Fuel Poverty Scenario Modelling based on Ofgem Energy Price Caps - up to April to June 2026

Notes

These estimates are based on Scotland’s statutory definition of fuel poverty. Under this definition a household is in fuel poverty if:

• in order to maintain a satisfactory heating regime, total fuel costs necessary for the home are more than 10% of the household's adjusted (i.e. after housing costs) net income (and more than 20% in the case of extreme fuel poverty); and
• if, after deducting those fuel costs, benefits received for a care need or disability and childcare costs, the household's remaining adjusted net income is insufficient to maintain an acceptable standard of living.

Under this definition, a household’s adjusted after housing costs net income is net of income tax, national insurance contributions, mortgage or rent payments, council tax, water and sewerage charges.

The remaining adjusted net income must be at least 90% of the UK Minimum Income Standard to be considered an acceptable standard of living, with an additional amount added for households in remote rural, remote small town and island areas. As calculated in “The cost of remoteness: reflecting higher living costs in remote rural Scotland 2024 update”, 90% of the UK MIS[1] ranged from between £12,360 for a single pensioner to £58,670 for a couple with, while in RRRSTI areas it ranged from between £16,320 for a single pensioner and £64,360 for a couple with children to reflect the higher cost of living[2].

It should be noted that fuel poverty rates are calculated based on modelled fuel bills which represent the amount we estimate a household would need to spend on fuel to heat their home to the required temperatures for the required number of hours, as set out in The Fuel Poverty (Enhanced Heating) (Scotland) Regulations 2020.

This will differ from a household’s actual energy use which will vary due to household circumstances and preferences. 

In this analysis we have assumed that the unit prices and standing charges for gas and electricity have increased or decreased in line with the announced OFGEM price cap each time it is published. However, in the case of the Ofgem price cap, increases will apply only to those households on standard variable tariffs. Survey data cannot distinguish between those households on fixed tariffs and those on standard variable tariffs nor do we collect detailed information on the specific tariff individual households are signed up to.

Additionally, as this analysis is based on upcoming Ofgem price cap figures, and current DESNZ prices, it inherently assumes the annual energy price is reflective of the current prices used. Therefore, the figures in this analysis under various scenarios should be interpreted as the fuel poverty rates and levels if fuel prices remained at that amount for an entire year.

It should be observed that from April 2024 all cost of living[3] payments previously included in the modelling had reached their end and therefore are no longer being added to household income as they were in previous scenario models.

However, from 2025 household income used in the calculation of fuel poverty also includes an adjustment to account for changes to the Winter fuel Payment (WFP) through the Pension Age Winter Heating Payment (PAWHP).

This involves removing the amount received from WFP for all households in the achieved sample of the 2024 SHCS and then adding any income from PAWHP eligible households were modelled to receive. 

This was done through cross referencing household characteristics data gathered through the SHS, with any household that met the eligibility criteria of the PAWHP having either £305.10 or £203.40 added to their income depending on their individual circumstances[4].

These adjusted incomes were then used for all fuel poverty calculations.