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Fuel poverty and new Public Service Obligation

Fine Gael presented a motion to the Seanad to delay the introduction of the Public Service Obligation on electricity bills, citing the danger of fuel poverty likely to arise as a result (Seanad Eireann, Debates, 6th October 2010, 754-777; 13th October, 430 – 456).  On a vote, it was lost 26-21.    Introducing the motion, Paudie Coffey (FG, industrial and commercial panel) told the Seanad that Ireland had the fifth highest domestic electricity prices of 31 European countries and now the minister was proposing an additional levy.  This did not show much consideration for the hardship and realities of our communities.  The minister might argue the reasons for the introduction of the Public Service Obligation (PSO), which was all very well, but there was a time and place for doing so.  Were the minister to consult the Society of St Vincent de Paul, the Money Advice and Budgeting Service (MABS), the Department of Social Protection or other agencies that dealt on a daily basis with people who struggled to pay electricity bills, they would realize the great hardship that currently existed.  Fine Gael believed that the increase should be postponed.

He was supported by Maurice Cummins (FG, labour) who spoke of many people suffering hardship at present.  MABS and the Society of St Vincent de Paul had appealed to suppliers and he appealed to the minister to make representations to suppliers to cut reconnection charges to a minimum.  These charges were another burden imposed on people – being cut off was bad enough, but having to pay a reconnection fee that was even greater than the sum owing in the first instance was crazy.

Speaking for the government, the Minister for Communications, Energy and Natural Resources, Eamon Ryan told the Seanad that electricity prices had fallen dramatically in the past 18 months.  This had delivered real savings for consumers and pushed prices 2% below the Eurozone average.  The PSO had been introduced in 2001 in order to move away from over-reliance on fossil fuel.  Prices had been brought down, there was a competitive market and it was important not to scare people at a time when they were scared enough.  He was pleased that the Minister for Social Protection had been able to provide increased funding to ensure those on low incomes and at risk of fuel poverty would not be affected by any increase in the PSO.

Later, Senator Niall O Brolchain (GP, agricultural) said that although there might be doom and gloom about fuel poverty, the insulation of homes taking place now was a good news story.  25,000 houses had been covered by the Warmer homes scheme, of which 16,240 last year, a good news story that the government needed to push and more than a thousand people a week were applying for the home energy saving scheme.  People might be negative about the carbon tax, but it was important to consider its positive aspects (Seanad Eireann, Debates, 14th October 2010, 987).

In the Dail, the Labour party presented a motion on fuel poverty for a full-scale debate (Dail Eireann, Debates, 12th October 2010, 63-89; 13th October, 430-456).  Liz McManus (Lab, Wicklow) introduced the motion by drawing attention to the fact that there had already been 2,500 electricity disconnections this year and 4,000 gas disconnections.  Unless the government woke up to this reality, then the crisis would deepen as winter set in.  Although the renewed programme for government had promised to publish a fuel poverty strategy by the end of 2009, all we had got was a carbon levy but silence on the fuel poverty strategy.  The programme promised that those most at risk of fuel poverty would be protected from the impact of the carbon levy, but the government had passed on that as well.  She hoped that this motion might produce some result, because there were already rumours in the media of some kind of increase in the fuel allowance.

In Northern Ireland, by contrast, a fuel poverty strategy was in place which included the zero-disconnection policy that should be adopted here too.  It was based on the use of prepaid meters, so people paid only for what they could afford.  Here, winter mortality death rates killed about 2,000 people, mainly old people due to the cold, one of the highest levels in the European Union.  The rise of the numbers of the fuel poor was likely to put more lives at risk this winter.  Families with young children were forced to choose between heating their homes and cooking a hot meal.

Fuel poverty, she said, was spending more than 10% of household income to achieve acceptable warmth.  60,000 Irish households lived in persistent fuel poverty and 160,000 more intermittently.  Up to 59% of disconnections affected owner-occupiers.  Debt management had grown 40 times in Bord Gais in the past year.  Community welfare officers would not give help with oil fills.

Her colleague Mary Upton (Lab, Dublin SC) spoke of how fuel poverty was traditionally associated with lower incomes, but the recession was now so widespread that it was a real issue in households that were previously considered well off.  Because of the banking crisis, we found that the country was in the grip of a recession that affected everything from food on the table to the payment of mortgages, with the prospect of a miserable, freezing winter for the new poor.  Why should we have to question the government for not delivering a strategy that was plainly needed last winter and is nowhere to be seen as we face into this winter?  she asked.

