British Gas has announced substantial price increases to both its gas and electricity prices. The dramatic price increases of 18% for gas and 16% for electricity comes after weeks of speculation, following an announcement from its parent company Centrica that price rises were inevitable due to high wholesale power prices.
The fuel poverty charity National Energy Action (NEA) estimates that over 5.4 million UK households are currently in fuel poverty and, if six largest energy companies raise their prices by a similar amount, it will increase this number to about 6.1 million.
Rising domestic costs are primarily driven by global prices. NEA believes that the only solution is to improve energy efficiency standards in properties occupied by low-income households and to mitigate the impact of high energy prices for the most vulnerable through rebates and income maximisation measures.
It points to a recurring cause of tension being the Government's increasing practice of funding programmes to address both fuel poverty and carbon abatement through levies on domestic energy bills. This is regressive since it takes no account of ability to pay and can result in additional households becoming fuel poor.
The Energy Market Reform document is expected next week and it is likely to indicate that further increases in energy prices are on the horizon to fund additional measures proposed by Government.
NEA is calling for both short term and long term measures. Jenny Saunders, NEA Chief Executive said:
"What we need in the short-term is Government to divert the additional revenues accruing from VAT on domestic gas and electricity to fund energy efficiency programmes for low-income households.
"NEA anticipates that if all suppliers follow the ScottishPower increases of last month, then Government will receive an additional £225 million in VAT receipts. This could be added to the Warm Front budget to provide a transition fund until the Energy Company Obligation takes effect from 2012/13.
"We also need Government to commit to retaining the higher rate of Winter Fuel Payment for financially disadvantaged older households.
"Longerterm we need an Energy Company Obligation which is both adequately resourced and ring-fenced to fund a comprehensive energy efficiency programme for low-income households and a clear road map showing how the Government's target to eradicate fuel poverty by 2016 can still be met."
Andrew Eagles, Managing Director of Sustainable Homes, has recently returned from a week living in a zero-carbon house.
Zero-carbon is frequently referred to as the panacea. The great hope that will assist in achieving carbon reduction targets. Andrew decided to write up a summary about how it was to live in one of these homes that are so talked about.
His article - click here - provides an insight into what makes these homes of the future work and what it is like to live in one.
Unions and pressure groups have joined together to warn the Government that its current policy for tackling fuel poverty will leave greater numbers of households unable to afford to heat their homes.
An open letter from groups including Friends of the Earth, Association for the Conservation of Energy, Consumer Focus, Age UK and the TUC, urges the Government to work faster to radically improve the energy efficiency of housing stock while protecting those already vulnerable to fuel poverty.
The letter outlines three key changes to current policy:
The government has set aside £3million of its new £15 million renewable heat generation fund for social landlords.
The Renewable Heat Premium Payment scheme will make grants, ranging from £300 to £1500 to help householders buy renewable heating technologies such as solar thermal panels, heat pumps and biomass boilers.
While the scheme, which opens on 1 August, is aimed mainly at individual households without access to mains gas, a fifth of the fund will be allocated to social landlords.
The scheme will be run by the Energy Saving Trust who, once £10 million has been allocated, will decide whether the remaining funds will be handed out.
Climate change minister Greg Barker said:
"This starts a new era in home heating because we're making it more economical for people to go green by providing discounts off the cost of eco heaters.
Getting money off an eco heater will not just cut carbon emissions, it will also help create a market in developing, selling and installing kit like solar thermal panels or heat pumps."
The grants represent an opportunity to reduce energy costs and the financial benefits carry on: from October 2012, people who have installed eco-heaters will benefit from the heat premium payment scheme.