Britain’s energy regulator has proposed making changes to energy bills so that households would be charged different rates depending on their wealth or income.
Ofgem is floating the idea of a “progressive approach” to the standing charge portion of the bill, as part of efforts to make sure the costs of the shift to cleaner power are fairly distributed.
“We think now is the right time to review how the transition to a greener and more secure energy system should be paid for by consumers,” it said, as part of a “call for input” on a wide-ranging review of energy system costs launched on Wednesday.
Ofgem’s chief executive Jonathan Brearley raised the prospect of such reforms in April.
“Over the next few years, we do expect variable costs to come down, but the proportion of costs that are fixed will rise, which, if unchecked, could exacerbate inequalities that we see today,” Brearley said at the time.
“We want to at least ask the question — whether or not we can allocate costs more progressively.”
The ideas are at an early stage, with no decisions made and details not yet fleshed out.
The standing charge is currently a daily flat rate on energy bills, used to pay for costs such as investment in the gas and electricity networks.
Critics have long argued it is unfair, as it does not reflect households’ actual electricity use.
The huge investments required in new pylons and cables to move electricity from wind and solar farms is now adding to the impetus for reform.
Ofgem’s review on Wednesday suggests a range of potential reforms, including charges varying depending on ability to pay.
“For example, if a progressive approach was desired, then energy system fixed costs could be allocated and recovered (pre-distribution) based on a proxy for wealth . . . council tax is funded in this way,” it said in the document.
It suggests an “income-based standing charge” and a “wealth-based standing charge”.
This could be combined with other ideas, such as standing charges that vary depending on how much electricity the consumer uses at peak times.
Household energy bills remain a potent political issue for the government despite wholesale energy costs falling since the energy crisis of 2021-22 triggered by global gas supply shortages.
Typical household energy bills remain hundreds of pounds higher than pre-crisis levels, partly due to higher network costs, while household energy debt levels are at record highs.
The Labour government pledged during the election campaign to bring bills down by £300 by 2030, although critics have questioned how it will manage this.
Britain’s price cap on energy bills, which governs typical domestic bills, is currently almost 10 per cent higher than in July last year, when Labour took power.
As well as the investment required in electricity networks, Ofgem is also grappling with changes to the way people use electricity.
More households use solar panels, for example, and more are being encouraged to use time-of-use tariffs exposing them to fluctuations in wholesale prices throughout the day.
BoogerSantos on
I don’t mind paying more taxes as a high earner. Progressive taxation is good for everyone, and there are a lot worse problems to have than a high tax bill.
But you know would would absolutely boil my piss would be being forced to pay more money to a private company because I earn more than most.
vetstapler on
Couldn’t the energy companies use some of their profit for this?
Commercial-carrot-7 on
At this point, wouldn’t it just be easier if we all set up direct debits into to nearest unemployed person
Reasonable_Blood6959 on
How about reducing the wealth of the energy companies making the profits instead. I swear all of our so called regulators in this country are totally fucking useless. Standing charges are already a fucking scam.
WingiestOfMirrors on
I get the idea, as long as its only the standing charge being means tested and theres is still a charge per unit of energy used or we’re going backwards on the front of using less energy.
That being said im not happy sending these companies my employment/asset ownership data. its the same issues as the OSA, whos going to hold the data? how long will it be held for? whos going to verify it? how safe is the data storage? This seem like a nice idea but its a dead duck.
811545b2-4ff7-4041 on
I’m all for stuff like speeding & parking fines to be aligned with wealth – so that they aren’t just seen as a cheap thing, and become an actual deterrent.. but our bills? From a private company? And who’s going to supply the data to let them do this??
And who’s going to decide the method for deciding this multiplier? And where’s the start/end points.
Madness. Stop standing charges. Make all charges linked to usage. Done.
BatVisual5631 on
Oh piss off. The utility companies are wealthier than me. They can use some of their enormous profits to actually fix the fucking infrastructure and stop paying it all out in dividends.
