Fuel Poverty in Britain - Even the Queen

Fuel poverty is an emerging political crisis in Britain. A household that spends 10% or more of its disposable income on fuel lives in “fuel poverty”. This week, the Financial Times reported that the Queen’s energy bills for her four residences have soared by 20%. Payments to the Queen by the Government have been frozen due to the financial crisis, so her household is getting close to hitting the fuel poverty line.

While this might seem like a lightweight bit of news, the Queen’s fiscal challenge is a dilemma faced by many households. And the details of her story are also very common:

• The Queen has had smart meters installed, which dropped energy use by 12%. But the gains have been more than erased by higher energy costs. (Of course, one could argue that without the smart meters the situation would be worse, but the point is that the utility bills don’t reveal a clear, quick payback on the investment.)

• If historical price trends continue, the average British household will be in fuel poverty by 2015; no income level is safe. Fuel poverty is not just a low-income issue, and rising energy costs will be a key political issue in the next election.

• The rising costs are driven by infrastructure expense and rising natural gas prices. Although Britain continues to pursue a green investment agenda, it is easy to envision a scenario in which infrastructure spending—a key to using energy more efficiently—is deferred.

• The Queen herself is deferring investment: postponing upgrades to the palace heating systems and buildings due to lack of funds. Apparently, the palace staff plans to do the upgrade in the “next 15 years”, and meanwhile is trying to buy power at wholesale rates to lower costs.

The article reports that the Queen patrols the palace to turn off lights—and we applaud her efforts—but frankly, she needs a home performance contractor with a financing package! She could get the improvements done and pay for them out of energy savings!

Remember HomeStar, a proposed U.S. program to heavily subsidize home upgrades, creating thousands of domestic jobs? This is the perfect antidote to rising energy costs. Did we just say jobs? Fuel poverty may actually be a winning political issue. Long Live the Queen!