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Challenges to Energy Affordability Policy in Ireland

This research examines the challenges facing low-paid workers and pensioners in Ireland regarding energy affordability, including rising energy prices, carbon tax, and reduced fuel allowances. It highlights the extent of energy poverty and questions if the "Warmer Homes" strategy adequately addresses its causes. The study also identifies shortcomings in the current energy affordability strategy and proposes measures to improve support for low-income households.

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Challenges to Energy Affordability Policy in Ireland

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  1. Loraine Mulligan Policy Research Unit SIPTU

  2. Energy Affordability Policy – Challenges to it working • Issues facing low paid workers & pensioners • Extent of energy poverty • Does the ‘Warmer Homes’ Strategy address causes of poverty adequately?

  3. Issues facing low paid workers & pensioners: • Rising Energy Prices • Gas↑ 20.5%; Fuel oil ↑15.2%; Electricity↑ 11.5% annually in December 2011 • Carbon Tax • ↑ €5 to €20 per tonne to apply from 1 May 2012 on heating fuels (except solid fuels) • Fuel Allowance reduced from 32 to 26 weeks • Other measures & taxes in Budget 2012 e.g. VAT increases, household charge.

  4. Energy Poverty in Ireland 2009 • 316,712 Households in energy poverty, 20.5% of all HHs, probably an underestimate. • 241,000 both income poor and energy poor. • 44,000 ‘working poor’ households also energy poor in 2009; high risk • 94,647 HHs aged >65 living alone: = 30% of all energy poor

  5. Causes of Energy Poverty • Household Income • Price of Energy • Energy Efficiency of dwelling/behaviour

  6. Household Income • Lower income households (half avg. HH income), €400 per week, at higher risk of energy poverty (spending more than 10% disposable income on energy services) • Lack of supports for low-paid workers struggling to pay energy bills e.g. hotels/catering workers • No explicit measures to target working poor households e.g. extending eligibility for fuel allowance to Family Income Support (FIS)

  7. Household Income ctd. • Review of national fuel scheme and household benefits scheme to examine feasibility of aligning income supports with energy efficiency standards and income. • Concern that payments will be reduced/withdrawn without adequate improvements in energy efficiency

  8. Price of Energy • Strategy does not seek to address this issue • Energy Affordability Index not linked to increased energy supports if prices rise • Energy Poverty Coalition proposals: • National Stakeholders Committee (excluding energy companies) to hold utilities to account regarding price decisions. • Government or Regulator should proactively push for global price reductions to be passed on to customers in a timely manner by requiring an explanation for delays.

  9. Energy Efficiency of dwelling/behaviour • €76 million for Better Energy Scheme in 2012 to upgrade 17,000 low income homes & provide grant support • Reform eligibility criteria of energy-efficiency schemes, taking account of number and age of occupants, health, age of home, thermal efficiency and income. Need to broaden eligibility to low-paid workers.

  10. Energy Efficiency of dwelling/behaviour • ‘Pay-as-you-go’ scheme model by 2014. Won’t work for low income/low-paid households who cannot afford to pay off loan, some state support necessary. • Focus on most extreme necessary but may miss out on others in need of assistance. • Area-Based Approach should not be used to disregard households outside the targeted areas.

  11. Other Shortcomings of Energy Affordability Strategy • Trade Unions not included as partners despite issues affecting low paid and working poor • No commitment to compensate poorer households for carbon tax; revenue raised not ring-fenced for energy poverty

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