More households are going cold because of electricity bill fears

Less excess money to pay bills and contained debt, but more families who are cold in winter. This is the uneven balance shown by the fuel poverty indicators published last December, but corresponding to the previous year, by the Ministry for Ecological Transition and Demographic Challenge (Miteco).

"2021 was a year of some lights and a big shadow: the increase in hidden energy poverty, that is, households that have decided to stop consuming energy for fear of the bills," observes José Carlos Romero, professor at Comillas Pontifical University and coordinator of the Chair of Energy and Poverty at that institution.

Romero warns that "it is very bad data" that the percentage of the population with inadequate temperature between December and March has climbed from 10.9% to 14.3% (up to 6.7 million people). Two factors are at work. On the one hand, the echoes of the storm Filomena, which in January of that year pushed the price of electricity in the wholesale market above 90 euros per megawatt hour (MWh). And on the other hand, the beginning of the upward price crisis in summer, due to the rise in the price of gas and CO2 emission rights, which was reflected in households in autumn, he explains. Therefore, this report does not include what happened in 2022, the impact of the energy crisis resulting from the war in Ukraine, which may worsen the behavior of this indicator.

The study published last November by the Chair of Energy and Poverty at Comillas, which also does not incorporate the analysis of what happened in 2022, since the survey of living conditions and household budgets of the National Institute of Statistics (INE), and from which these data are calculated, is published in summer, focuses on severe hidden energy poverty -those who spend less than a quarter of what they should to have their home in ideal comfort conditions (between 18 and 24 degrees, according to the World Health Organization) -.

This is closely linked, they explain, to the fact that families are unable to heat their homes in winter or cool them during June-September. Two million Spaniards are affected, 10%. "Without the government's measures, it would have reached 200,000 more households," they estimate in the study.

An indicator that is different from that of Miteco, the hidden energy poverty, as it refers to those households that spend less than half the energy of an average household. "It seems insufficient to us. Using relative thresholds can mask a widespread reality of fuel poverty. By contrast, using absolute thresholds, as we do with our indicator, avoids this problem, because the measure you compare yourself to is your own needs," Romero argues.

Reasons for improvement

Precisely, the measures adopted by the Executive since the Covid crisis in 2020 and to date largely justify the slight improvement in three of the four indicators: disproportionate spending, hidden energy poverty and late payment of supply bills (see graph). The number of beneficiaries of the bono social eléctrico (electricity social bonus) amounts to 1,253,538, according to data from the National Markets and Competition Commission (CNMC) as of July 2022.

This increase is explained by the inclusion of new groups entitled to apply for this discount -consumers affected by the Covid pandemic, a category that was renamed vulnerable consumer at the end of last year (unemployed people, with a temporary employment regulation file, or entrepreneurs who have seen their working day reduced due to care or other similar circumstances that entail a substantial loss of income-; from 2021, beneficiaries of the minimum living income and, from October 2020, low-middle income households affected by the energy crisis and which has been called energy justice voucher-. In addition to the extension of the endowment of the thermal bonus.

But it is also due to the fact that since April last year renewals are automatic, add Endesa and Naturgy sources. "Before, it was the customer who had to reapply for the social bonus to the Ministry [of Ecological Transition], and now it is the last resort marketer that automatically makes the renewal consultation to the Ministry when it expires. This has meant that many consumers with a social voucher do not lose it at the end of its one-year validity period," they point out.

Cecilia Foronda, director of energy and people at Ecodes, analyzes that, although it is true that "the measures implemented by the government have had an effect, they have managed to slow down what could have been an escalation, and that is reflected in the data on bill payments, the fear of prices meant that [vulnerable groups] did not turn on the heating, that they were cold; they held back". Foronda predicts that the lack of comfort in housing is an upward trend, which could worsen in 2022 by affecting people without resources not only in winter but also in summer, due to the heat wave recorded, and which is likely to be repeated this year.

Yolanda Picazo, an analyst in the energy area of the Environmental Sciences Association, believes that, despite the high energy prices, these provisions and others adopted by the Executive, such as the cap on gas prices or the reduction of VAT to 5% and the temporary suspension of the 7% tax on electricity generation, "can contribute to further reducing the percentage of vulnerable population affected by energy poverty". On the other hand, Romero, despite admitting that they are well oriented, warns that the main difficulty lies in their implementation. "It is very difficult for the citizen who can benefit from them to know about them and take advantage of them; this is something in which we clearly have to improve," he says.

Unfinished business

The problem on which all those consulted agree is that they are palliative, short-term measures, and that it is urgent to act in the long term, in the rehabilitation of housing, which is what ultimately helps to mitigate the incidence of energy poverty. Picazo insists that we must tackle the main causes: "The poor quality of housing; we must move to a new model whose pillar is based on the generation of clean energy that we have in abundance in this country, increasing the income of the most vulnerable households and price containment".

Foronda also calls for more structural, more preventive actions, such as improving energy efficiency through refurbishment, because "the cheapest energy is that which is not consumed". He asks the central, regional and local governments to increase the rate of housing rehabilitation, especially for people living in poverty.

"There is a lack of information and support for European funds to reach and prioritize these groups living in the most inefficient housing. And to prioritize them is to reserve 20% of these funds for them and to open accompaniment offices, because they do not know what aid exists and, if they do know, they do not know how to apply for it. The money for the work is not enough, there has to be an intense work of the Administrations or a support to the social entities so that these people are able to apply for these aids", he emphasizes.

And, although they can receive up to 100% of the cost of the renovation, if nobody asks for them, they will go to other types of groups, he clarifies. "There are higher percentages of subsidies for vulnerable families, but there is no reserve of funds to spend exclusively on these people," he points out.

The promotion of energy education is another pending task: informing the population about more efficient consumption habits, self-consumption or energy communities.