Primary-Effect-3691 on
– rack up credit card debt
– have negative wealth
– get paid to use electricity
– profit
thereforewhat on
This is daft. This is a utility bill.
People are likely already paying bigger energy bills if they live in a larger property and paying smaller energy bills if they don’t.
If this standing charge is effectively a tax to pay for national energy infrastructure it should be funded through taxation.
Fun_Elk284 on
We’ve already got the most expensive energy in the world, how are they thinking of ways to make it worse. Dreadful.
Long_Volume1971 on
How about charging people progressively more for more energy used?
That way we discourage people from over using and wasting electricity, while making it cheaper for those who do not use much?
Obviously the personal/business use gets murky and it might discourage EV adoption, so we would need to account for that by monetary incentives…
wkavinsky on
What absolute fucking bollocks is this?
Take the fucking gas hold up out of the equation so that the power companies can actually start paying what a unit of power through renewables is actually worth, rather than the equivalent price if it was generated through gas.
Then ditch the fucking standing charge so people aren’t paying £40 a month just for the fact they’re connected to the electric grid.
Ok_Eggplant3949 on
See this is an idea that im all for on paper but i bet they’ll use some stupid definition of wealth so the actual rich can easily avoid it while everyone else gets fucked over
HerefordLives on
>Over the next few years, we do expect variable costs to come down, but the proportion of costs that are fixed will rise, which, if unchecked, could exacerbate inequalities that we see today,” Brearley said at the time
But renewables are cheaper! Energy efficiency!
It’s almost like they know renewables are going to massively increase everyone’s bills so they’re looking at ways of masking it
Human-Walk-7227 on
Can’t wait for them to forget the wealth part and increase the bills based on income because its easier to work out.
Employ-Personal on
You could ‘means test’ everything if you wanted, just imagine. If all payment was by card readers, since the government have given themselves the right to access your bank account, they could set the VAT rate at, say, 5% for the poor, and 98% for the ‘rich’. That way they could empty the bank accounts of the wealthy quite quickly. Only thing is, it won’t stop those bastards leaving and living elsewhere where they are not hated so much. We’d be better off voting for Corbyn and accepting that we’ll all be poor once he nationalises everything. BTW, there are a number of undisputed outcomes to the imposition of true socialism. Once it’s imposed, there can be no alternative or turning back, and the only democracy left to the ‘people’ is voting for the membership of the central committee. Secondly, the leadership always turns into the authoritarian dictatorship, and once the Central Committee gets its feet under the table, nothing removes them and they, their families and their cohort of hangers-on remains in power and becomes a special class with significant advantages over the proles. Always.
Xenozip3371Alpha on
Well I’ve got fuck all in the bank, does that mean my energy would be free?
I fucking doubt it.
0Bento on
This can absolutely fuck the fuck off.
Make sacrifices all your life to save for old age? Have to pay it all in care home fees.
Do the “right thing” and save money and manage to get a decent paying job? Pay more for your energy.
Want to leave some things to others after you die? We’ll tax that too thank you.
Gov needs to stop punishing people for doing the right thing.
GarySmith2021 on
If true, this is incredibly stupid, why should what someone pay be based on their earnings rather than what they consume. Even ignoring the fact it isn’t them paying the government, but a private company, it’s not like they’re costing the company more.
marshy266 on
How would they be getting this information. Would HMRC be sharing a bunch of tax information with energy suppliers?
Everybody has to give their income info to probate companies now?
simondrawer on
Isn’t that how it works? Bigger house means more energy used means bigger bill.
Shawn_The_Sheep777 on
Private sector companies should not have access to people’s financial information regarding income and wealth. This problem has been caused by govts insisting that energy providers roll out green initiatives and add it to the fixed cost. Also the cost of failed energy suppliers is added into the fixed cost. Ordinary consumers shouldn’t be paying for these costs. We have an unfair system and they appear to be wanting to make it worse.
