London (Platts)--30May2008

The UK government Friday said it was announcing new measures to combat
fuel poverty, the condition in which householders struggle to afford the
energy they need to cook food and keep warm.

Fuel poverty is defined as spending more than 10% of net income on
energy. Numbers in fuel poverty--measured in millions--are soaring as record
oil prices push gas prices up to record levels. The average UK household gas
bill could soon hit GBP1,000/year ($2,000) recent UK newspaper reports have
warned.

The government said it would seek changes in the law to allow
data-sharing with energy suppliers. That would mean the government could use
its data on vulnerable households to help energy suppliers target their low
cost tariffs at the most vulnerable customers.

The Department for Work and Pensions will look to introduce a measure to
the Pensions Bill now in parliament. The government said there would be a
pilot scheme to ensure people applying for grants under the Warm Front
scheme--which helps insulate homes--are also referred to their energy supplier
for tariff advice. There will be GBP150,000 ($300,000) spent on an awareness
campaign on social assistance for the vulnerable.

Measures for the long term include GBP3 million to fund a pilot project
for fuel-saving microgeneration in fuel poor communities. The government is
also continuing work on a heat strategy--looking at ways to deliver heat to
homes, possibly more efficient than delivering energy for households to make
their own heat.

The UK's big six energy retailers have previously agreed to boost their
voluntary spending on fuel poverty alleviation from GBP50 million/year to
GBP150 million/year by 2011, responding to a challenge in the government's
Budget statement in March.

Energy minister Malcolm Wicks said in a statement Friday: "We've got a
commitment from the energy companies ... now we're working on finding ways to
get them the right information to enable them to get that money to those who
need it the most."

The latest measures announced Friday give further details on suggestions
that were announced after a major fuel poverty summit hosted by energy
regulator Ofgem in April 2008.

RWE-NPOWER ANNOUNCES NEW SOCIAL TARIFF

RWE-Npower, one of the big six retailers, said Friday it was launching a
new "social tariff" that would offer a discount of GBP250/year to those most
in need. Over three years social programs will cost the company GBP53 million.
It is aiming to recruit over 80,000 customers to its "Spreading Warmth"
tariff.

The tariff will be launched to the public in the autumn. The money is
over and above the GBP300 million RWE-Npower will be spending over the next
three years on energy efficiency measures to help people save energy in their
homes.

RWE-Npower has recently come under fire from consumer group Energywatch
for its increasing levels of customer complaints and for its low levels of
spending on social tariffs.

"This initiative will see Npower move off the bottom and offer social
tariffs on a much more significant scale," Energywatch said in a statement.

ANALYSIS: IS SWITCHING ENOUGH?

The main parts of the current strategy to fight fuel poverty seem to
involve retailers agreeing to offer their lowest-priced tariffs to the most
vulnerable customers and working hard to make sure that the vulnerable find
out about and switch to these tariffs. But the simple matter is that relative
gains--being on the cheapest tariff in the market, or switching to a cheaper
tariff--can only offer a certain degree of comfort when the entire market has
picked up hugely in absolute terms.

Average household fuel bills of perhaps GBP1,000/year are now double the
GBP500 or so of five or six years ago. And the talk is now of fuel bills going
even higher--perhaps to GBP1,300 or GBP1,400/year.

Some of the biggest spending by the government on fighting fuel poverty
is on winter fuel payments for the over 60s, which cost billions of pounds
each year--more than the GBP150 million/year that the retailers will spend on
social tariffs. But winter fuel payments are not a targeted response to fuel
poverty.
They don't go to the vulnerable under 60, but do go to rich over 60s,
including tens of thousands living in warmer countries such as Spain. And the
money--a simple cash sum--does not have to be spent on energy--let alone the
long-term energy saving measures such as insulation which could be the
eventual key to cracking the fuel poverty problem.

Consumer group Energywatch's campaigns director Adam Scorer said:
"There's very little in the statements that hasn't already been said and
almost nothing new on the table. These announcements are going to have a
hollow ring to them for the millions of households who need government and
regulator to respond to the true scale and consequences of fuel poverty."

Energywatch said that making switching easier would not put enough extra
pounds in the pockets of the 4.5 million households who are already struggling
to pay their energy bills. The least expensive deal was still too much for a
fuel poor consumer, it said.
Friends of the Earth, which is looking to sue the
government over its
failure to meet legal fuel poverty alleviation targets, said: "The only way to
warm up our 4 million fuel poor homes is to super-insulate them and help them
produce their own energy."