Consumer Value Proposition 2C13: PSR Awareness and Data Sharing with Utilities - December 2019
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Consumer Value Proposition 2C13: PSR Awareness and Data Sharing with Utilities December 2019
Table of Contents
Overview of Consumer Value Proposition ................................................................................................. 3
Summary of CVP ........................................................................................................................................ 4
Summary of CBA inputs ............................................................................................................................. 5
Cost Benefit Analysis details ...................................................................................................................... 7
Legal Notice
This paper forms part of Wales & West Utilities Limited Regulatory Business Plan.
Your attention is specifically drawn to the legal notice relating to the whole of the
Business Plan, set out on the inside cover of The WWU Business Plan. This is
applicable in full to this paper, as though set out in full here.
2
PSR Awareness CVP
Overview of Consumer Value Proposition
Commitment name
PSR awareness and data sharing with utilities
Description
The Priority Services Register (PSR) is a free service that ensures the provision of tailored support to
customers with a range of vulnerabilities. It is maintained by suppliers, electricity distribution companies
and water companies with the goal of providing a number of services to customers in vulnerable
situations.
Customers who may be eligible for the PSR include but are not limited to people with physical or
mental health conditions that would affect their ability to understand or pay their bills and those of
pensionable age.
WWU are committing to signing up 12,000 homes per annum to the suppliers PSR. In turn, these
customers will be referred to the electricity and water registers to help in aligning data across the utility
sector.
The main beneficiaries of this initiative are the 12,000 homes per annum that WWU will add to the
PSR. These households will realise financial benefits – WWU have forecasted 32.82% will be eligible
for the Warm Home Discount Scheme, with 20% eligible for water social tariffs – which in turn will
reduce the likelihood of mental distress of these customers as they will receive assistance in paying
their bills. In addition, the inhabitants of these households will realise health benefits associated with
residing in warmer and more comfortable homes.
3PSR Awareness CVP
Summary of CVP
Costs and Benefits over RIIO-GD2
Financial Net Present Net Benefit per
Commitment Cost Social Benefit
Benefit Value £ spent
PSR
Awareness and
£250,000 £17,558,640 £58,768,383 £60,041,529 £270.80
Data Sharing
with Utilities
Cashflow over RIIO-GD2
4PSR Awareness CVP
Summary of CBA inputs
Name Description Value (£) Source1 Probability Source for probability
Costs
Contribution to partners Annual contribution to partners £30,000 Figure n/a n/a
to add WWU’s service onto provided by
their normal works WWU
Costs
Social media sign-ups Annual cost for WWU’s social £20,000 Figure n/a n/a
media sign-ups provided by
WWU
Benefits
Warm Home Discount WWU have forecasted £140 UK 32.82% See Cost Benefit Analysis section
32.82% of these PSR sign-ups Government, (page 7).
will be eligible for the Warm 2019
Home Discount Scheme,
through which they will receive
a £140 discount off their
annual electricity bills.
Financial
Water social tariffs WWU have forecasted 20% of £258 WWU, 2019 20% Per WWU – in two years of
these PSR sign-ups will be sample data of 2,196 people,
eligible to be placed on a WWU have helped 20% access a
water social tariff, averaging a social water tariff.
financial benefit of £258 per
household per annum.
Comfortable and warm The average cost of a £37 Personal 1.583% See Cost Benefit Analysis
homes reduce the risk consultation with a GP. Social Section (page 9).
of illness Services
Social
Research
Unit, 2017
1
Further information on sources is provided in the Cost Benefit Analysis details section
5PSR Awareness CVP
Comfortable and warm The value of the prevention of £1,897,129 UK 0.029% See Cost Benefit Analysis
homes reduce the risk a fatal casualty in Great Government, Section (pages 9-10).
of excess winter death Britain. 2017
Social
Reduced likelihood of The annual cost to society of £1,165 OECD, 2018 5.967% See Cost Benefit Analysis
mental distress mental health issues, divided Section (page 10)
by the UK population.
6PSR Awareness CVP
Cost Benefit Analysis details
Costs
Name 2021 2022 2023 2024 2025
Contribution to partners £30,000 £30,000 £30,000 £30,000 £30,000
Costs
Social media sign-ups £20,000 £20,000 £20,000 £20,000 £20,000
Costs per annum £50,000 £50,000 £50,000 £50,000 £50,000
• WWU will spend £30,000 per annum to add their service onto the normal works of their
partners.
