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Jim McClelland looks at the energy bill prospects for business

As the summer sun fades and the prospect of winter looms dark, cold and wet, the spectre of domestic fuel poverty returns to haunt one in nine households in England.

This is not the stuff of gothic horror fiction; this is a grim reality for millions of the population, in 2018.

The Government’s own most recent report estimates the average fuel poverty gap (the shortfall in meeting the agreed minimum threshold) has decreased again slightly to £326 and the aggregate for England to £832 million.

However, it also admits the number of households affected has crept up, to total 11.1%, or roughly 2.55 million.

UK industry is paying as much as 33% more for its electricity than counterparts in Europe

Jim McClelland Jim McClelland Editor of @SustMeme

Highest ever levels

This unwelcome uptick forms part of a nationwide debt trend that is not just changing, but growing, according to the Money Advice Trust.

The Trust has looked at how domestic money problems have changed in the 10 years since the financial crisis of 2008, publishing its findings in the study A Decade in Debt.

The Trust expects 2018 to see the highest level of demand at National Debtline in five years. So far, some 48% of people calling the service for support have had a deficit budget, which represents a significant rise compared to the figure of 27% back in 2009.

Forecasts project that the UK household debt-to-income ratio will gradually increase over the coming years, peaking at 146% in early 2023, worryingly close to the 2008 high of 148%.

Energy debt

Tellingly, whilst the nature of the debt discussed a decade ago typically revolved around credit cards, personal loans and mortgage arrears, the difficulties commonly faced today are more likely to concern household bills, not least energy.

Already, the proportion of people struggling with energy debt has almost doubled from 9% in 2008 to 17% in 2018, as fuel costs increasingly make up a bigger proportion of the monthly outgoings of the average household.

Sadly, things do not look like getting better any time soon.

By August this year, it was already being reported European winter gas prices were 50% higher than the same time last year and talk of an impending supply crisis was making the news, especially in the wake of exceptional market disruption caused by the unseasonal Beast from the East.

Worse for business

Bad as the situation seems for domestic customers, however, businesses could be getting an even worse deal. Research conducted by University College London has revealed UK industry is paying as much as 33% more for its electricity than counterparts in Europe, even before Brexit.

Whilst heavy industry and energy-intensive manufacturing are sectors most obviously affected by this uneven playing field, almost all players with responsibility for heating commercial premises are beginning to feel the effects, as the economic outlook worsens.

As the mercury drops, small to medium-sized enterprises are increasingly wrestling with responsibility for keeping office-based staff warm and well (plus productive) over the winter period.

Retail operations are also managing customer expectations, especially near potential pinch-points, such as high-street doorways, chiller cabinets and changing rooms.

What can you do?

As purse-strings tighten, options shrink. Not even the best payback on new energy kit can be instantaneous and, much like under-pressure homeowners, companies struggle to budget for property improvements that call for any significant investment upfront.

Switching tariffs may offer some opportunistic relief, but the odds are constantly changing as supplier prices fluctuate relative to one another. Strategic cost forecasting is therefore difficult in general and almost impossible in detail.

So, what does the law say? Well, Workplace (Health, Safety and Welfare) Regulations 1992 do place a legal obligation on employers to maintain a ‘reasonable’ temperature in the workplace. Whilst there is no maximum in the Approved Code of Practice, there is a minimum temperature requirement of 16°C (or 13°C if the work involves rigorous physical activity).

Of course, having legislative policy in place is one thing, policing compliance another. Damp, mould and condensation might be obvious signs of unhealthy working environments, but more subtle specifics such as cold spots and draughts, even inappropriate air-conditioning settings, can cause issues and impact on wellbeing and welfare over time.

Low hanging fruit first

For some organisations, though, there remains a mix of valuable low-hanging fruit yet to be picked, when it comes to basic good housekeeping. For instance, the independent gas and energy comparison service for all sizes of UK-based firms, Business Energy suggests that 10-20% reductions in electricity usage can be achieved by the introduction of just simple efficiency measures that help both monitor and cut consumption, including:

- Adding an energy monitor onto the meter to visualise live usage;

- Changing legacy meters for the new smart meters;

- Using management software to analyse trends and peak demand;

- Only using A+ grade efficient appliances; and

- Ensuring all lighting, heating and computers are switched off at night and weekends

In summary

These ideas might not appear too exciting, but, shaving as much as a fifth off the electricity bill could prove a gamechanger for some commercial customers, in the short term.

Longer term, however, the wider affordability-fix will be of a different order, necessitating systemic change and full-blown energy transition. Meantime, fuel poverty is happening here and now, creeping up on households and climbing the UK business agenda, alike.

Jim McClelland is a Sustainable futurist, editor, journalist, speaker