An introduction to fuel poverty in Belgium

In the following guest post, Elias Storms, Sandrine Meyer and Stijn Oosterlynck provide an introduction to the problem of fuel poverty in Belgium[1], the key policies and protection schemes in place, and highlight how some existing measures and programmes are regressive. 

For this introductory article, we prefer the term energy poverty over fuel poverty, staying as close as possible to the French term ‘précarité énergétique’ and the Dutch term ‘energiearmoede.’ When these are used by policy makers and social workers, they refer to problems of affordability of domestic energy in general, meaning that all sorts of energy use related to housing are taken into account when discussing energy poverty: space heating (and cooling), water heating, cooking, lighting and use of home appliances (cf. Hills 2012, p. 29).

Even though there are terms in the two main official languages (French and Dutch) to refer to the general problem of energy poverty, there exists no universally adopted definition of energy poverty in Belgium, let alone an official one. After analysis of existing definitions in other European countries, and on the basis of a variety of considerations, we propose the following conceptual definition in a recent report:[2]“Energy poverty refers to a situation in which a person or household encounters particular difficulties in his house to satisfy basic energy needs”.

Recently, there has been a rise in both political and academic attention to the problem of energy poverty. At the federal as well as the regional level energy poverty is mentioned in government coalition agreements, and guaranteed access to energy plays a central role in the federal plan to tackle poverty (‘armoedebestrijdingsplan’ or ‘plan de lutte contre la pauvreté’). In recent years, media coverage of energy poverty has increased as well. Especially during winter time, numerous stories are published and attention is drawn to the phenomenon of energy poverty. Even though news coverage rarely goes in depth, general interest is clearly on the rise.

Most of the existing social and environmental regulation and policy measures related to domestic energy are not directly concerned with energy poverty. Instead, they figure mainly within two broad categories. One group focuses on the price of and access to energy. Among other measures, regional governments impose additional public service obligations, as allowed by the European Directive 96/92/EC. The second category of policy measures mainly consists of lowering energy consumption and limiting its environmental impacts. Unfortunately, there is no connection between these two types of measures and a broader, long-term energy (poverty) strategy.

Consequently, most of these measures are curative, indirectly targeting households confronted with energy poverty. Only rarely do measures operate on a long-term basis, focusing on the prevention of energy poverty. There are programmes dedicated to the overall improvement of energy efficiency in housing, for example by providing financial incentives for households’ investments in renovation and insulation of their homes, but it remains unclear how many energy poor households are actually reached with these measures. It is certain, however, that they are under-represented compared to well-of households.

It is difficult to compose an accurate picture of energy poverty in Belgium due to limited availability of data. In contrast to the United Kingdom, there is no systematic collection of information on the quality of housing. This severely limits the possibilities of creating a comprehensive indicator, which could serve social policy makers and academic research alike.

Despite these limitations, we can deduce from existing statistics that energy poverty is on the rise in Belgium. Between 1999 and 2009, average household expenditure on energy use in housing compared to disposable income, rose from 4.36% to 5.77%. Moreover, these percentages differ significantly when comparing high and low incomes: in 2009, households in the first decile spent on average 15% of their income on energy, while the highest decile only spent 2.5%. It is no surprise then that more and more households are in default on their energy bills. While there is no clear trend distinguishable in the number of households being cut-off from the energy grid, the number of active budget meters is on the rise. These budget meters can cause ‘hidden’ energy poverty (see infra), a dimension which is very difficult to measure precisely because of this lack of data.

In the remainder of this article, we present a brief overview of the main social policy principles regulating the Belgian energy market. The Belgian political and legal situation is rather complex, due to decentralisation of several federal competences in favour of the three regions: Flanders, Brussels-Capital and Wallonia. As a result, there exist large differences in policy measures between the three regions. Additionally, nearly all measures and programmes, as well as different eligible social categories and their corresponding qualifying conditions, differ from one energy vector to another. Thus, someone receiving assistance on the gas market might not be entitled for financial support when heating with a different type of fuel. For some sources of energy, such as wood or coal, there is no support system at all.

A central concept in consumer protection in Belgian energy policy is the notion of the protected customer. Protected customers enjoy significantly reduced tariffs for gas and electricity, as well as some other benefits. The qualifying conditions of this category are not directly linked with energy poverty. In brief, the following categories are eligible for support: households with one or more members receiving a living wage or other type of income replacement granted by a Public Welfare Centre, and households with a disabled member. In the Brussels and Walloon regions, customers who are in debt settlement are considered protected as well. Recently, the Brussels region has added a new category, namely the households whose general income is below a certain threshold. This protective measure is thus not directly aimed at consumers who run a risk of energy poverty. Especially in Flanders, where the eligible categories have not been extended, households in energy poverty often remain unprotected.

