Fuel poor consumers should be placed on a tariff charging the same rates as under the October 2020 price cap, leading academics have suggested.
The move is being mooted by academics from the University of Oxford and Cambridge Architectural Research in response to the Department for Energy Security and Net Zero Select Committee’s Preparing for the winter inquiry.
It comes amid growing concern that despite the price cap falling to its lowest level since 2021, prices remain high and there is as yet no support coming from government ahead of the winter months.
A new report by the academics proposes an Energy Cost Support Scheme (ECSS) which would help millions of consumers in the most need with their energy bills this winter.
The findings are based on research conducted by examining data from thousands of customers of prepayment meter (PPM) specialist supplier Utilita. They follow preliminary findings into what support will be required this winter, published earlier this summer before Parliament headed into recess.
The ECSS would be worth around £1,000 per household, between October 2023 and March 2024, halving energy costs. It could be delivered in one of two ways, with the preferred method being that each eligible household should revert to the £1,042 price capped default tariff which was set in October 2020.
An alternative method is to spread the £1,000 across six months, paying £5.50 per day through winter “directly and automatically to energy meters or as discounts on standard credit bills”. This method however is not suited to legacy PPM customers.
The report calls for the ECSS to be targeted, but adds that the current fuel poverty definitions and means tested benefit routes to target help are insufficient to identify those in most need.
“For speed and simplicity, eligibility should be based on criteria already available to the energy suppliers,” it said.
These include the expected 2.8 million households eligible for the revised Warm Home Discount scheme, around 4.5 million PPM households, c.1 million households where electricity is the main metered fuel but annual consumption is below 4,200kWh and the estimated 1 million households who are extra-vulnerable to loss of energy supply for medical reasons and are on the Priority Services Register.
While the total number of eligible households could exceed 9 million, the report states that there will be overlaps between the groups.
“The government has already allocated £8 billion for the Energy Price Guarantee support this financial year that is now not going to be needed; this would cover payments for 8 million households,” it explained.
Other recommendations made include replacing Cold Weather Payments (CWP) with Extreme Weather Payments (EWP).
Under the current scheme CWPs are made to eligible households if the average temperature in their area is recorded as, or forecast to be, zero degrees celsius or below over 7 consecutive days.
Households will receive £25 for each 7 day period of very cold weather between 1 November and 31 March.
Yet the report criticises the retrospective nature of CWPs, with households unable to spend money during the cold period, as they cannot be sure it will be given to them. It further adds that “£25 is too little to compensate, so the present policy is too limited on both counts”.
Under the proposed EWP scheme the payments would be paid in advance for each day in regions where the Met Office predicts a minimum temperature of -4°C or below (equivalent to 0°C average over 24 hours) for the next day. Payments must be £6.50 for each day at a minimum and possibly more during colder weather or in colder regions, such as the North of England and Scotland.
“Eligibility should be tied to a wider group of recipients than at present, probably the same as those getting the ECSS. With the present scheme, the money is paid into the customer’s bank account, but it would be preferable if the money could be paid directly onto the householder’s energy account,” it explained.
In the longer term, the report calls for a better definition of fuel poverty, with concerns the current definition “considerably underestimates” need. It also calls for further action to encourage legacy PPM customers to switch to a smart meter and a review of the design and operation of the Priority Services Register.
Dr Brenda Boardman of the Environmental Change Institute, University of Oxford, one of the report’s researchers, said: “This represents a real opportunity for the government to focus on the needs of the fuel poor and ensure they have security of supply on a daily basis, without the risk of debt or disconnection.
“Our report develops effective policies by using new evidence from existing customers.”
Dr Jason Palmer, from Cambridge Architectural Research who undertook the data analysis, said: “We were struck by the very painful choices many households in fuel poverty have to make every day.
“Around 6% of the 28,000 households whose energy use we examined have hardly any heating at all through the winter. They are juggling family finances and if they get it wrong then their health – in extreme cases their lives – are on the line.”
A spokesperson for the Department for Energy Security and Net Zero said: “We have been providing unprecedented support to families, with nearly £40 billion to cover around half a typical household’s energy bill last winter. Energy prices have fallen significantly since last Autumn and the energy price cap is down £580 from its peak.
“Additional help is also available for the most vulnerable this winter through an increase to the Warm Home Discount, from which we expect over 3 million households to benefit.
“Our consultation on how best to ensure people can access the full benefits of moving to a smarter, more flexible energy system is ongoing and we continue to keep options under review including for the most vulnerable households.”