Customers, Policy & regulation

Ofgem will perpetuate fuel poverty with proposed change to gas network extension scheme, say networks

The UK’s gas distribution networks (GDNs) have reiterated fears about the impact that change planned by Ofgem to the criteria for the Fuel Poor Network Extension Scheme (FPNES) will have on the UK’s fuel poor.

Speaking on behalf of the industry, the Energy Networks Association (ENA) said Ofgem’s proposal will result in fewer fuel poor customers being connected to the gas grid, thereby depriving them of access to affordable heating.

Ofgem yesterday opened a consultation on its plan to alter the criteria for the FPNES, which subsidises gas grid connections for eligible fuel poor customers. The regulator wants to remove a requirement that individuals must reside within the one of the UK’s 25 per cent most deprived areas, as measured by the government’s Index of Multiple Deprivation (IMD), in order to qualify for the scheme.

It says that making this change would allow the FPNES to become more closely aligned with other mechanisms for delivering support to fuel poor consumers – such the Energy Company Obligation. In addition Ofgem says it is not convinced there is strong evidence that the IMD is an effective predictor of fuel poverty, meaning the FPNES may not be targeting those most in need of support.

This is not the first time Ofgem has moved to remove the IMD criterion from the FPNES. It raised the prospect in March of this year, but met resistance from GDNs who said that scrapping the use of the IMD would result in fewer total connections, because it would make engaging with local authorities to collaborate on connections more complex.

After a pause to consider this concern, Ofgem has, however, thrown it aside and pressed ahead with progressing its proposed change. Its letter said: “We recognise that this option could make it more difficult for GDNs to progress such community schemes. However, we consider that the GDNs should work to find new and innovative approaches to identifying households that would qualify”.

In response, the ENA told Utility Week that the networks remain in opposition.

A spokesperson said the industry “firmly considers” that Ofgem’s plan “will result in less fuel poor connections being carried out: “IMD criteria made up 71 per cent of the total number of connections made under the scheme in 2016/17 and the ability to deliver connections to fuel poor communities would be diminished by proposed changes.

“Ofgem have previously recognised the importance of IMD criteria to the FPNES and in 2015 after consultation with GDNs and partners increased the threshold from the top 20 per cent to the top 25 per cent of deprived areas. In doing so GDNs increased their targets under the scheme to help lift more people out of fuel poverty.”

The spokesperson added that “taking a community approach, working with local authorities and partners, to future proof housing in the most deprived areas of the country delivers long term benefits and is an important element of the FPNES and the national effort to combat fuel poverty.”

Ofgem’s consultation on its proposed change to the FPNES will close on 2 November 2017.

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