Ben Wray looks at the issue of fuel poverty as winter approaches, and argues that new not-for-profit energy supplier Our Power Energy could provide a model for challenging corporate power in more than just the energy sector
AS November begins it’s getting colder, and for most of us that means scarf and gloves when we leave the house, and when we get back in sticking the radiator on straight away. But there’s many, far too many, in Scotland who can’t afford to stick the radiator on, or at least not for long enough to keep the cold out.
Fuel poverty is defined as a household having to spend more than 10 per cent of its income on all household fuel use to. Extreme fuel poverty is having to spend more than 20 per cent of disposable income to meet an “adequate standard of warmth”.
In 2013 ( the most recent available figures ) 940,000 Scottish households – 39 per cent – were in fuel poverty, with 252,000 (10.5 per cent) in extreme fuel poverty. That number has been rising steadily from 2010, with the equivalent figures being 818,000 (34.7 per cent) in fuel poverty and 225,000 (9.6 per cent) at the start of the new decade. That number had risen sharply itself over the preceding decade, from 16 per cent in fuel poverty in 2003/4.
The problem of fuel poverty – driven by high and rising energy prices, low and stagnating incomes and homes with poor energy efficiency – has been getting steadily worse over the past decade, with the collapse in oil prices only providing very slight respite.
“The problem of fuel poverty – driven by high and rising energy prices, low and stagnating incomes and homes with poor energy efficiency – has been getting steadily worse over the past decade.”
Suffice to say, the Scottish Government is going to miss its target of “eradicating, as far as practically possible, fuel poverty by November 2016.” As Norman Kerr of charity Energy Action Scotland told MSPs at a Holyrood committee two weeks ago, “the fuel poverty target will not be reached, and by some considerable way.”
On Sunday, the Scottish Greens argued that with current Scottish Government efforts in place its likely to take 28 years to eradicate fuel poverty. The Greens emphasised the need to radically improve energy efficiency in housing, and have a policy of a national insulation programme which would undoubtedly make a big difference to keeping homes warm, saving money from decreasing energy usage and lowering carbon emissions all in one go.
But the problem of energy supply also needs to be tackled head on. According to consumer group Which?, the ‘big six’ energy firms pocketed an extra PS2.9bn this year that should have went to customers, as price reductions nowhere near matched the fall in energy costs. An investigation by the Competition and Markets Authority found millions of customers pay too much, with 25 per cent of households incorrectly billed. The poorest have to pay more with the premium ‘pre-pay meters’ adding over 10 per cent extra cost.
Unfortunately, energy is still a reserved matter, and therefore all eyes are on Jeremy Corbyn’s Labour to come up with an energy policy that it’s a bit more dynamic than Ed Miliband’s price freeze. But waiting for a possible Labour victory in five years’ time at the General Election is hardly a strategy. Something can be done in Scotland now to challenge the big six directly, and thankfully it is – and is the first of its kind in Britain.
“Our Power Energy is a new not-for-profit energy supplier in Scotland set-up by a combination of 35 housing associations, local councils and social landlords.”
Our Power Energy is a new not-for-profit energy supplier in Scotland set-up by a combination of 35 housing associations, local councils and social landlords. It’s got PS2.5 million from the Scottish Government and PS1 million from Social Investment Scotland in loans to provide a capital base.
What does it aim to do? The plan is to provide all of its residents in the social housing sector with low cost heat and power, with a target of 200,000 homes by 2020. It’s looking to enter the market in early 2016, and expects tenants energy bills with Our Power to be ten per cent cheaper.
In the future , Our Power will look to invest directly in renewable energy generation projects and district heating schemes to socialise the production and distribution process. It will also provide a fairer payment system and ‘membership’ will mean far greater customer contact with the company than with the big six.
And they believe it is going to be popular – their consumer research has said 90 per cent will switch over to Our Power. They think they will be Scotland’s biggest social enterprise in five years with a turnover over PS150million – and of course all the profits are re-invested back into Our Power.
We should strike a note of caution: it hasn’t entered the market yet and its website is very short on detail (perhaps to be expected at this stage). Issues like the governance structure are going to be paramount, after all it is a company competing in a marketplace, with all the pressures that brings. But we should also be excited about the difference this could make to people’s lives: 32 per cent of tenants in the social housing sector are living in fuel poverty; they need Our Power.
“One of the key themes of the new Common Weal Book of Ideas is that without all of the levers of a full nation-state, the government elected to power in Holyrood next year has to find creative ways in which to do large-scale public investment, especially on energy and housing investment.”
And if it does match its ambitions, the power of a good example could pull more housing associations and local authorities in (with a council election in 2017 now is the time to put the pressure on) and could lead to bigger investment from the Scottish Government and Social Investment Scotland (PS2.5million and PS1million respectively is peanuts in government terms). That could mean Our Power growing in size, or it could mean one, two, many Our Power’s being established across the country. It could break into the private housing sector and put the big six under pressure there too.
Furthermore, if it can be done for energy supply then why not for other things, like housebuilding for example? Housing associations and local authorities, backed by government investment, could create a housebuilding company on a similar model to Our Power to build a new generation of affordable, zero-carbon, well-insulated social housing that could build far better homes for much cheaper than the existing players in the housing market. That too could potentially be massive for tackling fuel poverty.
One of the key themes of the new Common Weal Book of Ideas is that without all of the levers of a full nation-state, the government elected to power in Holyrood next year has to find creative ways in which to do large-scale public investment, especially on energy and housing investment. Our Power could potentially be a living embodiment of one way to do that. We propose others as well that could be considered: for example a national mutual company, with each Scottish citizen a shareholder who recieves a dividend.
It has become a cliche, but it makes it no less true: we should be ashamed to live in perhaps the most energy rich nation in the world and have anyone living in fuel poverty, never mind 940,000 households. This winter, we should be making the big six tremble with fear, not just at our indignation, but at our will to action. Let’s hope Our Power has got them worried.