MSE News: An energy social tariff could save vulnerable households up to £1,500/year on their bills

Scot_39

For electric

Nuclear for one - France still way over 50% at full capacity (they were shifting from a high of c70% about 10+ years ago ? to more renewables and gas pre Ukraine) - UK 16% last year.

And the way French govt has capped EDF's pricing to avoid it tracking gas domestically ( Channel Islands get some of theirs from France Interconnect - to Jersey IIRC - share mix with local oil / renewables and difference vs mainland cost ?).

https://www.theguardian.com/business/2022/jan/14/france-edf-cap-household-energy-bills

Its not that nuclear was cheap - in fact French used to pay more for electric - about 10-15% more in recent past IIRC.

 

Our grid bid system another issue - basically elevating pricing for all supply types towards the maximum.

and this is really simplifying it

Old renewables  nuclear etc - cost 20p, gas 50p, both get 50p, old supplier pockets 30p

With Cfd - CfD cap 15p, gas 50p, both get 50p in "bid auction", renewables rebate 35p (so effectively 15p)

(See one description https://www.emrsettlement.co.uk/about-emr/contracts-for-difference/ )

So the Cons revised CfD pricing model designed to disrupt that "drag all to highest" pricing model  - but we simply don't have enough generation covered by it yet.  c20GW more - most of it highly variable ("unreliable") renewables - should be on tap by 2027.

In other countries - the old renewables just get 20p, gas gets 50p - and the consumer gets the mix price (35p if equal share).

In some other countries - like France imposed on EDF above - they have imposed a wholesale price cap - so no one gets the 50p - I assume for gas electric protected via a gas price cap. 

Not really looked into it - but Southern Europe - Portugal / Spain etc iirc all have proposed or had some sort of wholesale caps.

So despite the fact renewables generated third of needs last year - the old contracts - got gas prices.  Cons - last autumn - tried to renogatiate to CfD style capped / indexed - all the major suppliers - refused.  So have fallen back to windfall tax on profits rather than dictate (to try keep them investing in UK - not sure if the cap includes UK re-investment offseting explicitly - like the oil one though).

But remember renwables haven't always been the cheap option - green electric tariffs - used to carry a real price premium - when companies started marketing them.

Since 2015 FOS wind - Cfd pricing was c12p - by 2022 - c3.6p (both prices at 2012 rates - the actual price indexed) - so in past likely even more expensive ( 20p for grid bid / Cfd ex was not a guess at that price - just an illustration)

There is suposedly a review going on - but in the real world of actually governing (as opposed to the far easier opposition soundbite world) - the govt has to worry about the UKs actual dependence on these private (some actually foreign state owned) suppliers.

The whole thing is a bit of a mess.

KxMx

I don't need help with budgeting - I track every penny, have no debt, pay all my bills on time and usually have a little left at the end of each month- although that amount has shrunk with the general cost of living.
My lifestyle is very modest, I'm not a big consumer, no car, don't smoke or drink, holidays few and far between etc. My water usage is way lower than average. I use 24m3 a year. I have the same frugal attitude towards energy as well. 


I am thankful for the EBSS which lifted a lot of worry this winter, and CoL payments that will pay for bigger things I need- like new glasses as I just haven't had the money left out of my monthly budget to save up, and go towards things like dental work for a badly chipped front tooth- i'm having to go private despite qualifying for free NHS dental care, no NHS dentists in area. 

I don't need to put more layers on- I already layer up routinely due to faulty body temperature regulation. A thin layer under a thick layer works best. Literally always need socks unless it's 25c+ outside. 

I live in a ground floor, one bed flat that actually needs more heating than the 3 bed semi I previously lived in!
I have been pretty shocked by how much heating is needed here, bedroom/living room are quite big hence more difficult to heat. 

My usual heating usage is a few hours in morning and evening, with an hour in the afternoon if it's really cold. I certainly don't maintain a temperature of 18c as is recommended in my circumstances. I look at the forecast temperatures every week and adjust my timer up or down as needed. 

So like my water company who give me a 25% discount in recognition that my income is low (ESA+UC), or a broadband company that offers a social tariff (I shall be switching as soon as my current contact ends), a small discount on my energy bill would be hugely appreciated.

MattMattMattUK

KxMx said:

I don't need help with budgeting - I track every penny, have no debt, pay all my bills on time and usually have a little left at the end of each month- although that amount has shrunk with the general cost of living.
My lifestyle is very modest, I'm not a big consumer, no car, don't smoke or drink, holidays few and far between etc. 


