Leaving no one in the dark, neither today nor tomorrow

When people lose their job or are put under pressure, in particular regarding their health, they should not be worrying about paying their bills, write Marine Cornelis and Alicia Carrasco.

Marine Cornelis is a consultant at Next Energy Consumer. Alicia Carrasco is the CEO of OlivoEnergy, a consulting firm.

The COVID-19 situation is exceptional and deserves exceptional answers. More than ever, our home should be our shelter, besides being our classroom, our office, our gym and our dining hall. When people lose their job or are put under pressure, in particular regarding their health, they should not be worrying about paying their bills.

Throughout Europe, governments and regulators are taking sensible measures to prevent disconnection and help certain household pay or postpone the payment of their bills.

For instance, in the Flanders region of Belgium, one month’s utility bill (up to €202.68) will be covered by the Flemish government for households where at least one member is temporarily unemployed because of the coronavirus outbreak.

In Italy, in the first eleven towns most affected by the pandemic, the payment of water and energy bills will be postponed until after the 30th of April, and their amount spread over the next months.

Many governments and regulators have decided to prohibit disconnections in case of unpaid bills until the coronavirus emergency is over. As providers of essential services, it is only reasonable that utilities make efforts and put themselves even more at the service of their customers.

The paradox of goodwill

Those efforts shouldn’t be spread unevenly, to the risk that smaller utilities suffer too much. In Spain, COVID-19 measures launched via the Royal Decree of the 31st of March enable those affected by temporary unemployment, freelancers and also SME to lessen the cost of their utility bills.

Those measures are very well-intended and necessary. However, in Spain, only last resort retailers can provide electricity to vulnerable consumers, but all suppliers finance the whole process according to their market share.

Hence, between grid-regulated costs and the methodology around the social bonus, costs will be borne unevenly among DSOs and suppliers. Not all DSOs count with the same liquidity to cover unpaid grid charges.

If the situation lasts too long and small utilities and alternative suppliers, such as cooperatives, accumulate too much debt, they could face unbearable cash-flow problems and could be pushed into bankruptcy. This would put the whole alternative energy system at risks. Citizens would have to pay the bill twice, as taxpayers and as customers.

It is also as global citizens and actors in the energy transition that their role could be jeopardised. The Clean Energy for all Package, adopted last year, has put the consumer at the centre of the market and opened up new rights for them to fully join the energy transition.

For example, EU law now guarantees consumers to benefit from alternative services, such as aggregators, or to join local energy communities. A renewable or a citizen energy community provides environmental, economic or social benefits for its shareholders or members or for the local areas where it operates, and therefore bring positive value to the community.

They contribute to more sustainable growth, social innovation and enable consumers to participate in the energy transition directly.

According to EU law, all kind of consumers, including the most vulnerable, should have the right to join energy communities. Still, they will do so only if they feel it’s financially worth it and that they have the guarantees that their rights will be adequately enforced, also in a time of crisis.

Investing now in the future of energy

Thinking about the future of the energy system should, therefore, be the priority. It is what will drive our ability to be more resilient to climate change and to mitigate energy poverty in the long run.

Energy poverty and vulnerability still affect 50 million Europeans and goes way beyond the inability to pay the bills. In Spain, between 3.5 and 8.1 million people, depending on the indicator used, are in a situation of energy poverty.

Energy poverty leads to social exclusion and stigmatisation, poor living conditions and increased vulnerability to climate change and natural disasters. It affects directly health, dignity and the sense of security we feel at home.

The exceptional circumstances of dealing with the COVID-19 should be the catalyst for better, more coordinated action against energy poverty and climate change. One of them is the creation of a smarter and more flexible energy system.

The Package of European directives adopted in 2019 provides the right framework to implement new energy services that put consumers at the centre of the energy transition.

Those services enable consumers to use of distributed energy resources and entitled them to participate indirectly in electricity markets. They will stimulate the take-off of electric vehicles.

They provide congestions solutions to DSOs, and ultimately enable better integration of renewable energy sources. It is the right moment for governments to take into account the capabilities and benefits of new energy services for vulnerable consumers and the place they live.

Strong energy efficiency commitments and massive renovation waves should accompany this transformation, as also announced in the EU Green Deal. The European Commission also announced upcoming guidance to assist Member States to address energy poverty.

Housing renovation, retrofitting programmes and making not only consumers but also buildings, more flexible and fit for the future, should be among the priority policies.

It will protect vulnerable consumers in the long run and support their active participation in new energy services, with shared self-consumption, energy communities and public-private shared electric vehicles, and empower them to deal with the challenges of climate change.

Coherent policies that are part of a long-term approach are more than ever necessary to bring our economies out of the crisis on a lasting and sustainable manner and also to respond to the ever more pressing challenge of the fight against global warming. It’s the right choice for today’s market players and for creating a world where no one is left behind.