Energy Bill [HL]

Written evidence submitted by National Energy Action (NEA) (EB07)

About National Energy Action (NEA)

NEA works across England, Wales and Northern Ireland to ensure that everyone in the UK can afford to live in a warm, dry home. To achieve this, we aim to improve access to energy and debt advice, provide training, support energy efficiency policies, local projects and co-ordinate other related services which can help change lives

Summary

1. Given the infrequency of such pieces of legislation, the Energy Bill provides a vital opportunity for the UK to reduce energy demand and improve energy security whilst being one of the most significant opportunities in the near future for the government to contribute to alleviating the cost of living crisis.

2. The Secretary of State has stated that the Bill will bring down energy bills, however it does not go far enough in removing barriers to the rollout of cheap renewable energy, reducing energy demand or protecting bill payers from further energy cost rises.

3. The priorities for this coalition of or ganisations representing leading charities across the environment and anti-poverty groups to ensure that the Bill brings down the cost of energy for good, whilst speeding up the transition to net zero are follows:

a. Address the pressing issue of cold, damp homes for the most vulnerable by raising minimum energy efficiency standards of private rented sector homes to cut energy costs.

b. Give the Secretary of State powers to stop energy firms from forcibly transferring people onto expensive pre-payment meters by banning the forced movement to PPMs

c. Protect consumers from energy bill increases by removing the hydrogen levy from consumer bills

4. The Government should strengthen the Bill by introducing these amendments to ensure that the Government’s goal of bringing down the cost of energy bills for good is achieved.

Priorities for the Energy Bill

Improvement of energy efficiency standards for renters living in cold, damp homes

5. Despite aiming to improve energy security and bring down the cost of energy bills, there were no measures to reduce energy demand and insulate homes in the Government’s first draft of the Bill. The coalition support an amendment which would raise existing minimum energy efficiency standards in the private rented sector (PRS MEES) from EPC E to EPC C by 2028.

6. Delivering energy efficiency in homes is one of the few near-term actions that can be taken to reduce dependence on gas. Further, without action on housing and buildings, there is no plausible path to achieving the fifth carbon budget or meeting the 2030 statutory fuel poverty target.

7. There are approximately 4.6 million private rented households in the UK, and at least a quarter of those households are living in fuel poverty . Private renters are particularly susceptible to rising energy prices given their lack of autonomy over energy suppliers, tariffs, building fabric and heating systems.

8. Tenants in the private rental sector (PRS) in the least efficient homes are paying as much as an additional £950 per year compared to the average. Citizens Advice showed that 31% of renters feel unable to heat their home to a comfortable temperature, while 1.6 million children in privately rented homes are living in cold, damp or mouldy homes. Each year, the NHS spends an estimated £1.4 billion on treating illnesses associated with living in cold, damp housing. A recent study by the Energy and Climate Intelligence Unit also highlighted that the delay in confirming new energy efficiency standards for the private rented sector could cost private renters an additional £1bn in energy bills.

9. The UK Government consulted on proposals for revised Minimum Energy Efficiency Standards (MEES) in the PRS in September 2020, but are yet to respond to the consultation. The consultation suggested that all rental properties be brought up to EPC Band C by 2028 - so an amendment saying this would only be putting existing government policy onto a statutory footing. The Energy Bill provides an opportune moment to renew the proposals for doing this.

10. Improving energy efficiency in the PRS will be essential for:

d. The UK meeting its Net Zero targets to a) reduce emissions by 78% by 2035 and b) reach net zero by 2050;

e. Achieving the UK’s energy demand commitment of 15% reduction across buildings and industry by 2030;

f. Combating fuel poverty, and working towards the statutory target of all fuel poor homes reaching EPC C by 2030;

g. Improving energy security and resilience by reducing reliance on fossil fuels; and Creating jobs in the decarbonisation sector and stimulating benefits for the economy.

11. We note that while there are concerns that landlords are leaving the market, and worsening the housing crisis being experienced by renters, official data does not back this up. Data from the English Housing Survey also shows that the number of private renting households rose in England by 177,000 from 2021 to 2022. While some landlords are selling up, others are expanding their portfolios, and therefore the overall number of properties in the Private Rented Sector remains fairly consistent .

12. Reducing energy demand through energy efficiency measures will be a crucial step in building resilience against international fuel prices, improving energy security, and cutting carbon emissions, alongside more cheap, homegrown renewables.

