Dublin, 2 February 2015
A consultation paper on energy affordability, published by Minister for Energy Alex White today (Monday), invites opinions on whether the energy market is working for consumers, particularly those in energy poverty.
The paper, Towards a New Affordable Energy Strategy for Ireland, suggests that the regulatory focus on encouraging consumers to save money by switching energy suppliers is not working for those in energy poverty, who “are not likely to be among the most active switchers.” It asks what market reforms are necessary to ensure that all customers benefit from competition.
The paper contends that making homes more energy efficient is the best way to address energy poverty. But it notes that the funds dedicated to this are a fraction of what’s spent on energy-related income supports.
The paper is published as Minister White prepares to meet the Commission for Energy Regulation (CER) next Thursday (5th February) to get its views on the perceived slowness with which energy suppliers have passed wholesale price reductions on to consumers. The Minister will also seek the CER’s advice about what can be done to address the very high proportion of customers that have never switched suppliers.
Minster White said: “I will be asking the CER, which has statutory responsibility for monitoring the market to ensure that the market is actually working for all consumers and to explore ways of significantly increasing the number of households that benefit from the discounts that arise from switching energy suppliers. I am particularly concerned that people experiencing, or at risk of, energy poverty appear not to get these benefits. This needs to be addressed and the regulator needs to ensure that the market works for all energy consumers.”
Government actions to help people in energy poverty resulted in a 38% reduction in the number of disconnections in the third quarter of 2014, compared to the same period in 2013. The main energy suppliers have agreed a voluntary code of practice, which includes a commitment not to disconnect customers who engage with their supplier and make a genuine effort to clear arrears. Suppliers have also agreed to offer realistic payment plans to their customers.
Towards a New Affordable Energy Strategy for Ireland says that area and community based retrofit schemes have been introduced since 2011 More than 285,000 homes have received Government-assisted energy efficiency upgrades, with approximately 120,000 of them being delivered free of charge to households in energy poverty.
Minister White said: “Retrofitting homes is the best way to help people out of energy poverty. It insulates families against future price increases and replaces environmentally damaging imported fossil fuels with jobs in local communities. This case for energy efficiency is underpinned by evidence from the Economic and Social Research Institute, the Vincentian Partnership for Social Justice and the International Energy Agency.”
Towards a New Affordable Energy Strategy for Ireland also notes that, while oil remains the most prominent heating method for Irish homes, oil consumers do not currently have the statutory protections that govern the electricity and gas markets. It asks whether the Government should extend the energy regulator’s remit to the unregulated oil sector.
The consultation paper, which builds on Ireland’s first affordable energy strategy, published in 2011, invites views on how energy poverty should be defined and measured. Minister White has invited submissions on the issues raised in the paper, with a consultation deadline of Friday 27th February.
The outcome of the energy affordability consultation will inform Minster White’s medium-term energy strategy, which will be set out in a White Paper later this year. This follows the 2013 publication of an energy Green Paper and an extensive consultation on its contents.
Energy poverty: Achievements
Warmer Homes, Ireland’s first national strategy on energy affordability, was published in 2011. Since then:
- More than 50,000 homes in energy poverty have been provided with free energy efficiency upgrades through the Better Energy Warmer Homes Scheme.
- New Area and Community based energy efficiency programmes have been introduced to better target those at risk of energy poverty, and to promote community involvement in combating energy poverty. Launched in 2013, these programmes have already resulted in the upgrade of an additional 6,000 homes in energy poverty.
- An additional 20,000 local authority homes have been upgraded to a BER of at least a C1. Nearly 25,000 homes have also benefitted from works under the Housing Aid for Older People scheme which provides grants of up to €10,500 to assist older people living in poor housing conditions.
- New building regulations have been introduced that will ensure that all new homes constructed in Ireland will be highly thermally efficient (at least equal to a B1 on the BER scale), thus protecting future generations from the effects of energy poverty.
- Around 120,000 Pay As You Go (PAYG) metres have been distributed free of charge to customers in financial difficulty, allowing these people to better manage their energy costs and reduce the number of electricity and gas customers facing disconnection.
- The definition of a vulnerable customer has been defined in legislation. New statutory protections prohibit the disconnection of vulnerable customers during the winter months. They also prohibit the disconnection, at any time, of those critically dependent on electrical power.
- Energy suppliers have implemented a new code of practice (The Energy Engage Code), which sets out procedures for dealing with customers in financial difficulty.
- Under European Communities (Internal Market in Electricity) Regulation 2010 (S.I. 450 of 2010) the CER have a statutory responsibility to take any actions which the Commission, deems necessary in order to ensure that final customers are benefiting from competition in the supply of electricity and to advise the Minister of any actions in this area.