Modelling Affordability of Essential Services

The cost-of-living crisis has prompted a renewed focus on the size of utility bills in the UK and how spending on essential services such as energy and water has become unaffordable for many households. This could well get worse in the future as costs rise with inflation while household incomes are squeezed. In order to mitigate the worst effects of this, there is a wide variety of support schemes in place, either by the utility companies themselves or directly from the government.

Understanding how these affordability problems affect different parts of the country and different sections of the population is essential for both companies and regulators alike. Equally critical is measuring the effectiveness of the various support schemes - how good are they at addressing water affordability problems, how much they cost and so on.

To answer these questions, we developed a model for a large UK water and sewerage company. This analysed the incidence of water affordability problems across its customer base at a highly geographically disaggregated level. It also forecasts 10 years into the future and allows the user to simulate the impact of a wide range of support scheme options to understand how effective they would be at addressing affordability issues and how much they would cost.

More details are available here. If you’d like to know more, please contact markw@throughlineadvisors.com or colm.gibson@thinkbrg.com.