13. There is widespread public support for this, as evidenced by our recent polling conducted with YouGov: 72% of respondents agreed that the UK needs a proper plan to phase out gas through upgrading homes with better insulation, heat pumps, and the rollout of renewable energy.

Protection for vulnerable households from being forced onto prepayment meters

14. Another key missing part of the Bill is the absence of an introduction of a total ban on the forced transfer of households to Pre-Payment Meters (PPMs). Analysis by Citizen’s Advice found that in 2022, 3.2 million people were cut off from electricity supply because they could not afford to top up their PPM. Disconnection was found to be at least a monthly occurrence for 2 million people. Nearly 18% of households who ran out of credit on their pre-payment meters went on to spend two days or more without any energy supply, leaving them unable to turn the heating on or cook a hot meal.

15. This is affecting highly vulnerable people for whom PPMs are an inappropriate method of managing energy payments. 64% of prepayment meter households are lived in by a vulnerable person, and 51% are lived in by a disabled person or someone with a long-term health condition.

16. The PPMs scandal uncovered by the i Paper and the Times revealed that energy firms were not following the rules set out to protect vulnerable customers from being forced onto PPMs. Energy firms have recently signed up to a new voluntary code of conduct, designed to govern the forced installation of prepayment meters.

17. This however, remains voluntary. And while the Secretary of State was able to give an opinion on the the forced installation of prepayment meters, there were no legal powers available to proactively make any changes, and the department was reliant on Ofgem to make such changes (who, in turn, have been reliant on voluntary agreements to make any quick process).

18. According to polling commissioned by Warm This Winter, almost three-quarters of the public would back changes to the Energy Bill to ensure that the government can ban the forced transfer of houses onto PPMs. Half support a permanent ban, and a further 23% back a ban whilst energy bills remain high.

19. While the Secretary of State was supportive of a ban on forced installs earlier this year, the UK Government did not have the power to do so unilaterally and had to rely on Ofgem to do so. We are therefore calling for the Secretary of State to be given the powers to intervene and introduce an all-out ban on the forced transfer to pre-payment meters. The proposed ban will not affect the voluntary installation of PPMs by customer request.

Accelerating the Smart Meter Rollout for prepayment customers

20. The smart meter rollout has been ongoing since the Energy Act 2008 powers gave the powers to the UK Government underpinning it.

21. To date, approximately half of traditional meters have been upgraded to smart ones. This progress is consistent across both credit meters and prepayment meters. This is despite the original deadline for the rollout to be completed being the end of 2020. The current policy is for the rollout to be substantively completed by the end of 2025. However, this bill gives powers to the Government to continue the rollout until 1st November 2028.

22. Several organisations, including the CMA and Ofgem, have found that traditional prepayment meter users face significant detriment in the energy market, and that the rollout of smart meters to these households would help to reduce this detriment. There are, however, 2 million legacy prepayment meters still in place, more than 14 years after the rollout began.

23. A significant benefit of smart meters for prepayment customers is the ability to effectively end self-disconnections through either:

a. Automatically switching to ‘credit mode’ once the credit on the meter runs to zero

b. Automatically providing an emergency loan when the credit on the meter runs to zero.

24. This however, is not yet possible, as the rollout has now prioritised targeting prepayment users. H undreds of thousands of households self-disconnect every winter , losing their access to energy. The Bill presents an opportunity to reduce this significantly

25. Amendment NC1 addresses this issue, ensuring that all legacy prepayment meters are replaced by smart meters by the end of 2025.

Protect consumers from energy bill increases by removing the hydrogen levy from consumer bills

1. A concern we have with the original draft of the Energy Security Bill is the proposal to put a new levy onto household bills to fund hydrogen development, despite not there being no clear benefits to households. According to the Secretary of State , the Energy Bill has been put together to bring down customer bills. A Levy placed on household bills to fund hydrogen development is inconsistent with this aim. We therefore support the amendment added to the Bill by the House of Lords to remove the responsibility for levies away from households .

2. The government responded to this concern in the Second Reading Debate by assuring that the Bill won’t introduce the Levy straight away and that there will be a consultation on the nature of the levy at a later date, however if one of the primary aims of the Bill is to reduce energy costs for customers and there is significant concern about this levy from consumer groups and Fuel Poverty groups , parliamentarians , Conservative think-tanks , and others, then the Government should clarify at this stage that the levy will be reserved for the Consolidated Fund or gas shippers.

22 May 2023

 

Prepared 23rd May 2023