I am thankful for the EBSS which lifted a lot of worry this winter, and CoL payments that will pay for bigger things I need- like new glasses as I just haven't had the money left out of my monthly budget to save up, and go towards things like dental work for a badly chipped front tooth- i'm having to go private despite qualifying for free NHS dental care, no NHS dentists in area. 

I don't need to put more layers on- I already layer up routinely due to faulty body temperature regulation. A thin layer under a thick layer works best. Literally always need socks unless it's 25c+ outside. 

I live in a ground floor, one bed flat that actually needs more heating than the 3 bed semi I previously lived in!
I have been pretty shocked by how much heating is needed here, bedroom/living room are quite big hence more difficult to heat. 

My usual heating usage is a few hours in morning and evening, with an hour in the afternoon if it's really cold. I certainly don't maintain a temperature of 18c as is recommended in my circumstances. I look at the forecast temperatures every week and adjust my timer up or down as needed. 

So like my water company who give me a 25% discount in recognition that my income is low (ESA+UC), or a broadband company that offers a social tariff (I shall be switching as soon as my current contact ends), a small discount on my energy bill would be hugely appreciated.

Or would it make more sense, rather than having "social tariffs" cross subsidised, market distorting, with cliff edge cut offs, that as a nation we paid adequate pensions and disability benefits so that people did not need social tariffs? 

KxMx

MattMattMattUK said:

KxMx said:

I don't need help with budgeting - I track every penny, have no debt, pay all my bills on time and usually have a little left at the end of each month- although that amount has shrunk with the general cost of living.
My lifestyle is very modest, I'm not a big consumer, no car, don't smoke or drink, holidays few and far between etc. 


I am thankful for the EBSS which lifted a lot of worry this winter, and CoL payments that will pay for bigger things I need- like new glasses as I just haven't had the money left out of my monthly budget to save up, and go towards things like dental work for a badly chipped front tooth- i'm having to go private despite qualifying for free NHS dental care, no NHS dentists in area. 

I don't need to put more layers on- I already layer up routinely due to faulty body temperature regulation. A thin layer under a thick layer works best. Literally always need socks unless it's 25c+ outside. 

I live in a ground floor, one bed flat that actually needs more heating than the 3 bed semi I previously lived in!
I have been pretty shocked by how much heating is needed here, bedroom/living room are quite big hence more difficult to heat. 

My usual heating usage is a few hours in morning and evening, with an hour in the afternoon if it's really cold. I certainly don't maintain a temperature of 18c as is recommended in my circumstances. I look at the forecast temperatures every week and adjust my timer up or down as needed. 

So like my water company who give me a 25% discount in recognition that my income is low (ESA+UC), or a broadband company that offers a social tariff (I shall be switching as soon as my current contact ends), a small discount on my energy bill would be hugely appreciated.

Or would it make more sense, rather than having "social tariffs" cross subsidised, market distorting, with cliff edge cut offs, that as a nation we paid adequate pensions and disability benefits so that people did not need social tariffs? 

Oh that absolutely would make much more sense. 
Last time I checked though there wasn't much chance, if any of that happening, whereas in reality social tariffs are the way things are going. 

wild666

Some of the beggars on the streets are not in poverty as they claim benefits and then go on the streets begging for money. 
I once saw someone change from tidy clothes into some rags and put the clothing they had taken off in the boot of their vehicle, I think it was a fairly new VW, later that day I saw that person sat on the street begging for money. He was making pounds from tourists who dropped money in a tin he was using.
If a social tariff comes in then it should be for something like the first 100 kWh of electric per month and the first 300 kWh of gas per month. This would cover the first £60 plus pounds of their bill but not standing charges so they person would still have to pay part of the bill even if they used less electric and gas per month than the figures I quoted.

gt94sss2

Alnat1 said:

Making landlords bring properties to EPC C before being allowed to rent them out would also help..

This is already government policy and comes into effect from 2025.

As to having a social tariff. While this sounds superficially attractive, it just means the bills of others would go up to compensate and creates a new poverty trap.

Also the proposal to cover those who are "fuel poor" households (defined as those spending more than 10% of their income after housing costs on energy) would be very difficult to calculate/work out as everyone's income/housing/energy costs are different.

