MAKING ENERGY BETTER

An investigation into the energy challenges faced by rural communities in Dorset

PROJECT TEAM

Bob Pulleybank, Karen Spurr, Tim Smith

May 2016

Contents

Acknowledgements

Executive Summary

1.Introduction

2.Background

3.Difficulties experienced in off-gas areas of Dorset

4.Evidence of the impact of living in off-gas areas of Dorset

5.Support and Advice available to Fuel Poor households in Dorset

6.Conclusions

7.Recommendations

Appendices

Acknowledgements

We would like to thank all the Dorset Local Citizens Advice offices who completed the questionnaire and provided information on specific issues with fuel poverty in their areas.

Information from previous studies by the Centre for Sustainable Energy for Citizens Advice and DECC has been used to give the background to fuel poverty. Information from the Healthy Homes Dorset project has been used to help draw conclusions and recommendations for future action.

We would also like to thank the following organisations for their time in answering our questions and discussing off-gas energy issues: Jon Bird - Dorset County Council, Phil Neale - Wessex Energy Advice Centre, Lisa Poole - Myconsortium oil club, Mike Scott – Shroton Oil Club, Caroline Buxton – Citizens Advice in Dorset, Simon Thompson – Dorset Community Action, Robbie Stevenson – Southern Gas Networks, Stephanie Lloyd-Foxe – Magna Housing.EXECUTIVE SUMMARY

Citizens Advice awarded funding to Citizens Advice in Dorset (CAiD) to deliver a project through the “Making Energy Better” campaign which seeks to ‘address the unique and often disproportionate energy challenges faced by rural communities’.

The funding has enabled CAiD to produce the Energy Referral Toolkit shown in Appendix 5 which is now available for advice providers on the Advice Dorset website. The 7 rural Citizens Advice (CA) offices in Dorset have been funded to promote and share this Toolkit with their Local Advice Networks. Purbeck CA has also been funded to investigate the impact of being off-gas in rural Dorset.

This report presents the findings of this investigation with specific references to the difficulties faced by households living in off-gas areas, the impact on individuals and families in the form of case studies, and a summary of the advice and support available to these households.

The underlying causes of Fuel Poverty (low incomes, high fuel prices and poor quality housing) are also the principal drivers for the energy challenges faced by off-gas communities. Consequently, Fuel Poverty statistics have been used to identify the types of property and heating fuels which are likely to lead to households experiencing difficulties in off-gas areas.

The identification of off-gas areas was greatly assisted by the availability of the Non-Gas Map which has been produced by KILN for DECC and National Grid. This interactive map (described in Section 2.2) shows the number of properties in each Lower Super Output Area (LSOA) which are within 23m of a gas main (and entitled to request a gas supply) and those over 23m from a gas main together with a number of data items such as Fuel Poverty, property tenure and fuel used for heating.

Analysis of this data for 37,711 households in West Dorset has shown that there is a direct link between fuel poverty and living in an off-gas area, that there is a less direct link with households living in private rented or rent-free accommodation and a weak link with electric or oil-fired central heating. There was no link between fuel poverty and households living in purpose built or converted flats. The main drivers by Government to reduce fuel poverty have been to promote competitive markets through supplier switching and to improve housing quality through grants for insulation and replacement gas boilers.

These drivers to reduce fuel poverty do not have much impact in rural Dorset due to a number of factors including the poor internet service making it difficult to obtain the most competitive energy prices and the prevalence of private rented accommodation restricting the availability of housing upgrades. This has an adverse impact on households which suffer from reduced use of the house due to only heating a few rooms, and/or an increase in ill-health and poor living conditions due to condensation and mould.

There are local initiatives to improve housing quality for some households (such as Healthy Homes Dorset funded by Public Health Dorset) but it is recommended that a broader approach is taken which co-ordinates actions and offers improvements to heating and housing for private rented and rent-free accommodation (such as loans to purchase bulk fuel stocks or a boiler rental scheme). This would enable significant additional housing improvements compared to current improvement schemes. In addition the way that CA record energy issues could be improved to allow for follow-up and analysis of clients with energy challenges.

There is a proposal to revise the Priority Services Register to allow more specific actions by Distribution companies and this would be an opportunity to refer CA clients direct to these companies and maintain an awareness of their vulnerability.

1.Introduction

1.1Citizens Advice

Citizens Advice, including Citizens Advice Scotland, provides free, confidential and impartial advice to help people resolve their problems. As the UK’s largest advice provider, Citizens Advice is equipped to deal with any issue, from anyone, spanning debt and employment to housing and immigration plus everything in between. We value diversity, promote equality and challenge discrimination.

Citizens Advice represents consumers across essential regulated markets. We are the statutory consumer advocate for energy and postal services in Great Britain, and for water in Scotland. We use compelling evidence and expert analysis to put consumer interests at the heart of policy-making and market behaviour. We have a number of responsibilities, including unique powers to require private and public bodies to disclose information.

We tackle issues that matter to consumers, working with people and a range of different organisations to champion creative solutions that make a difference to consumers’ lives.

1.2Citizens Advice in Dorset (CAID)

Citizens Advice in Dorset (CAiD) is a consortium of the nine Citizens Advice Offices based in Dorset, Bournemouth and Poole. Its aim is to ensure that the people of Dorset, Bournemouth and Poole have access to the best possible advice services by promoting the work of Citizens Advice, and by supporting the development and growth of the service.

The members of CAiD are the nine local Citizens Advice in the area:

  • Citizens Advice Bournemouth
  • Citizens Advice Bridport
  • Citizens Advice Christchurch
  • Citizens Advice Dorchester & Sherborne
  • Citizens Advice East Dorset
  • Citizens Advice North Dorset
  • Citizens Advice Poole
  • Citizens Advice Purbeck
  • Citizens Advice Weymouth & Portland

CAiD was established as a charity in 2009 to support and develop Citizens Advice services across the local area with a remit to act as a voice for the CAB service, actively seek funding for the network, aim to achieve more efficient working across the Local Offices, work with Local Offices and other partners to develop services for the benefit of our clients, and keep up to date with the external environment and develops relationships with funders.

CAiD works closely with the member offices to develop services and respond to emerging needs as well asworking with partners across the voluntary and statutory sectors and managing a number ofprojects[1]. An example of this activity is the recent launch of the British Gas Energy Trust[2] funded “Healthy Homes Partnership” managed by Dorset Community Action. This project aims to provide advice to households not on mains gas, and those with health issues made worse by living in a cold home, or who have other issues such as mental health needs, a household with young children, and those living in emergency accommodation. The project can also make loans and grants to eligible clients. In addition Magna Housing Association (one of the partners) will identify tenants who may benefit from having a wood-burning stove with wood provided from local sustainable woodland.

CAiD has played a critical role in developing the significant growth in activity in the Citizens Advice service in Dorset. This has a direct beneficial impact on the people that use the service.

1.3The Rural Energy Project

Citizens Advice has provided funding through the “Making Energy Better” campaignto Rural Issues Group members. The funding is intended to enable members toinvest in public education as well as raising awareness of the importance of rural energy challenges. Energy is an issue that cuts across a number of other problems like debt, mental health, and access to services and the project will identify and address the unique and often disproportionate energy challenges faced by rural communities in Dorset.

2.Background

2.1.The GB Energy Market

There have been many attempts to improve competition, transparency and fairness in Great Britain’s energy market over recent years, but there remains a significant group of consumers who are poorly served, including those who use prepayment meters and those who have never switched energy supplier. This significant minority is being systematically disadvantaged by the competitive market, exacerbating problems of energy affordability, fuel poverty and undermining any benefits of reduced costs delivered by energy efficiency programmes. Other consumers find themselves unable to switch suppliers due to outstanding debt, although recent action[3] by Ofgem to force suppliers to allow switching with outstanding debt up to £500 is expected to improve this issue.

The group of ‘sticky’ customers, who are unable or unwilling to engage in the energy market, remains a concern. Their lack of engagement not only limits the extent to which the market can be considered competitive, but inevitably results in these customers being charged unduly high prices for their energy in comparison to households that participate in the market. Stakeholder initiatives to encourage switching, such as Citizens Advice’s ‘Energy Best Deal’ programme, and wider regulatory attempts to simplify tariff options and improve consumer confidence, such as the Retail Market Review (RMR) and Energy Market Review (EMR), 2015 saw no significant increase in overall understanding of tariffs but an increase in switching rates[4],[5] (Fig 1) although this is still only around 3% of all consumers. The Competitions Market Authority (CMA) review also found some indications that the restricted tariffs had an adverse impact on competition.

Figure 1 – Quarterly Domestic Switching Rates

It is thought that ‘fuel poor’ rural consumers are less likely to be frequent switchers due to their restricted access to the internet as this is the main source of tariff information and also enables lower tariffs through internet management of accounts. In addition the smaller suppliers do not offer the Warm Home Discount and there is some evidence that Economy 7 tariffs are not offered by the new suppliers who are often the most competitive.

2.2.Government Actions on Fuel Poverty

The energy challenges facing households in rural Dorset are similar to those facing a more general group, defined nationally as those in Fuel Poverty. Fuel Poverty is caused by three factors:

Low incomes;

High fuel prices; and

High demand for fuel due to poor quality housing.

Successive UK governments have had a policy to reduce fuel poverty and the 2000 Warm Homes and Energy Conservation Act target was to eradicate fuel poverty by 2016 with a definition based on those spending more than 10% of their income on energy. This target was almost impossible to achieve as although property improvements reduced the demand for fuel, energy prices increased faster than incomes (Fig 2).

Figure 2: Fuel Poverty across UK under 10% definition

Following a review of fuel poverty by Professor Sir John Hills in 2011/12, the current government amended the definition of fuel poverty in England (but not Wales and Scotland which are subject to devolved government regulations) in the Warm Homes and Energy Conservation Act to those households which have required fuel costs above average (the national median level) and were they to spend that money they would be left with a residual income below the official poverty line (the High Cost/Low Income basis). In reality most low income households do not spend enough of their income on fuel to maintain the “standard” of 210C in the living room and 180C elsewhere.

In March 2015 the Department for Energy & Climate Change (DECC) published a new Fuel Poverty Strategy for England[6] and associated Regulations. This document included a legal obligation for as many fuel poor homes as “reasonably practicable” to be raised to a Band C energy efficiency rating by 2030, with interim targets for 2020 and 2025. There is also a specific methodology for measuring energy efficiency in relation to the target[7] – but not fuel poverty itself. This methodology uses sophisticated modelling to estimate the number of households in fuel poverty.

This had the effect of reducing the fuel poverty statistics in England from around 2.75 million in 2013 to 2.35 million or approximately 10.4% of all households[8]. This is down from the estimated peak of 2.57 million in 2009 although the average fuel poverty gap increased from £355 to £374 in line with increasing energy prices. Of these 2.35 million households, it is estimated that 49% have an Energy Efficiency Rating of E or worse. In the South West, it is estimated that approximately 11.5% of households were in fuel poverty with a poverty gap of £447. The analysis by DECC has been carried out at county, local authority and Lower Super Output Area (LSOA) which covers about 1,000 households. The graphical output is included in the Non-Gas Map produced by KILN for DECC and National Grid[9] and the data for the Dorset area is shown below in Figure 3 where patches of significant poverty are in darker blue.

Figure 3: Fuel Poverty in Dorset

Natural Gas has traditionally been the lowest cost fuel for heating purposes and so households without access to a gas supply (about 37% of Dorset households) are already disadvantaged compared with other, mainly urban, areas. Recent energy market turmoil has significantly reduced the cost of heating oil but that is expected to be a fairly short term issue.

The average proportion of households in Fuel Poverty (FP) for Dorset as a whole is 10.2% but this varies from 16.5% in some rural LSOA to less than 6% in urban LSOA, although some areas of Bournemouth are as high as 24%.

The proportion of properties in each LSOA without a gas supply varies from 95% to 9% in rural West Dorset. Recent changes in the Licence Conditions for Gas Distribution companies now require them to make gas connections free of charge to households living on a range of means tested benefits and within 23m of a suitable gas main. There are specific targets agreed with each company for the number to be completed within the next 5 years but many of these will be in urban areas which are easier to identify.

The main drivers by Government to reduce Fuel Poverty have been to promote competitive markets through supplier switching and to improve housing quality through grants for insulation and replacement gas boilers, neither of which have much impact on households in rural Dorset.

As part of the latest Fuel Poverty strategy, the government also introduced or improved a number of initiatives but scrapped the Warm Front scheme:

  • The Energy Company Obligation (ECO) to improve energy efficiency standards in fuel poor homes – estimated to help around 260,000 homes annually to 2017[10];
  • Energy Efficiency Rating improvements for privately rented homes – from 1st April 2018 any home which is re-let must meet a minimum rating of ‘E’ and from 1st April 2016 a tenant may request the landlord’s consent to improve the Energy Efficiency Rating and the landlord may not unreasonably refuse;
  • Multi-agency pilot schemes have been funded in 2015 and 2016 to improve the insulation or heating of homes or clear fuel debts or arrange delivery of fuels, e.g. Healthy Homes projects, ‘Winter Wellbeing” in Cornwall;
  • More effective targeting of fuel poor households through reduced complexity for ECO, including incentives for delivery to non-gas homes.

The Energy Efficiency Rating Improvement measure should have an impact on households in rural Dorset but this will only be effective if private landlords are encouraged to co-operate with the requirements.

Alarm at the increase in cold-related excess winter deaths caused the National Institute for Health and Care Excellence (NICE) to publish guidelines in 2015 with recommendations that local Health and Wellbeing Boards (HWB) should develop a strategy to address the health consequences of cold homes and commission a single point of contact for health and housing referral services that provide tailored solutions for vulnerable households. Citizens Advice commissioned a review of the implementation of these guidelines by National Energy Action (NEA) which reported in May 2016[11] and found that fewer than half HWB refer to fuel poverty in their strategies and less than a third refer to excess winter deaths with even fewer completing the necessary implementation guidelines, although some local actions were taking place which were not part of a documented strategy. The NICE recommendations are shown in Appendix 4. The research by NEA assessed the overall performance of all 151 HWBs against 3 criteria allocating scores of 0 to 2 for actions taken on each criteria, giving a maximum score of 6. 9 HWB scored 0, Bournemouth and Poole scored 1, Dorset scored 2 and only 8 scored the maximum of 6.

A recent review of the Priority Services Register by Ofgem[12], has found that there is limited awareness of the Priority Services Register (PSR) and there is low uptake of the services. The proposals include the following changes to the existing arrangements: