Affordability of energy has been on my agenda a lot this week. It’s a critical time of the year as plans need to be agreed in the next few weeks if they are to be implemented before the cold weather starts. At the same time groups are looking at a possible Social Tariff and how this might operate.
As a reminder last year, the government gave everyone £400 towards their bills. Everyone got this as it was just too difficult to be discretionary about who got the money. As a result of this and other schemes, an amount equivalent to 2% of GDP was paid out by the government.
This scheme has been criticised on many grounds. Firstly, it went to people that didn’t need the money. Then there were lots of edge cases where people who needed money didn’t get it – like where their landlord pays the bill. Fundamentally the scheme did not address any of the underlying issues – it did not improve house insulation or incentivise lower consumption. There were also issues with the communications – the message was that bills were capped at £2,500, but the scheme was a cap on unit cost and many people were charged much more than this if their usage was above average, in fact some who paid less than this were worried that their bills would increase.
One of our teams looked at the support packages offered across countries. There were clear similarities, most schemes either gave people money or capped the unit cost of energy. An interesting case was Norway where the support was provided only for the first 5,000 kWh. In Texas the support was up to $2,400.
Let’s hope that this winter we can provide more targeted support. I’d like to see a scheme that targets those on low incomes, encourages people to be moderate with their consumption, and moves towards a more sustainable scheme based on home improvements.
