Targeted support urgently needed following price cap update

Industry bosses are calling for targeted support measures to be urgently introduced for vulnerable customers, following Ofgem’s update to the price cap.

Although the cap is decreasing by £1,200 from July, there is a concern that without action now, the government “risks sleepwalking into delivering blunt and costly universal support packages”.

Simon Oscroft, co-founder of So Energy, said even with the reduction in the price cap level, customers will still be spending almost double what they were paying before prices started to spike.

He added that the issue is compounded by the fact that prices are only decreasing by £426 a year in real terms which equates to around £36 a month, less than the £66 a month offered under the Energy Bill Support Scheme which ended in March.

He said: “This means that – without further government intervention – customers will be worse off this winter than they were last winter. We therefore need targeted support for the most vulnerable this winter but delivered in a way that minimises costs for the taxpayer.

“Otherwise, the government risks sleepwalking into delivering blunt and costly universal support packages that they had to resort to last winter because they didn’t have time to develop a more focused package. We are ready to work with government on a solution, but they need to set the wheels in motion urgently.”

Utility Week is calling on government to urgently engage on targeted support and commit fresh funding to help customers navigate a cost of living crisis which is far from over, as part of the Action on Bills campaign.

Sharing similar concerns is Energy UK’s deputy chief executive, Dhara Vyas, who said: “The fall in the price cap from July will be welcome news for customers who have had to face record energy bills over the last year amidst a steep rise in the cost of living and for whom the government’s bill support has been crucial in preventing even bigger difficulties.

“However, bills remain much higher than they were 18 months ago and many customers will continue to struggle, especially following the removal of some of that support.

“If – as the current projections indicate – annual bills of £2,000+ become the new normal, it underlines the importance and urgency of the energy industry, Ofgem, government and consumer groups working together to put in place targeted support for those most in need next winter.

“We also need to press ahead with expanding our own sources of domestic, clean power and making more of our homes energy efficient as these will help bring down energy costs permanently for all customers.”

Elsewhere Tom Lowe, founding director of trade association Thermal Storage UK and former head of industry operations at Bulb, told Utility Week that a social tariff by next April was feasible but warned “the work has to start and progress very quickly”.

He added: “The amount of data required in terms of transferring from the Department for Work and Pensions to the energy suppliers, possibly with involvement from Treasury and oversight I would guess from Ofgem, is quite intense.

“From experience of working on things like the Warm Home Discount, the process for that data transfer is slow in terms of getting it set up and the data sharing.

“But that’s the absolutely key thing you need if you are going to get it implemented ahead of April and certainly this winter, I suspect targeting would still be difficult unless there is significant work happening behind the scenes to get it in place now.”

Additionally Lowe stressed that any social tariff has to be designed with consideration of the future market, rather than just how the market looks now.

“You need to make sure that social tariff can be amended or changed to actually incentivise the right things on the grid, as well as providing support for that individual household’s needs, so that we move away from gas to electricity,” he said.