TheElectricCow

wild666 said:

If a social tariff comes in then it should be for something like the first 100 kWh of electric per month and the first 300 kWh of gas per month. This would cover the first £60 plus pounds of their bill but not standing charges so they person would still have to pay part of the bill even if they used less electric and gas per month than the figures I quoted.

I think an idea like this sounds like the best way to go for a social tariff in my opinion, it's a fairly simple and effective method to administer and doesn't penalise anyone for having different usage to an equivalent household on the same income. Additionally it also means wasteful users getting the support aren't being subsidised by everyone else, and still have a good incentive to cut down use

Going a step further, perhaps the allowances could vary on a summer/winter basis to allow for heating needs without giving people free bills in the summer or difficult winter costs. Or maybe house type/size, number of occupants, or building efficiency  could have some bearing on the figures (I would be wary of adding too many factors that aren't needed though, and those are naturally not perfect solutions).

Obviously would take some thought and research going into figuring out exactly what numbers would be fair, but the idea of determining a basic liveable energy allowance where each household only pays for consumption over that figure seems like it could work far better than a complex system involving comparisons between income, housing costs, and energy use. 

What ever the system is, I think we can all agree there will be outliers on both ends of scale in terms of some not getting enough support or others getting more than they may necessarily need, based on individual circumstances. In that case I feel something more like this prevents a lot of potential "abuse" of the system, while people with genuinely higher energy needs (e.g. medical equipment) should be able to receive more support on an independent level rather than throwing more money at the masses to ensure that minority are adequately covered. But that's the sort of thing that is really going beyond the scope of a utility provider and is more a topic for wider welfare policy.

Spoonie_Turtle

TheElectricCow said:

wild666 said:

If a social tariff comes in then it should be for something like the first 100 kWh of electric per month and the first 300 kWh of gas per month. This would cover the first £60 plus pounds of their bill but not standing charges so they person would still have to pay part of the bill even if they used less electric and gas per month than the figures I quoted.

What ever the system is, I think we can all agree there will be outliers on both ends of scale in terms of some not getting enough support or others getting more than they may necessarily need, based on individual circumstances. In that case I feel something more like this prevents a lot of potential "abuse" of the system, while people with genuinely higher energy needs (e.g. medical equipment) should be able to receive more support on an independent level rather than throwing more money at the masses to ensure that minority are adequately covered. But that's the sort of thing that is really going beyond the scope of a utility provider and is more a topic for wider welfare policy.

The problem with this is other than the physical use of equipment, what other thresholds would determine who needs to use extra?  There will always be people with illnesses needing more heat (or cooling in the summer) who either don't have a diagnosis and/or don't meet the threshold to claim disability benefits.  Many of those people will likely not be able to get a letter from their Dr confirming they need a particular temperature range to be able to function, because their Dr doesn't believe them (I am not exaggerating there).

And that's without mentioning families who have extra loads of washing every day due to medical conditions, or any other scenarios where extra energy is needed that people don't tend to think of.

victor2

It does appear from the discussion on here that a majority of people are not in favour of an "energy social tariff". But there is no obvious alternative to helping those who are struggling with their energy costs.

Of course it could be that by its nature, a money saving forum will not be in favour of effectively giving financial help to those in need at the expense of those who have already made savings.

MattMattMattUK

victor2 said:

It does appear from the discussion on here that a majority of people are not in favour of an "energy social tariff". But there is no obvious alternative to helping those who are struggling with their energy costs.

Of course it could be that by its nature, a money saving forum will not be in favour of effectively giving financial help to those in need at the expense of those who have already made savings.

Those of us who are not in favour of a social tariff are because in general social tariffs represent a failure of the primary system of welfare and a failure to address that. If disability benefits and pensions were adequate then the a social tariff system would not be needed, so the primary solution, the obvious solution and the rational solution is to increase pensions and disability benefits.

Social tariffs are firstly divisive, secondly they are market distorting and thirdly and perhaps the worst part, they create a cliff edge. A group of people get social tariffs and that saves them £200 pcm, but everyone else, those who earn 1p more than the threshold are not eligible, so they lose their social energy, water, broadband, mobile phone etc. tariff. That means that people who earn a little bit more, or who work part time around their disability etc. can end up substantially worse off than those who do not by virtue of the cliff edge created by social tariff thresholds. Social tariffs are an inherently flawed solution to a solvable problem, I and others are not against them because we do not want to see people helped, but because they are just about the worst way of helping people.