Energy retailers urged to bring in their own social tariffs

Energy suppliers have been urged by charity bosses to begin working on introducing their own social tariffs rather than waiting for the government to act.

A consultation on long-term bill support such as a social energy tariff was initially pledged by the government last year, but this has yet to materialise.

Speaking at Utility Week’s Consumer Vulnerability and Debt conference on Tuesday (7 November) Christine Tate, director at charity Scope, discussed the impact the cost of living crisis is having on disabled energy customers and called for an enduring support mechanism to be introduced.

“There has to be more support options this winter and there has to be a long term solution. Scope, along with Age UK, National Energy Action (NEA), other charities and indeed many suppliers, have been urging the government to consult as promised on brining in a social energy tariff,” said Tate.

She explained that such a tariff “would make an enormous difference” to disabled consumers and that it should be introduced as part of a package of support along with energy efficiency and help with managing debt. A social tariff, she said, must be an automatic payment and go to those needing a high amount of energy and who are on low incomes and include people receiving disability benefits.

Tate added: “There is general public support for this too. Three quarters of the general public support our calls for discounted energy bills for disabled people.

“There is so much support for a social tariff that in the absence of government progressing at speed, can’t Energy UK and suppliers work with companies like Scope towards running a pilot? Perhaps looking at Warm Home Discount industry initiatives to help fund a pilot to see how a social tariff might work and report back to government to say how this might be implemented.”

All water companies currently offer their customers a social tariff and there is also the WaterSure scheme to help certain vulnerable customers. Tate said there is an opportunity for an alignment of eligibility with both energy and water support and a “joined up approach” for an automatic discount for both for those who need it.

In response to Tate’s calls for suppliers to do more, an Energy UK spokesperson highlighted how some suppliers have been introducing “quasi-social tariffs” but added that “these represent attempts to help their most vulnerable customers as best they can…and it’s certainly no substitute for government intervention or a comprehensive approach”.

They added that while suppliers do as much as they can for their vulnerable customers, there is a limit to how much help they can provide and while they are keen to work with government on this, the government has to take the lead.

There is, they said, “limited value” in running a trial when so much about how a social tariff would work depends on government and to some extent, Ofgem. They also pointed to the fact that when comparing energy with other sectors such as water, there are “usually very significant differences that make such comparisons invalid”.

A spokesperson for Good Energy said that “the big hurdle a voluntary social tariff would need to get across is that it would need every supplier involved in order to be fair”.

They added: “And like the water company’s equivalent, even if cross subsidised through bills, it would be reliant on government data. Good Energy would look to be involved if there were a trial of some sort but we don’t underestimate the challenge.”

Simon Oscroft, So Energy company co-founder, added: “Suppliers, consumer groups and now two parliamentary committees have consistently been calling for progress to be made on a social tariff for energy customers. There are complex societal and technical questions that need to be resolved so we can appropriately target support to vulnerable customers. These questions require government involvement.

“Additionally, the outright amount of support needed for customers requires funding well in excess of anything that could be made by suppliers. Again, only government can properly decide as to whether a social tariff would best be funded through energy bills, general taxation or a combination of the two.

“We need to see a proper consultative process to bring together all groups and decide the best way forward so we have a proper framework to target support to those who need it most. We stand ready to support policy-makers.”

Meanwhile, a 100Green spokesperson said the company already offers its own social tariff support, agreeing with Tate that social tariffs are “a solution that should be driven by energy companies themselves rather than government”.

A spokesperson for Eon Energy pointed to comments made earlier this year when its chief executive Chris Norbury was giving evidence during a hearing of the energy security and net zero select committee in which he outlined what his company was doing to support its vulnerable customers.

Norbury said: “What we will be doing this winter is for very low-income families we will be offering a rebate on the energy bill, for low-income families who have medical care at home we will be offering a rebate on the energy bill, the rebate for those is 25%.

“Where customers already have energy debt with us and who fit into those categories we will be bringing their account back to zero and we will be offering a 50% rebate on the energy bill, that is for the six months of this winter. That is what we can do for our customers.”

He added: “We will be implementing something that goes towards a social tariff, yes, but we are limited in what we can do on our own. It would be far better and far more beneficial for people across society if that intervention was made by government.”

Utility Week also contacted Centrica, EDF, Scottish Power, Ovo, Octopus, Utilita and Ecotricity for their thoughts on the matter but received no response at the time of writing.