The cost of adequately heating the home MESL Working Paper

Issued: November 2023

The cost of adequately heating the home

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Summary

This Working Paper examines the cost of household energy over the recent period of high energy inflation using the Minimum Essential Standard of Living (MESL) data and demonstrates the impact of dwelling efficiency and method of purchase on these costs.

Energy poverty typically results from the interaction of three key factors, namely, the energy efficiency of a dwelling, the cost of household energy, and household income. To demonstrate the influence and interplay of these factors, this paper identifies the minimum energy need for four household types, calculating the variation in cost by level of dwelling efficiency and method of purchase. This paper examines the potential burden of energy poverty for the household types in social welfare and national minimum wage scenarios. The analysis presents these findings in the context of the overall MESL expenditure need and household income for each household type.

The value of current energy-related income supports, and other social welfare payments has been eroded over the current inflationary period. This paper highlights the fixed nature of Fuel Allowance and the Household Benefits Package and sets out the case for an alternative policy approach that is more responsive to households’ minimum energy need by taking account of dwelling efficiency and any price volatility in the energy market.

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