13 - Energy spending and vulnerable households

Summary

Introduction

As with most goods and services there are significant variations in the energy use and spending levels among different households. Most of these differences can be explained by specific household characteristics such as income, the number of family members, the type and size of a family's home, or geography. As a consequence, the effect of changes in energy prices, incomes, or energy policy measures on household energy spending can vary across different types of families. In recent years, fuel poverty among vulnerable households and energy equity has occupied an important place in the energy policy debate.

In this chapter we focus on the UK. A discussion of the significance of the issue in other countries can be found in the previous chapter, by Waddams Price, in this book. In Britain, according to the official definition, households that spend more than 10 per cent of their incomes on energy are described as ‘fuel poor’ and having difficulties in warming their homes adequately. The fuel poverty ratio is calculated as fuel costs (usage multiplied with price) divided by income. If this ratio is larger than 0.1, a household is considered as being fuel poor (DECC, 2009c).