A social tariff must be designed as a temporary measure with the end goal of returning eligible customers to mainstream rates – or risk an “energy apartheid”.
This is the view of Eon UK chief executive Chris Norbury, who set out his vision of targeted energy bills support in an interview with Utility Week.
Norbury believes a social tariff should be co-funded by industry and government and administered by Citizens Advice, based on a similar model in the Netherlands.
In 2022’s autumn statement the government pledged to work with industry to consider the best approach to consumer protection, including options such as a social tariff, with the aim of implementing measures by April 2024. However, no consultation has been forthcoming.
Norbury, who replaced Michael Lewis last June, said he and other retailers had continued to press government for action but admitted there is no consensus on what a social tariff should look like.
His view is that “mechanisms and entities” should be created to identify and support vulnerable customers “in such a way that you bring them back into a place where they can afford to participate in the energy market”.
“There is a model in the Dutch market where a social tariff is co-funded between the public and private sector,” he explained. “Customers for whom affordability is a challenge are able to access a discounted tariff. The administration of the scheme sits with a third party, which is the Dutch equivalent of the role Citizens Advice plays here. That is there to bring a degree of impartiality but also to improve the reach of that support, perhaps to customers who would not otherwise trust the state or trust the energy company.”
He added: “That third party also has the capability to not only provide a discounted tariff but to support those customers and to bring them back into a place where they can afford to participate. Whilst there’s an awful lot we (energy retailers) can do, that is a capability that inherently is not core to our business.”
Norbury said he could envisage Citizens Advice playing a similar role in the UK.
However, he cautioned: “If that imperative to support those customers struggling with affordability, to bring them back into a place where they can participate, doesn’t exist in a (social tariff) model then the risk is that you create a degree of energy apartheid. Because those customers who are in receipt of support become ultimately segregated from the mainstream energy market.
“What we need to ensure is that the targeted support that exists or the energy efficiency schemes that are in place are directed towards those customers who need it most, to enable them to reintegrate with the market.”
See the full interview with Chris Norbury in this week’s digital edition, available from Thursday.