Heat Networks and Hidden Fuel Poverty: Time for Fairer Support
Today marks National Energy Action's (NEA) Fuel Poverty Awareness Day, which highlights challenges that not only impact the most vulnerable households but are becoming more prevalent across society.
Defining Fuel Poverty
A review of how fuel poverty is defined is essential to understand the problem. The government uses the Low-Income Low Energy Efficiency (LILLEE) definition, which considers the minimum efficiency rating of a property and defines a household as being in fuel poverty if the property has an Energy Performance Certificate (EPC) rating of D or below and residual income below the poverty line.
By focusing only on households in EPC D and below, this definition assumes that households in properties rated C or above cannot be in fuel poverty. This does not reflect true affordability challenges. National Energy Action (NEA) defines a household as being in fuel poverty if it needs to spend 10% or more of its income on energy to maintain a satisfactory heating regime. Using this measure, NEA estimates that over 6 million UK households are currently in fuel poverty.
The rise in households citing financial pressures around energy bills reflects the reality of increasing living costs. Expenses such as rent, mortgages, food, and childcare have risen significantly over recent years, while household incomes have remained relatively stagnant.
Current Policy Landscape
As part of the Warm Homes Plan, the UK government is updating the fuel poverty strategy, which acknowledges the need for change. However, more needs to be done, particularly in the heat network sector.
Households on communal electricity supplies and private wire arrangements are already disadvantaged by not being eligible for the Warm Homes Discount, which supports eligible domestic electric households. Switch2 advocated for this change in government consultations earlier this year. While the government acknowledged the disparity, no changes were made as there were no additional funds to support this.
Self-disconnection among prepayment meter customers continues to rise, with households reliant on emergency credit and falling into a cycle of debt repayment before returning to emergency credit.
Upcoming regulations in the heat network sector beginning 27th January 2026 will provide a framework for more transparency, protection from poor practices, and additional support credits for prepayment customers. However, the framework does not provide the same level of pricing protection as the gas and electric market, and questions remain about how effectively it will address fuel poverty.
Addressing the Challenge
The approach needs to address both immediate needs and longer-term structural issues. Long-term solutions such as retrofitting properties and decarbonisation are essential to ensure poorly insulated homes and inefficient buildings are upgraded.
For heat networks, reliable and affordable heating requires improving operational efficiencies and reducing heat losses. The government's proposals to reduce the budget for the Warm Homes Plan represent a concern, as buildings must be futureproofed and energy efficient.
Short-term support and advice must be provided for households already in fuel poverty. The level of service must be relevant, with genuine energy efficiency tips that are practical and achievable.
Significant work still remains to support fuel-poverty households. Switch2 will continue to lobby for change in the sector, particularly with upcoming regulations. Our focus remains on championing consumer protection and asking the government for actual support mechanisms that households can actually benefit from and to provide the same levels of help as the gas and electric sector.