• WWU will spend £20,000 per annum on social media sign-ups.
Benefits
Name 2021 2022 2023 2024 2025
Warm Home Discount £551,376 £1,102,752 £1,654,128 £2,205,504 £2,756,880
Financial
Water social tariff £619,200 £1,238,400 £1,857,600 £2,476,800 £3,096,000
Financial benefits per annum £1,170,576 £2,341,152 £3,511,728 £4,682,304 £5,852,880
• Warm Home Discount
7PSR Awareness CVP
o Under the Warm Home Discount scheme, eligible customers are able to receive
£140 off their annual electricity bill.2
o There are 6,703,753 electricity customers on the PSR.3
o During Scheme Year 7 of the Warm Home Discount, nearly 2,200,000 vulnerable
customers received this funding.4
o Therefore, (2,200,000 / 6,703,753) = 32.82% of customers on the electricity PSR
received this funding in Scheme Year 7.
o This figure has been extrapolated over RIIO-GD2 – in year one, 32.82% of 12,000
customers that WWU commit to signing up to the PSR will receive this £140 benefit
= £551,376.
o The figure will grow by £551,376 each year as additional customers are added to
the PSR.
• Water social tariff
o Per WWU, in two years of sample data of 2,196 people, they have helped 20%
access a social water tariff with an average financial benefit of £258 per annum.
o This figure has been extrapolated over RIIO-GD2 – therefore, in year one 20% of
12,000 customers will receive this benefit of £258 = £619,200.
o This figure will grow by £619,200 each year as additional customers are added to
the PSR.
Drop
Name Attribution Probability Proxy 2021 2022 2023 2024 2025
off
£8,434 £11,948 £15,463 £18,977 £22,491
Comfortable
and warm
homes 50% 0% 1.583% £37
reduce the
risk of illness
£3,301,004 £6,602,009 £9,903,013
£13,204,018 £16,505,022
Comfortable
and warm
Social
homes 50% 0% 0.029% £1,897,129
reduce the
risk of excess
winter death
£1,001,018 £1,418,110 £1,835,201 £2,252,292 £2,669,383
Reduced
likelihood of 50% 0% 5.967% £1,165
mental
distress
£4,310,457 £8,032,067
Social benefits per annum £11,753,677 £15,475,286 £19,196,896
• In all cases, attribution has been set at 50%. This is based on the assumption that 50% of the
benefits are attributable to WWU – while they are not directly delivering the benefit (it would
2
https://www.gov.uk/the-warm-home-discount-scheme
3
https://www.ofgem.gov.uk/system/files/docs/2019/09/vulnerable_consumers_in_the_energy_market_2019_
final.pdf
4
https://www.ofgem.gov.uk/publications-and-updates/warm-home-discount-annual-report-scheme-year-7
8PSR Awareness CVP
be realised via electricity networks through the Warm Homes Discount Scheme), WWU are
actively placing customers on the PSR who would not realise the benefit without being on the
register.
• Drop off is set at 0%, as we do not expect benefits to decrease over the time frame in
question.
• Comfortable and warm homes reduce the likelihood of illness
o We assume this benefit will apply to the inhabitants of the households that are
deemed eligible for the Warm Home Discount Scheme as a result of this initiative.
o The average household size in the UK is 2.4 people.5
o Therefore, it will apply to a sample size of (2,200,000 / 6,703,753) * 12,000 * 2.4 =
9,451.422 people in year one.
o Studies have shown that visits to GP’s for respiratory tract infections increase by up
to 19% for every 1°C drop in mean temperature below 5°C in homes.6
o Between 2014-2018, the average daily temperature per calendar month was below
5°C for a total of 5/60 months.7
o As a result, we assume the success rate is 19% * (5/60) = 1.583%. That is, without
the initiative the customers would experience at least a 1.583% higher risk of
respiratory tract infections requiring at least one visit to their GP.
o Therefore, in year one, this initiative can expect to yield this benefit in the form of a
reduced risk of illness to 1.583% * 9,451.422 people = 149.616 fewer visits to the
GP in year one.
o The average cost of a GP consultation lasting 9.22 minutes is £37.8 This equates to
a social benefit in year one of 149.616 avoided visits * £37 * 50% attribution =
£2,678.
o The value of the initiative grows cumulatively each year as it affects an additional
9,451.422 people per annum and because the benefits associated with residing in
warmer homes are continuous.
