The government has asked Ofgem to report by the autumn on regulatory options for permanently ending the standing charge premium paid by prepayment meter (PPM) customers.
In his Budget statement today, chancellor of the exchequer Jeremy Hunt confirmed that standing charges for customers on PPMs will be brought in line with those on comparable direct debits from July until the Energy Price Guarantee (EPG) ends in April 2024. This premium for approximately 4 million customers on PPMs is £45 a year on average.
But looking beyond the end of the EPG, the Treasury’s Budget document says the government will ensure the PPM premium is ended on a permanent basis.
And it says Ofgem has been asked to report by the autumn on any additional regulatory options, including options for ending the PPM standing charge premium, so that they are ready for implementation in April 2024 when the EPG expires.
The Budget also says that the Department for Energy Security and Net Zero (DESNZ) will issue evidence on support for domestic customers who receive their energy via a non-domestic energy contract, like those on heat networks and living in static caravan parks.
The Budget also confirms that the government will keep the EPG at £2,500 per annum in April and not press ahead with previously announced move to increase the level to £3,000.
Other moves confirmed in the Budget include the launch of the government’s new Great British Nuclear (GBN) agency.
The agency will initially focus on small modular reactors. It will launch of the world’s first staged competition for SMRs with a view to select the leading technologies by the end of this year.
Nuclear energy will also be included in the Treasury’s green taxonomy, subject to consultation, in a bid to spur private investment by ESG (environmental, social governance) funds.
And the Budget confirmed that the government will also provide up to £20 billion in funding for early deployment of Carbon Capture, Usage and Storage (CCUS) over the next two decades.
The Treasury said a shortlist of projects for the first phase of CCUS deployment will be announced later this month. Further projects will be able to enter a selection process launching this year, and details for the selection of two additional CCUS clusters will be announced shortly.
The Budget papers also say that a consultation on the updated Energy NPS and the final Water NPS will be published shortly.
In addition, a call for evidence on options to reform the VAT relief for the installation of energy saving materials in the UK has been published.
Budget Reaction:
Commenting on the chancellor’s bills announcement, a spokesperson for the Britain Remade campaign, said: “Households will welcome the news that the energy price guarantee will be extended for three months – but this simply freezes bills at record high levels. If the government wants a vaccine to the energy crisis and not just an extension of furlough, they should lift the ban on the cheapest source of power – onshore wind – as soon as possible.”
Tom Greatrex, chief executive of the Nuclear Industry Association, said the chancellor’s announcement was a “huge step forward for UK energy security and net zero”.
“Nuclear’s inclusion in the UK green taxonomy is a vital move, following the example set by other leading nuclear nations, and will drive crucial investment into new projects, making it cheaper and easier to finance new reactors.
But Sue Ferns, senior deputy general secretary of the union Prospect, was more downbeat.
She said: “Whilst the long overdue launch of Great British Nuclear and green labelling for nuclear are welcome, the chancellor’s announcements today have not met the scale of President Biden’s Inflation Reduction Act and the EU’s Green Deal Industrial Plan. Without comparable investment, the UK risks being left behind in the race for good green jobs and investment.
“The government must urgently commit significant funding for full-scale nuclear plants and SMRs to give private investors the confidence to invest in the UK’s nuclear renaissance, and capitalise on the UK’s head start in offshore wind to cement our position as the world leader in this fast-growing sector.”