Energy prices to increase dramatically from April - but support will be targeted. How would you target it?

[cakeorwine]

The energy guarantee will go from April instead of for 2 years.

The support will be targeted on the most needy.

Personally I think we need to look at some kind of tiered rates. It would need to be based on your home usage, domestic needs but some system where you get a certain amount of KWH for a certain price and then pay more for KWH if you go over that usage.

I would also look at insulating houses and try to reduce usage so less subsidy is needed for energy as well.

@cakeorwine and that “average” bill will be much higher for households with more than the “average” 2.4 people in - it really is terrifying to imagine how most families will cope. Or if they do cope, what they will have to cut back on to do so, and how that will affect the wider economy.

The bonuses and benefits for those who work in energy (I’m talking about in their office/HQ based roles) are ridiculous. For example the likes of Eon have big bonuses, very generous pension schemes, holidays.

Energy alongside Financial Services is one of the most well remunerated sectors. If you did the same HQ related role in another Retail company I.e a Morrisons, Fraser Group etc you wouldn’t get paid the same because there are not any ‘public sector’ level benefits reinterpreted for the now private sector.

Im not sure why these people get paid so much in comparison to their counterparts in other sectors.

I agree. My DP are over 70 and classed as vulnerable. My DF works part time and earns more than I do working full time. DM has an income from investments.
Both receive state pension. So their household income is on a par with DH and I. But my DP receive winter fuel allowance and we don't.

The suppliers make very little profit as it is. It's a few pounds per customer. The cost of the price cap amount of energy for the average user is predicted to go up to around £4500 next April, following yesterday's shortening of the 2 year price protection.

There's no one solution, but lots of things that can be done that, when combined, will make a big difference.

A further universal bill credit, like the £400.

Extra payments for people above pension age or on UC/TC/DLA/PIP which would hopefully capture all lower income households and those with additional needs in the most cost effective way.

Tiered pricing on above average use and incentives to reduce energy consumption, eg get a £50 bill credit it you use 10% less than last year or similar.

A windfall tax on the producers, who are the ones making all the profit, not the suppliers that end users buy their energy from.

Mandated energy saving measures like requiring businesses to keep their doors closed if they're using heating or air conditioning, lights when unoccupied, that sort of thing. The main reason why prices have gone up is that demand exceeds supply, so the balance needs to be shifted by reducing demand.

Freely available advice and subsidised surveys so people can find out what the best way is to improve the energy efficiency of their homes.

Enforced rules to improve energy efficiency measures in rented homes.

Proper subsidies to help people and small to medium businesses invest in energy saving measures so they can fit solar panels, new windows etc without having to shell out thousands and face decade long payback periods.

Extra sales taxes on 'luxury' energy hungry appliances like hot tubs, like you pay more road tax if you run a car that uses more fuel.

Stopping people on pre-pay meters being charged far more than those on direct debits would be a good start. I also think shifting the balance between standing charge and unit rate so would be a good idea - with the current high standing charges even people with very low usage can't reduce their costs much.

Tax the energy companies, both suppliers and producers, with a huge windfall tax and distribute out the money to keep the cap at £2500.
These are “unprecedented times” and we are “all in this together”.
The idea that providers like British Gas etc would pull out of the market if this was done when they have been making huge profits off the back of the British public for decades is a joke.
If they do close up operations after a one off tax (they won’t) there will be some next energy providing capitalist vampires waiting in the wings anyway to try and cash in on the sector and take over.

The prices predicted for ave use from April range from £3,900 to £5,000. However, what's not clear is whether that factors in the measures the government is putting through Parliament this week which will try to create a separate price for electricity produced renewables and nuclear. I think by next winter they'll have come up with something which does this, so prices will fall by then.

The gov't already has a windfall tax on oil and gas producers and the gov't are about to introduce a windfall tax on renewable electricity producers.

It's a really tough situation - there are no easy answers, as the people profiting from this are the banks and the traders, not the generators and DEFINITELY not the suppliers. Gas fired power stations aren't profiting as they have to cover the cost of gas. Renewable electricity producers are only profiting from the high prices if it's a lot windier /sunnier than expected. If it's not as windy as expected, they're actually losing money.

Profit is part of business. When the oil price went negative during pandemic were you happy to subsidize them to get their expected profit?

I believe wholesale price of gas has gone down but that hasnt been passed on. But my source for that is twitter and i havent fact checked it.