• Comfortable and warm homes reduce the likelihood of excess winter death
o We assume this benefit will apply to the inhabitants of the households that are
deemed eligible for the Warm Home Discount Scheme as a result of this initiative.
o The average household size in the UK is 2.4 people.9
o Therefore, it will apply to a sample size of (2,200,000 / 6,703,753) * 12,000 * 2.4 =
9,451.422 people in year one.
o More people die in the winter than in the summer in England & Wales. In
2017/2018, 16,890 excess winter deaths in the UK were attributed to cold housing
conditions.10
o The estimated population of England & Wales is 58,744,595.11
o The likelihood of an excess winter death in England & Wales is therefore 16,890 /
58,744,595 = 0.029% as indicated on the social benefits table.
5
https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familie
sandhouseholds/2016
6
https://fingertips.phe.org.uk/documents/Fuel_poverty_health_inequalities.pdf
7
https://assets.publishing.service.gov.uk
8
https://www.pssru.ac.uk/pub/uc/uc2017/community-based-health-care-staff.pdf
9
https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familie
sandhouseholds/2016
10
https://www.e3g.org/news/media-room/17000-people-in-the-uk-died-last-winter-due-to-cold-housing
11
https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/datas
ets/populationestimatesforukenglandandwalesscotlandandnorthernireland
9PSR Awareness CVP
o In year one, this initiative will yield a benefit in the form of avoided winter deaths to
9,451.422 * 0.02875% = 2.717 people.
o The value of a prevented fatality in the UK is £1,897,129.12 This equates to a social
benefit in year one of 2.717 people * £1,897,129 * 50% attribution = £2,577,661.
o The value of the initiative grows cumulatively each year as it affects an additional
9,451.422 people per annum and because the benefits associated with residing in
warmer homes are continuous.
• Reduced likelihood of mental distress
o We assume this benefit will apply to the inhabitants of the households that are
deemed eligible for the Warm Home Discount Scheme as a result of this initiative.
o The average household size in the UK is 2.4 people.13
o Therefore, it will apply to a sample size of (2,200,000 / 6,703,753) * 12,000 * 2.4 =
9,451.422 people in year one.
o Studies have shown that customers in receipt of heating and insulation
improvements are 40% less likely to report a high level of psychological distress.14
o We acknowledge that this is not equivalent to receiving a discount off one’s energy
bill. As a result, we have taken the following assumptions – we have assumed that
being on the Warm Home Discount Scheme in tandem with other benefits
associated with being on the PSR is equivalent to receiving heating improvements,
but not insulation improvements. Therefore, we have reduced the likelihood of
improvements in mental distress to 20% for this initiative.
o This corresponds to a success rate of 20% * (2,000,000 / 6,703,753) = 5.967% as
indicated on the social benefits table.
o This equates to a benefit in the form of a reduced risk of mental distress to 20% *
9,451.422 people = 1,890.284 people in year one.
o The total direct and indirect costs of mental health in the UK was €106,024,000,000
in 2015.15 The EUR to GBP average annual exchange rate in 2015 was 0.73.16 This
is equivalent to £77,397,520,000.
o The UK population is approximately 66,436,000 people.17
o Therefore, the annual mental health cost per person is approximately
£77,397,520,000 / 66,436,000 = £1,165.
o This equates to a social benefit in year one of 1,890.284 people with reduced distress
* £1,165 * 50% attribution = £1,101,084.
o The value of the initiative grows cumulatively each year as it affects an additional
9,451.422 people per annum and because the benefits associated with residing in
warmer homes are continuous.
12
https://www.gov.uk/government/statistical-data-sets/ras60-average-value-of-preventing-road-accidents
13
https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/famili
esandhouseholds/2016
14 https://www4.shu.ac.uk/research/cresr/sites/shu.ac.uk/files/warm-front-health-impact-eval.pdf
15
https://read.oecd-ilibrary.org/social-issues-migration-health/health-at-a-glance-europe-
2018_health_glance_eur-2018-en#page30
16
https://www.statista.com/statistics/412806/euro-to-gbp-average-annual-exchange-rate/
17
https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/bulletin
s/annualmidyearpopulationestimates/mid2018
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