Sir_Henry_Deadman on
Or nationalise power and unlock it from stupid gas prices
curious_throwaway_55 on
Hi Siri, why does the UK have the longest tax code in the world?
peareauxThoughts on
Why can’t we just do what countries with cheaper energy costs are doing?
mixxituk on
Yes that’s nice but your no1 priority is unlocking from gas
27 commenti
(Article)
—-
Britain’s energy regulator has proposed making changes to energy bills so that households would be charged different rates depending on their wealth or income.
Ofgem is floating the idea of a “progressive approach” to the standing charge portion of the bill, as part of efforts to make sure the costs of the shift to cleaner power are fairly distributed.
“We think now is the right time to review how the transition to a greener and more secure energy system should be paid for by consumers,” it said, as part of a “call for input” on a wide-ranging review of energy system costs launched on Wednesday.
Ofgem’s chief executive Jonathan Brearley raised the prospect of such reforms in April.
“Over the next few years, we do expect variable costs to come down, but the proportion of costs that are fixed will rise, which, if unchecked, could exacerbate inequalities that we see today,” Brearley said at the time.
“We want to at least ask the question — whether or not we can allocate costs more progressively.”
The ideas are at an early stage, with no decisions made and details not yet fleshed out.
The standing charge is currently a daily flat rate on energy bills, used to pay for costs such as investment in the gas and electricity networks.
Critics have long argued it is unfair, as it does not reflect households’ actual electricity use.
The huge investments required in new pylons and cables to move electricity from wind and solar farms is now adding to the impetus for reform.
Ofgem’s review on Wednesday suggests a range of potential reforms, including charges varying depending on ability to pay.
“For example, if a progressive approach was desired, then energy system fixed costs could be allocated and recovered (pre-distribution) based on a proxy for wealth . . . council tax is funded in this way,” it said in the document.
It suggests an “income-based standing charge” and a “wealth-based standing charge”.
This could be combined with other ideas, such as standing charges that vary depending on how much electricity the consumer uses at peak times.
Household energy bills remain a potent political issue for the government despite wholesale energy costs falling since the energy crisis of 2021-22 triggered by global gas supply shortages.
Typical household energy bills remain hundreds of pounds higher than pre-crisis levels, partly due to higher network costs, while household energy debt levels are at record highs.
The Labour government pledged during the election campaign to bring bills down by £300 by 2030, although critics have questioned how it will manage this.
Britain’s price cap on energy bills, which governs typical domestic bills, is currently almost 10 per cent higher than in July last year, when Labour took power.
As well as the investment required in electricity networks, Ofgem is also grappling with changes to the way people use electricity.
More households use solar panels, for example, and more are being encouraged to use time-of-use tariffs exposing them to fluctuations in wholesale prices throughout the day.
I don’t mind paying more taxes as a high earner. Progressive taxation is good for everyone, and there are a lot worse problems to have than a high tax bill.
But you know would would absolutely boil my piss would be being forced to pay more money to a private company because I earn more than most.
Couldn’t the energy companies use some of their profit for this?
At this point, wouldn’t it just be easier if we all set up direct debits into to nearest unemployed person
How about reducing the wealth of the energy companies making the profits instead. I swear all of our so called regulators in this country are totally fucking useless. Standing charges are already a fucking scam.
I get the idea, as long as its only the standing charge being means tested and theres is still a charge per unit of energy used or we’re going backwards on the front of using less energy.
That being said im not happy sending these companies my employment/asset ownership data. its the same issues as the OSA, whos going to hold the data? how long will it be held for? whos going to verify it? how safe is the data storage? This seem like a nice idea but its a dead duck.
I’m all for stuff like speeding & parking fines to be aligned with wealth – so that they aren’t just seen as a cheap thing, and become an actual deterrent.. but our bills? From a private company? And who’s going to supply the data to let them do this??
And who’s going to decide the method for deciding this multiplier? And where’s the start/end points.
Madness. Stop standing charges. Make all charges linked to usage. Done.
Oh piss off. The utility companies are wealthier than me. They can use some of their enormous profits to actually fix the fucking infrastructure and stop paying it all out in dividends.
