People living in low income households in the UK are more likely to pay higher energy costs than those in wealthier households.
That’s according to research, published in the journal Energy Economics, which found that poorer households often face a “poverty premium,” leading to increased costs for basic energy tariffs and higher per-unit energy charges.
The study highlighted that these premiums are incurred through various pathways, such as the use of prepayment meters and living in rented accommodation or smaller properties like apartments.
On average, between 2011 and 2019, low income households paid between 10% and 20% more per unit for gas and electricity compared to wealthier households.
Researchers from the University of Edinburgh used statistical methods to analyse UK household data, combined with the National Energy Efficiency Data-Framework (NEED) figures, to measure the energy premiums faced by poorer households.
The study found that household poverty status significantly influenced the likelihood and intensity of these premiums, even when accounting for other factors such as property type and payment method.
Fiona Rasanga, of the University of Edinburgh Business School, a PhD student who led the study, said: “The findings shed light on how the poverty premium – or the idea that the poor pay more for essential goods and services – directly impacts the economic wellbeing of poor households.
“Policymakers could use the proposed measurement approach to keep track of the poverty premium and its economic impact on households.”