At present the ESB was cutting the electrical supply of more than 900 a month, with gas disconnections at 600 a month, said Martin Ferris (SF, Kerry N).  He had already called on the minister to reverse the decision to impose the 5% levy, but that had fallen on deaf ears.  The ESB had adopted an uncooperative, rigid attitude toward struggling families.  It even charged people to cut them off, which was outrageous behaviour from a state company and then charged them for the reconnection, adding to an already big bill that people could not pay.  Cutting the electricity supply of families who were genuinely struggling to meet their payments should not be an option.  The most recent report on fuel poverty that he had seen was by the Institute of Public Health in 2007 which found that fuel poverty was unacceptably high by international standards and that 17% of households here experienced fuel poverty – but that percentage was probably now much higher.  This was a recipe for social disaster.  Leo Varadkar (FG, Dublin W) told the Dail that the price of electricity for the lowest users of domestic electricity (1,000kW) was 50% higher than the Eurozone average, but for the most common user, it was 98% higher and that did not include the PSO levy.  Michael Kitt (FF, Galway E) expressed his concern at the high levels of disconnection – in the case of electricity mainly in the rural areas and for gas mainly in the city areas.

Replying for the government, the Minister for Communications, Energy and Natural Resources, Eamon Ryan described this as an important issue and said that it was important to reflect on how we could get this right so as to minimize the social disruption caused to people by being disconnected and ensure that we did not have a hugely expensive system that would impose a significant cost on customers.  He looked forward to the energy regulator returning with a review of the disconnections policy and ascertain if there were further measures that would make the policy more fair and effective.  Pre-payment meters were coming on stream and since December 2008, some 1,500 had been installed on grounds of financial hardship.  There was a code of practice which required that customers be given a seven-day notice of disconnection in advance.  It was right that no elderly customer would be disconnected in the middle of winter and that no person with a medical condition relying on medical equipment would have such equipment shut off or electricity disconnected.  It was right that the regulator consider if we need to go further than that.  The state was already addressing fuel poverty: some 380,000 customers received the household benefit package costing €200m and the fuel allowance provided €20 a week for 32 weeks costing €231m.

Also replying for the government, the Minister for Social Protection, Eamon O Cuiv spoke of how the evidence pointed to those in rented accommodation as suffering grievously from fuel poverty, despite being in receipt of the free fuel scheme.  One parent families were the most vulnerable cohort in society.  All the poverty statistics, he said, showed that this group always came out on top in deprivation.  He would focus his attention on ensuring that this cohort would not be left behind.  Thomas Byrne (FF, Meath E) noted that members of the Carers Association were in Leinster House that day to present their pre-budget submission.  Carers and the people they look after were often some of the people most in need of fuel efficiency and some had the highest fuel and heating bills in the country.  The Warmer homes scheme directly addressed some the issues affecting this crucially important sector of society.

Catherine Byrne (FG, Dublin SC) spoke of how the cost of gas, electricity and solid fuel had gone up from July 2008 to July 2010: solid fuel, +10%, bottled gas, +17.8% and electricity +3.3%.  More and more, people were relying on the Society of St Vincent de Paul to top them up each week, manage their home heating bills and keep food on the table.  The Society of St Vincent de Paul should not have to clean up the government’s mess.  Many organizations such as it, Age Action, Older and Bolder, the Carers Association, Alone, the Alzheimer Society, and MABS had called on the government not to introduce the PSO levy which meant an increase of almost 5% or €2.73 on the monthly bill.  She had met many older people who were unable to turn on the electric fire because they were afraid of the cost.  Many people lived in old properties without proper central heating or insulation and relied on electric heaters, which cost a fortune to run. Was the government really intent on sending us back to the dark ages of candlelit rooms and fathers’ overcoats on our beds?

Michael Darcy (FG, Wexford)  pointed to the ‘madness’ of charging elderly people and those experiencing fuel poverty a levy to stop them using fuel which they required to remain warm and viewed it as ‘Dickensian’.  Michael Ring (FG, Mayo) asked if the regulator was living in the real world.  He was on €300,000 to €400,000 a year and did not depend on a €20 a week fuel allowance.  The price of a bale of briquettes had increased 7% and the cost of oil 8% as a result of the new levies.