– rack up credit card debt
– have negative wealth
– get paid to use electricity
– profit
This is daft. This is a utility bill.
People are likely already paying bigger energy bills if they live in a larger property and paying smaller energy bills if they don’t.
If this standing charge is effectively a tax to pay for national energy infrastructure it should be funded through taxation.
We’ve already got the most expensive energy in the world, how are they thinking of ways to make it worse. Dreadful.
How about charging people progressively more for more energy used?
I get charged the same standing charge for maintaining the grid as a billionaire who uses two or three times as much electricity as me (https://www.creds.ac.uk/richest-people-in-uk-use-more-energy-flying-than-poorest-do-overall/#:~:text=The%20analysis%20of%20data%20from,was%20particularly%20true%20for%20transport.)
That way we discourage people from over using and wasting electricity, while making it cheaper for those who do not use much?
Obviously the personal/business use gets murky and it might discourage EV adoption, so we would need to account for that by monetary incentives…
What absolute fucking bollocks is this?
Take the fucking gas hold up out of the equation so that the power companies can actually start paying what a unit of power through renewables is actually worth, rather than the equivalent price if it was generated through gas.
Then ditch the fucking standing charge so people aren’t paying £40 a month just for the fact they’re connected to the electric grid.
See this is an idea that im all for on paper but i bet they’ll use some stupid definition of wealth so the actual rich can easily avoid it while everyone else gets fucked over
>Over the next few years, we do expect variable costs to come down, but the proportion of costs that are fixed will rise, which, if unchecked, could exacerbate inequalities that we see today,” Brearley said at the time
But renewables are cheaper! Energy efficiency!
It’s almost like they know renewables are going to massively increase everyone’s bills so they’re looking at ways of masking it
Can’t wait for them to forget the wealth part and increase the bills based on income because its easier to work out.
You could ‘means test’ everything if you wanted, just imagine. If all payment was by card readers, since the government have given themselves the right to access your bank account, they could set the VAT rate at, say, 5% for the poor, and 98% for the ‘rich’. That way they could empty the bank accounts of the wealthy quite quickly. Only thing is, it won’t stop those bastards leaving and living elsewhere where they are not hated so much. We’d be better off voting for Corbyn and accepting that we’ll all be poor once he nationalises everything. BTW, there are a number of undisputed outcomes to the imposition of true socialism. Once it’s imposed, there can be no alternative or turning back, and the only democracy left to the ‘people’ is voting for the membership of the central committee. Secondly, the leadership always turns into the authoritarian dictatorship, and once the Central Committee gets its feet under the table, nothing removes them and they, their families and their cohort of hangers-on remains in power and becomes a special class with significant advantages over the proles. Always.
Well I’ve got fuck all in the bank, does that mean my energy would be free?
I fucking doubt it.
This can absolutely fuck the fuck off.
Make sacrifices all your life to save for old age? Have to pay it all in care home fees.
Do the “right thing” and save money and manage to get a decent paying job? Pay more for your energy.
Want to leave some things to others after you die? We’ll tax that too thank you.
Gov needs to stop punishing people for doing the right thing.
If true, this is incredibly stupid, why should what someone pay be based on their earnings rather than what they consume. Even ignoring the fact it isn’t them paying the government, but a private company, it’s not like they’re costing the company more.
How would they be getting this information. Would HMRC be sharing a bunch of tax information with energy suppliers?
Everybody has to give their income info to probate companies now?
Isn’t that how it works? Bigger house means more energy used means bigger bill.
Private sector companies should not have access to people’s financial information regarding income and wealth. This problem has been caused by govts insisting that energy providers roll out green initiatives and add it to the fixed cost. Also the cost of failed energy suppliers is added into the fixed cost. Ordinary consumers shouldn’t be paying for these costs. We have an unfair system and they appear to be wanting to make it worse.
Or nationalise power and unlock it from stupid gas prices
Hi Siri, why does the UK have the longest tax code in the world?
Why can’t we just do what countries with cheaper energy costs are doing?
Yes that’s nice but your no1 priority is unlocking from gas