This notion of the protected customer is only available for electricity and gas markets. Households using other energy vectors, such as home heating oil, have to rely on different supportive measures (if they are present). To rub out this inequity, harmonisation between different support structures is needed.

For those households using home heating oil, there is a social heating fund (called sociaal verwarmingsfonds in Dutch or fond social chauffage in French), providing support to households with limited income and with financial difficulties paying their energy bill. Eligible households can ask their local Public Welfare Centre for a fixed amount of financial support per litre of heating oil.

These measures and programmes are generally financed through levies on the energy price per unit of consumption. However, this fiscal basis tends to shrink continuously due to better housing insulation and investments in decentralised energy production systems (e.g. domestic solar power), which increases the financial burden for other households. As a paradoxical consequence, these social programmes are increasingly paid for by low income households, considering that energy efficiency investments are largely carried out by households with medium to high incomes. Rethinking the financing mechanisms of these measures should therefore be a primary goal of future policy makers.

A second instrument that is central to social policies concerning access to gas and electricity, are the so-called budget meters (even though there are major differences between the regions, with the Brussels-Capital region not using this tool for example). When a household does not pay its bills after notice of default, the supplier can decide to ‘drop’ the customer, which means he will stop supplying after 60 days. If the customer does not enter into a new contract with another supplier, he will be supplied by the distribution network operator. Unless the customer is protected, this new ‘supplier’ will charge him a ‘dissuasive tariff’ which is slightly higher than what is available on the private market. This dissuasive tariff, twice-yearly determined by the national regulator, is meant to encourage customers to return to the private market where more economical tariffs are available.

When the customer gets into debt again, now owing to the distribution network operator, and is unable to pay after formal default notice, a budget meter is installed. In Flanders, this is paid for by the distribution network operator (who then socializes the cost by taking it into account in the distribution cost for all connected consumers). In Wallonia, the customer has to pay €100, unless he is protected, in which case the network operator pays for it. From then on and until the customer returns to the private market, he can only pay his electricity and gas with prepaid cards. When his budget is depleted and the customer cannot afford to recharge, he can activate an emergency reserve built into the budget meter. When this reserve is also depleted, the customer is effectively cut off. However, in Flanders there is a current limiter built-in, so that the customer can still use a maximum of 10A of electricity (although in some cases, this minimum supply can be disabled). In the Walloon region, such a limiter only exists for protected customers. As regards budget meters for gas, no such minimum supply exists in either region. When there is no minimum supply, the customer is effectively cut off when he runs out of budget. This results in ‘hidden’ energy poverty, where people still have access to energy but are unable to cover their basic needs. Unfortunately, this type of energy poverty is very difficult to measure.

When the customer does not recharge his budget card for some time, the distribution network operator can ask a local commission to cut off the customer. These commissions (Lokale Advies Commissie or Commission Locale pour l’Energie) are staffed with representatives of both the network and the Public Welfare Centre, and ultimately decide whether a customer will be cut off. In most cases, the commission formulates an advice protecting the customers’ connection to the network while obliging him to follow a certain payment plan.

These measures make sure that only a limited number of people are cut off from the electricity and gas network. However, as explained above, there are a number of people who cut themselves off because they lack financial funds to recharge their budget meter. It is hence very difficult to gain insight in the number of people who have to live without access to electricity or gas because of financial problems.

In Belgium, the problem of energy poverty is getting more and more attention. Thanks to public service obligations and social policy measures, with ‘protected consumers’ and ‘budget meters’ as important building blocks, the number of households being cut-off from the energy grid remains rather low. However, more and more households experience difficulties in paying their energy bills. The number of households ‘dropped’ by commercial suppliers is on the rise. As a result, more and more households are supplied by the distribution network operator, where they are subjected to the higher, dissuasive tariff. Only a limited number of households find their way back to the private market. However, currently available data is unable to shed light on ‘hidden’ energy poverty, when households deliberately consume less than what they actually need to live in dignity.

Bibliography:

 Hills J. (2012), Getting the measure of fuel poverty, CASE report 72, online: http://www.decc.gov.uk/en/content/cms/funding/Fuel_poverty/Hills_Review/Hills_Review.aspx

 Huybrechs F., Meyer S. and Vranken J. (2012), Energiearmoede in België, online: http://www.ua.ac.be/main.aspx?c=*OASES&n=104242 / La Précarité Energétique en Belgique, online: http://dev.ulb.ac.be/ceese/CEESE/fr/projet.php?menu=1&categorie=3&projet=124 

——————————————————————————————————————-

[1] This article is based on research funded generously by Electrabel, see Huybrechs et al. (2012).

Leave a comment

EU Fuel Poverty Network | Working to fight fuel poverty across Europe