‘Means testing’ energy bills could soar to pay for | U.Ok.Finance News
Wealthier households could also be requested to shoulder larger energy bills to safeguard low-income customers, as Ofgem proclaims a vital review of how it distributes the burden of escalating energy prices.The regulator unveiled the review into pricing fashions on Wednesday, with the objective of altering the present system “to ensure fixed costs don’t disproportionately affect vulnerable and low-income consumers”.It acknowledged that investment is required as Britain broadens its renewable energy sources, which might allow the nation to produce more of its own energy and insulate itself from world commodity shocks.The regulator stated this investment would finally cut unit prices by decreasing dependence on imported gasoline, however fixed prices may increase to fund improved infrastructure, the Times reported.Jonathan Brearley, Ofgem’s chief govt, commented: “This shift in the makeup of system costs means we need to review how we pay for energy and carefully consider how these costs are distributed.”We know clients have actual issues about equity and transparency of their bills, particularly round fixed prices. That’s why we’re asking huge questions on how and the place these prices are shared – and whether or not there are higher, fairer methods to do it.”The launch of this review is the next step in developing fairer pricing for a changing energy system, ensuring more choice for consumers while protecting those most in need.”Speaking at an industry occasion earlier this 12 months, Brearley stated: “We want to at least ask the question whether or not we can allocate costs more progressively. What [the review] will mean is looking at the bill and saying, ‘Are there ways in which we can attach the price customers pay for fixed costs to income?”Ed Miliband, the energy secretary, has set a objective to remove fossil fuels from the UK’s energy community by 2030.Ofgem famous that clients have been additionally altering their energy utilization, with electric autos and heat pumps growing some households’ energy consumption. Chris Norbury, head of E.ON UK, commented: “We welcome this review and the potential to reform standing charges.Ofgem must also avoid the temptation to create a short-term solution that simply moves these costs between customer groups, overlooking the people who need the most help, and disproportionately helping others. The ideal outcome would be an end to standing charges. To achieve this, it’s important to really understand what makes up these costs and then decide how best to allocate them.”
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