance increases, the end of the license and the expected increase in unemployment, plus inflation, we expect an additional 2,000 pounds ($ 2,748) to be added to the expense Annual of a family for April next year “.

Middle class grip

Although it is an emergency for the poorest in the country, it is also beginning to affect the middle classes.

Iwan Williams is a pensioner who lives in the family home where he has watched his children grow into adults in the picturesque seaside town of Colwyn Bay, half an hour from the coast of Llandudno. He asked that his real name not be used for this report.

Fearful of future energy price increases, he said he just reached an agreement to set his dual fuel bills (gas and electricity) at 315 pounds ($ 433) a month for the next three years, almost double that. his previous average of 175 pounds. ($ 240) monthly bill.

“And we are looking for savings to replace a good but very old boiler, hoping to use less to offset the price increase,” he told Al Jazeera.

Williams also cares for her elderly mother-in-law, making sure she “does that pensioner thing” of keeping the house dangerously cold.

“If we feel that way with a family income of around 45,000 pounds [$61,884] with about 100,000 pounds [$137,408] in savings, “he asks,” how do people less fortunate than us feel? “

Green impact

With COP26, the United Nations conference on climate change, which kicks off in Glasgow on Sunday, Britain’s focus on energy consumption is in the limelight. And rising gas prices have already had an impact on the government’s ‘net zero’ strategy to decarbonize the UK by 2050.

“Part of the net zero agenda was to make gas more expensive and use that tax to pay for green measures, but that has now been discontinued,” says NEF’s Kumar. “In the long term, it should still be flat out ahead of net zero, but if we continue to face these kinds of shocks, it’s hard to tell.”

The price of gas also has a personal impact on people and their communities, David Peacock said from his Llandudno flat. And the people of the UK are cautiously looking at a long, cold winter.

“Like many others, with or without disabilities, these are difficult times,” said Peacock. “And the future holds enough physical problems for all of us, without the financial uncertainty of whether the ever-increasing cost of fuel could further affect our health.”

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *