NATIONAL
ASSEMBLY FOR
WALES’
ENVIRONMENT AND SUSTAINABILITY COMMITTEE
INQUIRY INTO
ENERGY EFFICIENCY AND FUEL POVERTY IN WALES
MEMORANDUM OF WRITTEN EVIDENCE SUBMITTED BY
SCOTTISHPOWER
Executive Summary
1. ScottishPower is a major UK energy company with networks, generation and retail interests. It is part of the Iberdrola group, a major international utility and the world’s leading wind power developer.
2. We supply over 5 million electricity and gas services to customers in Great Britain, with around 240,000 services to customers in Wales. ScottishPower Energy Networks (SP Manweb) is also the licensed Distribution Network Operator (DNO) in North and Mid Wales.
3. ScottishPower is an obligated supplier under the GB-wide Energy Companies Obligation (ECO) energy efficiency scheme and an accredited Green Deal Provider. Throughout 2013, our delivery under ECO has included a significant number of energy efficiency measures being installed in Wales.
4. We also provide a large element of support to low income and vulnerable households in Wales under the GB-wide Warm Home Discount scheme. In the last Warm Home Discount scheme year (i.e. 2013/14), ScottishPower provided over £2.2m of support to eligible customers in Wales.
5. Since 2005, the ScottishPower Energy People Trust has awarded funds of over £323,000 to nine projects across Wales, helping 9,158 low income or vulnerable individuals in 7,230 households.
6. Through these various initiatives and support schemes, we are focussed on seeking to provide widespread support to those on low incomes, or who are otherwise vulnerable, so as to minimise the risk and impacts of fuel poverty.
RESPONSE TO QUESTIONS
A. Progress towards the Welsh Government’s statutory targets for eradicating fuel poverty in Wales by 2018
7. The latest UK Fuel Poverty Monitor (2014) published jointly by National Energy Action (NEA) and Energy Action Scotland (EAS) provided an assessment of fuel poverty levels across the UK and compares the differing approaches to tackling this issue in different areas.
8. The Welsh Government’s target is to eradicate fuel poverty in Wales, as far as reasonably practicable, by 2018 (with interim targets to, as far as reasonably practicable, eradicate fuel poverty among vulnerable groups by 2010 and in social housing by 2012).[1] In that context, the Monitor report notes that the interim targets were not achieved and summarises a number of challenges, including:
· Rising energy prices;
· Lack of access to mains gas - with 264,500 households in Wales having no access to mains gas, which has the effect of increasing their overall energy costs;
· A relatively high proportion of houses with solid wall construction which are both costly to insulate and can sometimes be difficult to treat;
· Low incomes - with Wales remaining amongst the poorer parts of the European Union.
9. As can be seen from Table 1 below, 29% of all households in Wales are fuel poor, compared to 25% in Scotland and 15% in England when using the same definition of fuel poverty, namely, those households that spend more than ten per cent of their income on fuel.[2] The proportion of hard-to-treat housing in Wales and the extent to which households lack access to mains gas supply are key factors that help to explain the high proportion of fuel poor households in Wales.
Table 1: Fuel poverty levels in the UK in 2011 by country (DECC)[3]
|
Country |
Number of households in fuel poverty (millions) |
% of households in fuel poverty |
Total number of households (millions)
|
|
England (10% definition) |
3.2 |
15% |
21.6 |
|
England (LIHC definition) |
2.3 |
11% |
21.6 |
|
Scotland |
0.6 |
25% |
2.3 |
|
Wales |
0.4 |
29% |
1.3 |
|
Northern Ireland |
0.3 |
42% |
0.7 |
|
UK (10% of income definition) |
4.3 |
c.17% |
25.9 |
10. It follows that the statutory target for 2018 remains a very challenging one though some progress is being made through delivery under GB wide schemes, such as ECO and Warm Home Discount, as well as under additional schemes developed and funded at a Welsh Government level.
B. Impact of the Welsh Government’s Nest and Arbed energy efficiency programmes
Nest
11. The Nest scheme targets a very similar group of households to those targeted by the Home Heating Cost Reduction Obligation (HHCRO) under ECO for Affordable Warmth eligible households. Much work has been done to raise awareness of Nest and, in our experience, many householders in Wales are likely to apply to Nest in the first instance.
12. In recent months, householders that have been through the Nest application process and found not to be eligible, have then been referred to the GB-wide Energy Saving Advice Service (ESAS) and directed to their electricity supplier so as to check if they might be able to benefit from HHCRO measures under ECO. Ensuring that there is this kind of joined-up approach to providing access to the two schemes is clearly important. To date, we have received a limited number of these type of referrals from ESAS.
13. The establishment of Nest pre-dates the introduction of ECO. We are therefore working with Welsh Government officials to look at how any future changes to Nest could be developed in a way that better complements the delivery of measures under the HHCRO element of ECO, thereby ensuring that more homes in Wales can benefit from newer, more efficient heating systems.
Arbed
14. We welcome the Welsh Government’s new Arbed programme which encourages local authorities in Wales to work closely with energy companies to develop bids for funding energy efficiency improvements. In particular, we consider that the rolling application process for funding under Arbed works well, given that in many other schemes in operation the often tight bidding deadlines mean that projects have to be submitted before they are fully developed, which can make delivery planning and cost control more challenging.
15. We support the concept of blending Arbed funding with local authority and ECO funding as this can help to meet the common objectives. Going forward, however, the Welsh Government will wish to consider this carefully in light of the UK Government’s proposed changes to ECO. Any blending of public money with ECO funding needs to be done in a way that secures the delivery of additional measures beyond those already obligated under ECO. This is important in ensuring a good use of public money.
C. Impact of the UK Government’s Green Deal programme
16. The Green Deal (GD) was launched on 28 January 2013 in England and Wales (and on 25 February 2013 in Scotland). There were on average 5 GD Assessments per 1,000 households in Great Britain with 4.5 per 1,000 households in Wales.
17. The GD incentives scheme has been available in England and Wales since January 2013. To date, there have been some 3.8 incentive payments per 10,000 households in England and Wales together and 3.4 incentive payments per 10,000 households in Wales alone. Scotland operates a separate incentive scheme.
18. On the other hand, the number of GD finance plans remains quite small and therefore reliable statistical inferences on this element cannot be drawn. Looking across all elements of the Green Deal, the evidence suggests that overall Green Deal activity in Wales is comparable with (though slightly below) levels elsewhere in Britain.
D. Implementation of the UK Government’s Energy Companies Obligation (ECO)
19. DECC regularly publishes statistics showing delivery of ECO and, in particular, official statistics show delivery in Wales on a quarterly basis. According to DECC’s latest Quarterly Statistics published in March 2014[4], of the 528,886 measures that had been installed under ECO to the end of December 2013, 6% were installed in Wales (31,809), which is somewhat greater than the population share figure which is c.5%.
20. In Great Britain, on average, there were over 20 ECO measures installed per 1,000 households, but this increases to 24 per 1,000 households in Wales. This indicates that there is proportionately more ECO activity in Wales compared to Great Britain as a whole. Given the higher incidence of fuel poverty amongst households in Wales, this is clearly helpful.
21. Our own experience of delivery in Wales is one of successful partnership working with local authorities and housing associations. We consider that this is key to facilitating cost-effective delivery at scale across local communities. We have worked closely with the Welsh Government on both the Nest and Arbed programmes, as well as with the Energy Saving Trust (EST) on ESAS Affordable Warmth referrals, to help deliver energy efficiency measures to households in Wales. As stated above, we have been focussed on ensuring that the various schemes operate in a complementary way so as to optimise effective delivery to households in Wales.
22. This focus on ensuring complementary schemes will be particularly important when it comes to implementation of the changes to ECO initially announced by the UK Government at the time of last year’s Autumn Statement, and now being considered by the Department of Energy and Climate Change (‘DECC’) in light of the recent consultation on ‘The Future of ECO’. A key element in this is to ensure that the way that the various schemes interact can maximise additionality, thereby optimising cost-effective delivery with the limited resources available.
23. In addition, funding of energy efficiency programmes such as ECO through consumer bills is more regressive than tax-funded schemes. We would therefore urge the Welsh Government to engage with the UK Government on the longer term funding of ECO through taxation.
E. ScottishPower’s other company-based initiatives to help customers at risk of fuel poverty
24. ScottishPower is focussed on delivering a number of other company-based initiatives to help those at risk of fuel poverty. These are summarised below, with specific reference to delivery in Wales where possible:
Warm Home Discount
We provide a large element of support to low income and vulnerable households in Wales under the GB-wide Warm Home Discount scheme. In the last scheme year alone (i.e. 2013/14), ScottishPower provided over £2.2m of support to eligible customers in Wales. This amounts to 7% of our total Warm Home Discount spend in that scheme year, which is greater than Wales’ share of the population figure which is c.5%.
The ScottishPower Energy People Trust
Our charity - The ScottishPower Energy People Trust - has awarded funds of £323,801 to 9 projects across Wales since 2005, helping 9,158 low income or vulnerable individuals at risk of fuel poverty in 7,230 households. See Annex B for a case study example of one of these projects.
Community Liaison Officers
ScottishPower operates a dedicated team of Community Liaison Officers, a number of whom operate across Wales, providing face-to-face support and advice to vulnerable customers on all energy issues whenever needed.
Winter Commitments
For the last two years we have announced a series of Winter Commitments to help our most vulnerable customers. These included: a commitment to no disconnections through the winter; not putting a limit on broader-group Warm Home Discount spend; suspending debt follow-up for our most vulnerable prepayment customers; and continuing to remind our quarterly credit customers that they could switch to cheaper tariffs.
Priority Services Register
The Priority Services Register is a free service available to customers who may need more support due to an illness or disability. Key benefits include a free gas safety check, a password service (for any representatives such as meter readers to quote when they visit so as to reassure about their identity) and access to bills in an alternative format (including braille, large print and CD).
National Debtline
Our partnership with the National Debtline is designed to help those customers showing signs of needing debt advice or otherwise needing help in managing their debt. The National Debtline adviser seeks to work through the individual circumstances of a customer taking into account all income and expenditure. As part of this support work, they also check to see if a customer is entitled to any additional benefits.
ScottishPower
17 June 2014
Annex A – DECC’s Green Deal and Energy Company Obligation (ECO): January – March 2013 Statistics[5]
Annex B – The ScottishPower Energy People Trust – Case Study
Neath Port Talbot County Borough Council
In December 2009, Neath Port Talbot County Borough Council – Welfare Rights Unit, was awarded £72,930 for a two year project “Fuelling Kids”, which provided comprehensive Welfare Benefits advice within some of the poorest regions in Wales.
The project targeted families most at risk of fuel and income poverty, providing them with Benefit Health Checks, debt and energy efficiency advice. The support workers contacted clients through partnership working with other organisations, running and attending events and through Surgeries at Schools. The funding provided for one full time and one part time support worker for two years.