Question

To ask the Secretary of State for Energy and Climate Change, with reference to Table 12 of the Final impact assessment of the future of the Energy Company Obligation, published by his Department on 22 July 2014, what estimate he has made of the change in the (a) aggregate fuel poverty gap and (b) average individual fuel poverty gap under the Energy Company Obligation in (i) each year between 2013 and 2017 and (ii) in total between 2013 and 2017.

The Energy Company Obligation (ECO) delivers vital measures that make a real and long term difference to fuel poor households. By the end of June 2014 ECO had delivered over 520,000 measures to over 435,000 low income and vulnerable households, reducing their energy costs and risk of being in fuel poverty both now and for years to come.

Estimates published in the final Impact Assessment for the future of the Energy Company Obligation show that against a baseline with no policy in place between April 2015 and March 2017, the policy would drive an estimated reduction in the number of fuel poor households in England of around 10,000 while resulting in a nominal increase in the aggregate fuel poverty gap of around 1 per cent. While uncertain, it is anticipated that there would be a similarly nominal increase in the average fuel poverty gap of around 1 per cent.

These estimates reflect that in the short-run the policy generates costs for energy consumers – including the fuel poor – in order to fund long-term improvements in energy efficiency. The short run costs across all households can mask the benefits of improved energy efficiency. For those expected to receive measures from April 2015 onwards, their aggregate fuel poverty gap is expected to be an estimated £22 million lower by 2017, but partially offset in the short-run by the costs of the policy.

All estimates of the fuel poverty impacts of ECO have been conducted following the methodology published in Section Four of the Analytical Annex to Fuel Poverty: a Framework for Future Action published in July 2013.1 This same approach is used for producing projections of fuel poverty in the annual National Statistics report.2 Projecting policy impacts on levels of fuel poverty is inherently uncertain and requires a range of assumptions to be made. As a result, a detailed assessment of the impact of the policy in each individual year of the scheme on fuel poverty has not been carried out. Such an assessment would be extremely difficult because of a number of uncertainties in the calculation, such as: which households take-up which measures; changes in the level and distribution of incomes across households; changes to the housing stock independent of ECO; and, also, changes to energy prices, including as a result of the policy. These uncertainties make estimates at the aggregate level more appropriate as opposed to trying to pin-point specific impacts in any one year.

[1] Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/211137/fuel_poverty_strategic_framework_analytical_annex.pdf

[2] For the latest report see: https://www.gov.uk/government/statistics/annual-fuel-poverty-statistics-report-2014