Following a request by the Fuel Poverty Taskforce, the Utility Regulator issued a consultation paper on assisting vulnerable customers with energy affordability in January 2010. Given the complexity of issues involved, the consultation proposed a three-stage approach to going forward which was supported by respondents to the consultation:
1. The consultation document which presented a set of high-level policy questions that we encouraged stakeholders to focus on prior to being able to effectively move forward;
2. A detailed analysis of options to be taken forward by appropriate fuel-poverty focused authorities;
3. Implementation of the preferred option, given political policy direction and appropriate legislative tools.
Our paper was intended as a constructive contribution to a wide and important debate. Questions addressed included the Utility Regulator’s statutory remit, purpose and scope of assistance, targeting and identification of beneficiaries, collection and disbursement mechanisms and exit provisions. The consultation closed on 12 April. We received 15 responses:
Age NI
Age Sector Platform
Belfast City Council
Consumer Council for Northern Ireland
Citizens Advice Bureau
Department for Social Development
Eaga
firmus energy
National Energy Action
NIE Energy Supply
Northern Ireland Environment Link
NIE plc
Northern Ireland Housing Executive
Phoenix Supply Limited
An analysis of the responses reveals broad consensus on:
• addressing affordable warmth as opposed to just helping with electricity bills;
• inclusion of all home heating fuels, in particular oil which is used by over 70% of households;
• support for an extended statutory remit for UR (primarily in relation to oil regulation); and
• the need for energy efficiency advice.
But less agreement on issues such as:
• who should pay for assistance to poorer consumers;
• targeting assistance;
• amount of assistance; and
• mechanisms for collection and disbursement of funds.
The Utility Regulator Position
Our statutory powers and general duties do not currently provide a legal basis for us to implement an affordability scheme that involves large-scale cross subsidy of one group of customers at the expense of another. That is to say, whilst we must have regard to the interests of certain groups of customers, this does not over-ride our principal objective or statutory duties which is to protect the interests of consumers in general. Nor was there consensus in the consultation responses that such cross-subsidies would be the right way forward.
There is widespread agreement that affordability assistance should address affordable warmth, not just help with electricity bills. No legal powers currently exist to introduce mechanisms for assistance within the oil industry, which currently provides warmth to almost three quarters of Northern Ireland households. In this context, it would be inequitable to require only natural gas and electricity customers and / or suppliers to provide assistance. There was widespread support amongst respondents to extend our remit to home heating oil. However, this would require primary legislation and a change to our statutory duties and powers.
There is no broad consensus as to who should receive assistance, what mechanisms could be used to identify and assist them or how much any assistance should amount to.
Next Steps
We will present the findings of the consultation to the Northern Ireland Fuel Poverty Task force and it will be for this forum to decide on further action with regard to stage 2.
We will be briefing key players including the Assembly’s Social Development Committee and the Northern Ireland Fuel Poverty Advisory Group on the responses received to the consultation.
The Utility Regulator will endeavour, where possible, to contribute constructively to the debate and work in future. Given the necessary political leadership, delivery mechanisms and legal instruments to do so, we would implement affordability assistance as required.