Frequently asked questions about the SDLP home heating oil proposal and support for other energy consumers
The SDLP is proposing 1000 litres of home heating oil for every household that needs it in Northern Ireland.— The SDLP (@SDLPlive) September 21, 2022
Almost 70% of homes here rely on oil central heating and most haven't received a single penny of support.@MatthewOToole2 | Leader of the Opposition pic.twitter.com/w5vJmbsyfl
How much will this cost?
We believe the scheme, based on current market prices, would cost around £550 million. It would mean that the nearly 70 per cent of NI homes on home heating oil would receive comparable support to the energy support being offered in Britain (i.e. around £1,000 for the average household). As such, the £500 million should be comfortably affordable based on the likely Barnett consequentials from UK Government support in Britain, added to the unallocated £437 million in Stormont coffers.
What about those on natural gas or other forms of energy?
This proposal is not in isolation. The SDLP wants to see immediate support for gas and electricity costs at least equivalent to that being provided in Britain. It is critical that solutions for NI also reflect our unique circumstances, including the high proportion of gas customers on pre-payment meters, and the operation of the all-Ireland electricity market.
Why isn’t this proposal better targeted at those in real need?
Ideally, we would have the time and the information needed to target this support at those most in need. We would have hoped that more steps would have been made by the Executive to prepare a strategy to protect homes from the projected rise in energy costs before the winter. But it is also true that
Waiting any longer would mean support would not be ready by the winter. We cannot justify allowing families to go cold, impoverished, and potentially become sick or die because they cannot afford to heat their homes.
The existing data the NI Executive has at its disposal would only allow it to target support based on receipt of benefits or the value of their property rates. Using benefits and welfare to identify those most in need would leave too many families not currently in the benefit system without support.
Relying on rates would also not factor in older residents whose property value is much higher than their income. Given that the elderly population are among the most vulnerable to fuel poverty we could not use a model that would exclude them.
What happens if the wholesale price of oil rises or falls sharply?
Our proposal acknowledges the need to build in a safeguard mechanism on cost. If, for example, the wholesale cost of energy fell by 30 per cent, a taper on the amount of oil provided could be introduced. This would need to be reflected in the design of the scheme from the outset.
Equally, headroom would need to be built into the scheme to accommodate an increase in the market price of oil.
Can NI oil companies meet demand?
We are not anticipating greater demand for oil than a normal winter period, but we acknowledge that deliveries would need to be planned to avoid bottlenecks in local supply and distribution. Given the intention of the scheme is that the vouchers would be valid until the end of 2023, we believe it will be possible to deliver agreed oil against a relatively predictable demand curve.
What mechanisms would be built in to prevent fraud?
Our proposal is that applicants would need to be verified via the Electoral Register in the same way as the High Street Voucher scheme, and would either receive a card or generate a unique QR code. Oil suppliers would need themselves to be accredited participants in the scheme and verify their deliveries via QR code. We envisage the Utility Regulator providing oversight, though formal regulation and enforcement would likely require primary legislation as the home heating oil sector is currently without any statutory regulation.