Britain should consider social tariff for household energy - watchdog

The government has guaranteed to keep average household energy bills below 2,500 pounds ($3,089) a year until the end of April and below 3,000 pounds until March 31, 2024. However, these costs are still around three times higher than people were paying prior to the pandemic and before Russia's invasion of Ukraine sparked record high prices in Europe's electricity and gas markets.

Britain should consider launching a social tariff for household energy which would see those most vulnerable and least able to pay charged a lower price for their power, the country's energy regulator said on Monday. British energy prices hit record highs last year, forcing the government to subsidise costs for all households and issue extra payments for the most vulnerable.

Even with this help, "there are many households that simply cannot pay their energy bills", Ofgem Chief Executive Jonathan Brearley said at an Institute of Government event. The government has guaranteed to keep average household energy bills below 2,500 pounds ($3,089) a year until the end of April and below 3,000 pounds until March 31, 2024.

However, these costs are still around three times higher than people were paying prior to the pandemic and before Russia's invasion of Ukraine sparked record high prices in Europe's electricity and gas markets. Brearley said it was unlikely that prices would return to pre-pandemic levels, and that the energy crisis sparked after Moscow sent troops into Ukraine meant new approaches were needed in Britain's energy sector.

Britain's telecoms sector offers a social tariff for low-income households, offering a basic broadband package funded by the major providers. Telecom giant BT said last year the government needs to find a solution to stop suppliers shouldering the costs. In a letter to British finance minister Jeremy Hunt last week, almost 100 charities and non-profit organisations such as ageUK and disability groups called on the government to implement a social energy tariff.

It said people in poverty and those relying on medical equipment run on electricity are still struggling despite current support measures. Brearley did not say how a social tariff in the energy sector would work but said the regulator would work with the government to look at possible options.

Britain's Department for Business, Energy and Industrial Strategy (BEIS) did not immediately respond to requests for comment on the matter. BEIS earlier on Monday said a total of 5.7 billion pounds has been provided across 99% of households in the country through its energy bill support scheme which runs alongside its price guarantee until the end of March.

($1 = 0.8093 pounds)

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