Fuel poverty is a real and persistent problem. Between 2004 and 2006, an additional 60,000 households in Northern Ireland entered fuel poverty. In light of rising fuel costs and increases in unemployment, there are concerns that the number of people who are fuel poor has reached unprecedented levels. Fuel poverty is caused by a combination of factors, including poor household energy efficiency, low income and expensive fuel.
Therefore, numerous potential solutions and ameliorating policies are open to us, of which a social tariff is one. I note and commend the actions that the Executive have already taken: the warm homes scheme, Housing Executive programmes and the one-off payment of £150 to people who are on income support and pension credit. It is obvious that the Executive and the Assembly are taking the issue seriously.
At first glance, the proposition to introduce a social tariff is attractive, because it reflects our desire to help the people who are most in need. However, given Northern Ireland’s energy market, the make-up of the energy supply and the pricing system, such a proposition must be given careful scrutiny and thought. I note that the Fuel Poverty Task Force recommended that a study into a social tariff be carried out and that the Utility Regulator has undertaken investigations that he plans to report to the Minister of Enterprise, Trade and Investment. That is the correct way to address the issue. No guarantees or decisions should be given until we have all the facts.
I note that an NIE briefing paper estimates that the cost of introducing a social tariff could lead to an increase of between 8% and 12% in electricity prices for all other users. In light of pressures that families already face due to increases in energy prices
In light of pressures that families already face due to increased energy costs, rising unemployment and the ongoing recession, such an increase could be detrimental, not only to the people who are involved, but to the entire economy.
Social tariffs exist in Great Britain. They were introduced initially to enable customers to access electricity at the lowest available rate, regardless of the method of payment. That issue arose from the fact that pre-payment customers in GB paid around £100 per annum more than those who paid by other means, such as direct debit or credit card. That situation is not as prevalent in Northern Ireland.
In addition, it must be recognised that the virtual monopolies that exist in Northern Ireland’s gas and electricity markets have resulted in much tighter net profit margins, greater regulation, and much smaller scope for companies to subsidise customers directly, or, indeed, for customers to shop around for the best deals.
Fuel poverty is a major issue. It is a top priority for the Ulster Unionist Party. The strategic energy framework provides an opportunity to address some of the structural and underlying problems that create fuel poverty and which can limit the Assembly’s options to solving it.
The Assembly looks forward to the findings of the Utility Regulator on the potential for a social tariff and the possible ramifications of introducing one. In the meantime, efforts must continue to reduce fuel poverty by increasing energy-efficiency measures in the home, ensuring maximum benefit uptake, and ensuring that all people who are eligible for the £150 one-off payment take it.