Jack Wall (Lab, Kildare S) drew attention to the regulator’s proposal to charge reconnection fees of €200.  ‘Who will pay that €200?’ he asked.  Regulators had a wonderful flair for developing theories.  Such reconnection fees would be paid for by either the Society of St Vincent de Paul or the community welfare officer, which was state funding.  The families would be put through the mill while trying to find €200 to ensure there was light and heat in the house and something for the kids when they came home from school.  Children in those families would suffer, not the regulator in his big high office.  He attacked as sacrilege the requirement by the Commission for Energy Regulation that Bord Gas and the ESB now re-brand themselves at a cost of €80m. Similarly, Jan O’Sullivan (Lab, Limerick E) described this as madness and spoke of how people must approach community welfare officers or the Society of St Vincent de Paul as bills built up.

Kathleen Lynch (Lab, Cork NC) criticized the way in which record numbers of houses were constructed with virtually no insulation.  Now the regulator was imposing a 5% surcharge on fuel even though people could not pay their bills as it was.  Whatever else we could do with €80m, it was not re-branding.  Instead, we should begin investing in fuel poverty, which was a particular issue for the elderly, people with young children and the many unemployed who had never experienced times like these and did not know what it was like to walk down a street and see every house in darkness.  We cannot live without electricity in this day and age, she said, nor without heating because our homes were not sufficiently insulated.  We were on an island where it gets cold and damp.

There was no proper understanding of the harsh realities of peoples’ lives as they struggled with the income coming in to their home, argued Joe Costello (Lab, Dublin C).   The biggest bills were energy and fuel bills.   For people who were disabled, elderly or ill, there would be a disaster in the coming months and, if austerity continued, in the coming years.  Was it not incredible that disconnection should cost €200 and reconnection a further €200?  The Minister for Finance had said that €50m of the carbon tax yield would be used to fund measures such as help for households at risk of fuel poverty – but what had happened to that?

The Minister of State at the Department of Community, Equality and Gaeltacht Affairs Mary White spoke of the importance of the interdepartmental and interagency group set up to cut delays and drive policy in the area of affordable energy policy.  The group’s wide membership reflected the complexity of the issue and recognized the need to identify those at risk of fuel poverty.  A new efficiency programme would commence in January 2011 (‘interjection: ‘they will not be thawed out by then’ – Kathleen Lynch).  The new retrofit programme would seek to significantly increase the pace of take-up of energy efficiency measures by radically changing the way householders were incentivized and supported.  One of the most commonly identified barriers to retrofitting was that upfront costs were prohibitive, so under the new proposals there would be upfront discounts to alleviate the need to wait for retrospective grant payments.  They would continue to develop the website and distribute a further print run of the Well and warm leaflet.

She recognized that the carbon levy posed a challenge for people in difficult financial circumstances who depended on fuel allowances to make their payments.  She was confident that additional money would be made available to those dependent on the fuel allowance to stay warm this winter.  She advised deputies to ‘watch this space’.   She advised those in difficulty with their bills to contact their suppliers to make revised payment arrangements before they reached the point of disconnection.  The Commission for Energy Regulation had announced that he would review the regulatory policy on disconnection in the context of improved customer protection.

Roisin Shortall (Lab, Dublin NW) criticized the failure of the vouched fuel allowance scheme promised by the Minister for Finance last December to offset the carbon levy to materialize.  She also drew attention to the statement by the Minister for Social Protection that he would receive a report from the interdepartmental group by the end of April.  Six months later, there was still no outcome.  The minister had declared that the group was to report by the end of June to allow time for proposed measures to be implemented when the heating season started again at the end of September.  We were beyond that point and still we had heard nothing.  What was taking it so long?  The cost of home heating oil had risen +9% as a result of the carbon levy alone, contributing to the +27% increase in home heating oil in the past year and a staggering +127% since 2007.  Many poor families, including thousands who would be considered the working poor, did not qualify for a fuel allowance because they were not in receipt of a social welfare payment.  Their income was too low to afford the works under the home energy savings scheme, so they were caught on both fronts.  These were the people who paid for everything, but got very little in return.  The government was not interested in people in these circumstances.  She asked the government to consider the proposal put forward by Active Retirement Ireland suggesting that home heating oil be added to the categories covered under the household benefit package.  The current one disadvantaged people who relied on oil for home heating.  Allowances were available for electricity, gas and bottle gas, but not oil.  Given that the carbon levy had impacted most on oil users, this merited consideration.  Finally, it was time for the government to deliver on its promise to present a fuel poverty strategy.  The litany of missed deadlines and forgotten commitments was the reason why we were debating this motion.  The motion was lost 74-70.