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Energy crisis: UK consumers face increasing fuel poverty this winter | Oil and Gas News

Colwyn Bay, Wales, UK – David Peacock is a 70-year-old disabled man who lives alone in an apartment in Llandudno, a Victorian seaside resort in North Wales, UK.

He receives a small state pension, which is supplemented by a pension credit and an independent personal payment from the UK government. Over the past year, he has seen his electric bill almost double.

David wants energy companies to provide flexibility to customers in difficult situations like his.

“Due to mobility and balance issues, combined with arthritic hands and other health issues, I can’t always read a meter. [when asked]”he told Al Jazeera.” Time will tell how reasonable they will be. “

Wholesale natural gas prices have skyrocketed as global energy demand returns with the easing of restrictions linked to the coronavirus pandemic and billions of dollars in stimulus money.

This surge in energy prices has triggered a wave of defaults among UK energy providers, affecting nearly two million customers.

But campaigners and experts warn that it also leaves consumers more vulnerable to the risk of sliding deeper into energy poverty, while hampering the UK’s green energy transition strategy.

Market fluctuations

At the height of the COVID-19 measures that undermined business last year, electricity use fell around the world, as did natural gas prices. In the UK, many smaller energy providers have taken advantage of this market swing to attract new customers at lower prices.

But soaring natural gas prices this fall made this business model unsustainable, as UK energy providers can only pass on part of wholesale price increases to residential customers.

As a result, more than a dozen small UK energy providers have gone bankrupt since September, forcing millions of customers to face the administrative headache of being transferred to a new supplier by the government regulator, the Office. of Gas and Electricity Markets (Ofgem).

“Ofgem’s number one priority is protecting customers. We know this is a worrying time for a lot of people, ”a spokesperson told Al Jazeera.

“The energy price cap covers around 15 million homes and will ensure that consumers do not pay more than is absolutely necessary this winter.”

But what is absolutely necessary depends on who you ask, because the cap is regularly adjusted.

The most recent, which came into effect on October 1, raised the cap to £ 139 ($ 191) for customers paying by direct debit and £ 153 ($ 210) for those on a prepayment plan. .

Millions of people are desperate.

Ruth London, Action Against Energy Poverty

Before that rise, more than four million UK households lived in fuel poverty, unable to afford to keep their homes warm and dry, according to the End Fuel Poverty Coalition, which warned that nearly half a million households now risked joining them.

In addition, some customers are totally at the mercy of market forces as energy caps – although millions of households still remain in difficulty – only apply to households with a standard variable tariff. The others have little protection. And those who depend on prepayment meters are particularly vulnerable.

What the activists want

“Millions of people are desperate, not knowing how they can possibly manage this winter, with the rise in the price of fuel on top of an unprecedented cut in social benefits [Universal Credit], further cuts to public services, rising food prices, COVID and a kneeling health service in one of the richest countries in the world, ”said Ruth London, spokesperson for the group. Fuel Poverty Action campaign.

London said the government could take immediate action, such as extending energy price discounts beyond retirees to other households in need. She is also arguing for longer-term solutions, such as fully funding emergency programs to insulate and renovate UK homes to make them more energy efficient, and changing the energy price framework, which currently imposes “a higher rate on those who have the least and consume the least energy”.

The government’s latest budget, unveiled by UK Finance Minister Rishi Sunak on Wednesday, promised to increase government spending, but contained no specific provisions to help households pay soaring energy bills – an omission that sparked strong criticism from activists against energy poverty.

Adam Scorer, chief executive of National Energy Action (NEA), an energy poverty charity, tweeted: “The Chancellor had the additional tax revenue and targeted mechanisms to provide support before winter. Chose not to. The cost of living will hit the most vulnerable relentlessly. “

The NEA noted that the government’s piggy bank could see an additional £ 100 million ($ 137 million) directly deducted from value-added tax (VAT) revenue on rising energy prices. Another billion pounds ($ 1.4 billion) windfall is heading to the UK Treasury thanks to ‘carbon tax’ revenues which have risen sharply due to the natural gas crisis – completing the four billion pounds ($ 5.5 billion) already made in 2021, putting Sunak in the electric seat.

“This gives it the resources to help more than 2.4 million homes across the UK who are battling the cost of keeping warm,” Scorer told Al Jazeera.

The windfall for the treasury would do more than pay winter fuel payments to vulnerable working-age households, providing direct and automatic relief to help pay energy bills, the NEA maintains.

“This emergency support will help millions of households get through this winter,” Scorer said. “Without it, they will go into further debt or be forced to turn off the heat, putting them at acute risk of serious illness as winter approaches.”

The Ofgem spokesperson told Al Jazeera: “Any customer worried about paying their energy bill should contact their supplier to access the range of support available.”

How the hell do people less fortunate than us feel?

Iwan Williams, British pensioner

Such support can be in high demand, explains Chaitanya Kumar, Environment and Green Transition Manager at the New Economics Foundation (NEF).

“There is more and more pressure on already struggling households,” he told Al Jazeera. “With the increase in energy bills, the reduction in universal credit, the increase in national insurance, the end of holidays – and an expected increase in unemployment, plus inflation – we expect 2 An additional 000 pounds ($ 2,748) will be added to a family’s annual expenses from April of next year.

Compression of the middle class

While it is an emergency for the poorest in the country, it is also starting to bite the middle classes.

Iwan Williams is a pensioner who lives in the family home where he saw his children grow up in the picturesque seaside town of Colwyn Bay, half an hour from Llandudno. He requested that his real name not be used for this report.

Fearing future energy price hikes, he said he had just struck a deal to set his dual fuel (gas and electricity) bills at 315 pounds ($ 433) per month for the next three years – nearly double his previous average of 175 pounds. ($ 240) monthly bill.

“And we are looking to save money to replace a working but very old boiler, hoping to use less to offset the price increase,” he told Al Jazeera.

Williams is also worried about his elderly mother-in-law, making sure she “does that retiree thing” to keep the house dangerously cold.

“If we feel like this with a family income of around 45,000 pounds [$61,884] with about 100,000 pounds [$137,408] in savings, ”he asks,“ how do people less fortunate than us feel?

Green impact

With COP26, the United Nations conference on climate change, which is due to open on Sunday in Glasgow, the British approach to energy consumption is in the spotlight. And rising gas prices have already had an impact on the government’s net-zero strategy to decarbonise the UK by 2050.

“Part of the net-zero agenda was to make gas more expensive and use that tax to pay for green measures, but that has now been suspended,” NEF’s Kumar said. “Longer term it should still be full steam ahead for net zero, but if we continue to face those kind of shocks it’s hard to say. “

The price of gas also has a personal impact on individuals and their communities, said David Peacock in his Llandudno apartment. And the people of the United Kingdom look with suspicion on a long, cold winter.

“Like many others, with or without a disability, these are unsettling times,” said Peacock. “And the future has enough physical challenges for all of us – without the financial uncertainty of whether the ever-rising cost of fuel can have an additional impact on our health.”

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