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The government should introduce a “social tariff” guaranteeing cheaper energy to vulnerable users who cannot afford their basic needs, the chief executive of regulator Ofgem has said.
Speaking as Ofgem launched an investigation into energy suppliers imposing prepayment meters on struggling households, Jonathan Brearley said the current high-cost energy market left some households simply unable to pay.
Ofgem’s investigation comes after Business Secretary Grant Shapps wrote to energy suppliers raising concerns over an increase in customers forced to move to prepay meters having fallen behind on regular payments.
Companies could face legal action if Ofgem determines they have moved customers to prepayment without exploring other options to support them.
Mr Brearley said action was needed to address the fundamental problem caused by the tripling of gas prices in the last year.
“There are families that can’t afford to pay their energy bills and we will be active with companies to examine how they deal with those who fall into arrears,” Mr Brearley said.
“But the root cause is that some customers, despite enormous widespread support from the government, don’t have the ability to pay for their basic energy needs.
“We think there’s a case to examine with urgency a social tariff that limits the impact of extremely high prices, which reduces the volatility for a defined set of vulnerable groups.”
Mr Brearley said the tariff would have to be subsidised during periods of high energy prices, and otherwise paid for with “funds raised in a progressive way”, adding that “energy bills are not a progressive tax base”.
His intervention comes after charities called on Chancellor Jeremy Hunt to consider a social tariff to address the…
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