Fuel poverty campaigners have backed proposals to award households compensation payments designed to offset the cost of hikes in gas bills.
The Times reported last week that government officials are exploring a scheme, introduced in the Canadian state of Ontario, under which households receive an annual payment based on the number of adults and children living there.
The payments would compensate gas users for any increase in their bills triggered by the government’s drive to wean the UK off fossil fuel heating.
Those who switch to low-carbon heating would still receive the payment, meaning they could keep the difference.
The scheme is one of a number of ideas being explored by the government as it wrestles with the challenges of decarbonising domestic heating.
Matt Copeland, head of policy and public affairs at National Energy Action, said today (13 June) that the fuel poverty charity “would support” the proposal while expressing caveats.
Giving evidence to the House of Lords industry and regulation committee’s ongoing inquiry into Ofgem and net zero, he said: “The devil is in the detail and it would need to be acceptable for households.”
Adding that compensation payments should not be “retrospective”, Copeland warned any move to shift policy levy costs and taxes from electricity to gas must cushion low-income consumers who may struggle to upgrade their heating.
“Potentially moving levies from electricity to gas would be really bad news for the lowest income households and probably lead to those households rationing their energy more and being colder.”
The financial pressure on lower-income households will intensify later this year due to an anticipated raising of the energy price cap and the withdrawal of pandemic-related financial support he said.
“The end of various government support schemes will mean that more than the 4 million fuel poverty households will struggle to pay their energy bills. These are the real near-term concerns that we have to deal with.”
Commenting on calls by environmental campaigners to widen Ofgem’s remit with a stronger focus on meeting the UK’s statutory 2050 net zero emissions target, Copeland said: “If the remit is expanded to have a more net zero focus, it cannot be at the cost of their current obligations to protect vulnerable customers in the energy market.”
Andrew Large, chair at Energy Intensive Users Group, told the committee that any move by the government to draw up a Strategy and Policy Statement for Ofgem, should beef up its duties with regard to industries that must consume large quantities of electricity.