@FindingMyself1999 E.On are actually really shit payers and I can promise you the energy industry doesn't pay better than other industries - salaries are on a par with telecoms, major retailers etc. Some people in the energy industry do have very generous pension schemes, but that's a legacy from the fact that these companies were (until the '90s) nationalised industries.

I agree there should be a windfall tax on producers. They have pretty much asked the government to do it!

But suppliers (companies which are supply only, not also producers) make very little profit from selling us energy. See this graphic from the BBC. This is why so many have gone under recently. There is next to nothing to play with. If an average bill is about £2500, the supply companies are making less than than £50 in profit from that bill. The pips are already squeezed.

Oh I see. If they have income from assets then it's a bit cheeky expecting to get benefits too.

The drop won’t be passed on yet because we are still being supplied with energy bought earlier at a higher wholesale price.

Indeed nor if they have decided (and it's no secret how they are made) to have more children that they cannot afford to provide energy for. It's a choice people make.

Agree windfall tax and rules for businesses use, there's lots of waste.
Cap on first 3000kw with extra payments for elderly and disabled.
And subsidised solar panels for domestic houses.
Think all the above is reasona

Reasonable

@AntlerRose Yes, wholesale gas prices have dropped. They peaked at around 550p- 650p /therm and are now back to around 350p/therm. But to put that in context, they used to hover around the 50-100p/therm.

Energy companies (electricity producers and electricity and gas suppliers) hedge their prices - so an electricity supplier needs to buy power in advance, and typically will do so in a staged manner to reduce the risk of needing to buy everything in a hurry (when you could be facing really high prices). So they might start buying the power that they'll need three years in advance, buying a bit more each month until they've bought 90% of their needs by the start of the season. Electricity producers do the same thing (but selling instead of buying).

So this means that changes to the wholesale price can take a long time to translate into lower prices. One of the many problems in the industry is that the small suppliers didn't do this hedge strategy, so when prices shot up last summer, they literally couldn't afford to buy the power that they'd promised to sell to customers.

We also don't know if this shower will be making decisions about anything in April!

Tiered pricing would be deeply unfair for all electric properties who already pay the most to heat their homes.

I'd start a rapid program of insulating poorly insulated housing, nationalise the power producing capacity we have domestically (or at least introduce a windfall tax). I'd start building more on and offshore wind, plus more 'small' nuclear plants, bring back subsidies for solar on houses.
Most of that would take time so in the meantime I'd be prioritising the elderly, those with health conditions, those with under 4s and those on low income (whether through poor employment conditions or through being on benefits)

It's hard to see a fair way to do it because people's circumstances are so different and no one expected the prices to go up this much. It's easy to talk about choosing a big house or a large family or a low paying job but who knew even two years ago energy bills would be 3 or 4 times higher and you'd need to budget for a £6k annual bill just to keep your home warm?

It's hard to see a fair way to do it because people's circumstances are so different and no one expected the prices to go up this much. It's easy to talk about choosing a big house or a large family or a low paying job but who knew even two years ago energy bills would be 3 or 4 times higher and you'd need to budget for a £6k annual bill just to keep your home warm?

This is very true.

We rent a house that the LL wanted to put solar panels on and install a heat pump but the oil tank was cheaper and so was the oil at the time ( 20p a litre then, now close to £1 and was higher ). If the government made it more affordable to switch then a rental property like ours would be largely self sufficient for energy ( if they had storage batteries ).

Totally agree. As well as supporting those on the lowest incomes, it is very important to put a KWh limit on the support, for each household. This will push higher volume users who can afford it to make savings, reduce consumption, insulate and fit solar. Some means tested gov ££ to support high users who cannot afford these things, will go a long way. Landlords need some incentive/regulations to ensure rented stock improves in efficiency.
All before April.

Not just to make energy affordable or reach net zero, but because the grid will fail over winter and we will have blackouts unless we conserve and co ordinate our energy use better, as a nation.

I’d nationalise it all so private companies aren’t making a profit but costs are covered

It will probably only be practical to assist people already on benefits. This is an issue because many people don’t claim when they can , e.g my MIL who I am trying to persuade to claim pension credit as she would qualify but hates the thought. There is also the just slightly above the line of benefits group who I actually always feel very sorry for.

Size of family and if you live in the colder parts of the country, as I much as that kind of situation can add huge amounts of cost I cannot see this going ahead at all.

One issue with any kind of any new benefit is the cost of means testing as it is completely prohibitive. So while many people as seen on this thread get irritated by people that receive state pension getting certain payments it would cost far more to have all pensioners means tested for winter fuel allowance.

On most threads it descends in to anecdotes and personal situations I am guilty of it myself as seen above.