By John Sinha
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Briefing: Fuel poverty

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Issue 386

The end of November saw the release of the government’s statistics on winter deaths. Cold weather is a killer in the UK. An estimated 31,100 “excess winter” deaths occurred over the winter of 2012-13, up from 24,000 the previous winter.

Most of these deaths occurred among those aged 75 or older. Excess winter deaths are strongly correlated with the coldest weather months; and the coldest winters have the highest number of winter deaths.

Keeping rooms heated at 21 degrees C for living rooms and 18 degrees C for bedrooms is recommended for households with young children, the elderly and those with disabilities. Yet keeping rooms this warm is becoming increasingly unaffordable for millions of households in the UK.

Energy prices are rising eight times faster than increases in average earnings according to Citizens Advice. Bills have doubled since 2000 and are forecasted to go up even further as a result of the UK’s increasing reliance on imported natural gas.

Those with the lowest incomes are the least able to absorb price rises, as fuel makes up a much more significant proportion of their incomes than is the case for those on higher incomes. According to the Fuel Poverty Advisory Group’s tenth annual report, the mean annual income of fuel poor households in the UK in 2010 was 11,000 pounds compared to an average income of 32,000 pounds for non fuel poor households.

In addition, those on the lowest incomes typically pay more for their energy, with households with an average income of 6,500 pounds paying 1,954 pounds for their energy, compared to those earning around 42,000 pounds paying 1,244 pounds per annum.

The energy companies, the government and the conservative media like to blame the “green crap” for the recent price rises. These are the levies energy companies put on the bills to pay for energy efficiency measures like home insulation and support for renewable energy. Yet the facts speak otherwise. According to Ofgem only 50 pounds of last year’s 150 pounds increase in fuels bills was due to environmental measures; the rest was made up by increases in fossil fuels, transmission and distribution costs.

Aggravating the problem of fuel poverty is the experience of electricity and gas privatisation over last the 20 years, which has failed even by the standards of its proponents. Far from competition delivering lower prices and a better service, privatisation has resulted in an energy cartel.

The Big Six energy companies control around three quarters of the UK’s generating capacity and 96 percent of all residential electricity supply, while the privately owned National Grid controls the national distribution network. Consumer choice is a chimera when consumers have to navigate between hundreds of confusing tariffs. And the nature of the wholesale energy market has become so complex and opaque that is nearly impossible to comprehend, let alone regulate.

There are numerous ways in which the energy companies manipulate the market. For example, they can periodically mothball power plants, thus creating a scarcity in the electricity wholesale market in which the generators can charge a higher rate during peak demand.

Ed Miliband’s modest proposal for a price freeze was received with derision by the press. While welcome, it is not sufficient to address the problem of fuel poverty in the UK, which has seen the average bill rise by 37 percent in just three years.

That the energy oligopolists have responded to this news with threats of blackouts is just bluster. As the energy economist Dieter Helm pointed out, the energy companies profit most in situations where there is a periodic shortage of generating capacity.

Cameron’s panicked response – remember the “greenest government ever”? – is to scrap the Energy Company Obligation, a scheme his government introduced. This levy on energy companies is supposed to be spent on energy conservation measures and support for low carbon energy sources, something which they have failed to do, preferring to pocket the money.

This is certainly a success for the big energy companies’ lobbying effort; it can only exacerbate fuel poverty. And, according to the Fuel Poverty Advisory Group, this government has already cut support for home energy efficiency measures by 44 percent.

The business model of the energy companies is threatened by the falling price of renewable energy and rising energy efficiency.

Likewise, the government’s “dash for gas”, its support for fracking and new nuclear power station at Hinckley, guaranteeing owners EDF a “strike price” of 92 pounds per MWh, which is double the wholesale rate for the next 30 years, will lock the UK into decades of fuel poverty and maintain the profits of the Big Six.

As the Fuel Poverty Advisory Group’s tenth annual report states, “It is clear that a major step change in the energy efficiency of our housing stock is the only viable and long-term solution if we are to have any hope of reducing the financial, physical and psychological health impacts of the ever increasing cost of energy bills.”

Fuel poverty is a class issue. The struggle against fuel poverty is also a struggle against austerity and potentially a powerful component of any struggle for climate justice, linking campaigns against fracking, and for climate jobs with the demand for a publicly owned and democratically run energy system. The energy cartel and the government’s neoliberal ideology are the chief obstacles to ending fuel poverty and de-carbonising the UK energy infrastructure. The mass burnings of fuel bills organised by the People’s Assembly and the protests against the “Big Six” are the start of this fightback.

As Chris Harman noted in this publication a number of years ago, “Faced with these struggles, there will be a particular onus on those who see climate change as resulting from the blind advance of capitalist accumulation to understand their class dynamic. That means trying to give struggles a direction that protects people’s living standards and conditions while at the same time presenting real alternatives to pouring greenhouse gases into the atmosphere.”

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