Energy poverty: Protecting vulnerable consumers

24-05-2016

Between 50 million and 125 million people in the EU are at risk of energy poverty – unable to keep their homes warm or pay their bills. The underlying causes are generally considered to be low incomes, high energy prices and poor energy efficiency of the living space, with market conditions and social environment also playing a role. The EU deals with this issue most directly through the Electricity and Gas Directives, which require Member States to define vulnerable customers in their energy market and protect them. The Directives do not include a common EU definition of energy poverty. But the European Commission suggests it could be defined as households spending too much – possibly twice as much as the average – on energy products, and households that have difficulties in paying their energy bills. Member States use various measures to fight energy poverty, including payments through their general social systems, social energy tariffs, limitations on disconnection due to non-payment, improvements in energy efficiency, better information and protection of vulnerable customers. However, a number of studies warn that, without robust energy efficiency measures, EU energy and climate policy could increase the risk of energy poverty, primarily due to the costs of financing the transition to renewable energies through utility bills. The Parliament has warned about this danger and has recently asked the Commission and the Member States to introduce a winter heating disconnection moratorium, as well as no interest credits for energy efficiency improvements and renewable energy investments for low income households.

Between 50 million and 125 million people in the EU are at risk of energy poverty – unable to keep their homes warm or pay their bills. The underlying causes are generally considered to be low incomes, high energy prices and poor energy efficiency of the living space, with market conditions and social environment also playing a role. The EU deals with this issue most directly through the Electricity and Gas Directives, which require Member States to define vulnerable customers in their energy market and protect them. The Directives do not include a common EU definition of energy poverty. But the European Commission suggests it could be defined as households spending too much – possibly twice as much as the average – on energy products, and households that have difficulties in paying their energy bills. Member States use various measures to fight energy poverty, including payments through their general social systems, social energy tariffs, limitations on disconnection due to non-payment, improvements in energy efficiency, better information and protection of vulnerable customers. However, a number of studies warn that, without robust energy efficiency measures, EU energy and climate policy could increase the risk of energy poverty, primarily due to the costs of financing the transition to renewable energies through utility bills. The Parliament has warned about this danger and has recently asked the Commission and the Member States to introduce a winter heating disconnection moratorium, as well as no interest credits for energy efficiency improvements and renewable energy investments for low income households.