The government must treat the development of a social tariff as a “priority” and urgently convene a task force to oversee its design, industry figures have told Utility Week.
The calls come on the back of support for the development of a social tariff voiced by Ofgem chief executive Jonathan Brearley earlier this week.
Philippe Commaret, managing director for customers at EDF, told Utility Week his organisation is “in complete agreement with Ofgem about the urgent need to look into how a social tariff could be introduced as soon as is practicable”.
However, he also stressed the need to maintain the current level of the Energy Price Guarantee while a more targeted approach to bill support is fleshed out.
He added: “The energy price cap has not protected vulnerable customers and even with the predicted price falls, energy bills would still be more than double where they were a few years ago. For some customers this will remain unaffordable. We hope to see this become a priority for government.
“With costs to government of the Energy Price Guarantee set to be much lower, we would also like government to look at holding the Energy Price Guarantee at £2,500 until more targeted support, for example, a social tariff, can be put in. We know further increases in energy costs, even short-term, will be unbearable for some of our customers.”
Speaking at the Institute for Government earlier this week, Brearley said a social tariff would need to be subsidised when prices are high and preferably paid for through funds raised in a progressive way.
He added: “There are a wide range of regulatory and policy options that could deliver this, and I recognise that there are trade-offs involved that are beyond a regulator’s power or vires to assess.
“For example, defining the group who have access to a social tariff is hard, with inevitable cliff edges between different groups of people and any subsidy may well involve public spending, which is not a matter for the regulator.
“This is why, ultimately, as with the strategy to tackle the wider affordability of energy, this is a matter for government, and we are working closely with them to explore the full range of options.”
In response to his comments, Matthew Cole, head of the Fuel Bank Foundation, told Utility Week: “Given the scale of the cost-of-living crisis, the government needs to consider either increasing the number of people who are eligible for the Warm Home Discount or introducing a social tariff targeted at low-income households who are struggling to pay their energy bills.
“Despite the government’s previous interventions, this group still urgently requires additional financial support. A task force should be set up to include the government, suppliers, Ofgem and charities to co-design a solution and think about how it should be paid for.”
Also commenting on Brearley’s speech was Peter Smith, director of policy and advocacy at charity National Energy Action, who said: “At the moment, very vulnerable groups need deeper support but will miss out on any targeted support post April when bills rise even further.
“There is a willingness amongst consumer groups, suppliers, Ofgem and government to accelerate work to develop a deeper and more adequate support mechanism, so it is ready to be implemented in 2024.
“We can’t waste any more time making do with sticking plasters when major surgery to the energy market is required.”
Meanwhile Gillian Cooper, head of energy policy for Citizens Advice, said: “It’s good to see Ofgem look at a range of options to help people cope with rising bills.
“It’s absolutely clear there’s a need for further targeted support. Our interim report with the Social Market Foundation and Public First identified the best solutions, which includes social tariffs.”