To think tiered electricity prices might work ?

[secrethedgehog]

I saw a suggestion today that a way forward with rising energy prices might be to give every household an allowance ( based on number occupants ?) of x units of energy at a subsidised price. Any units used over that price would then be more expensive, a little more than predicted now, to help finance the reduced price units.
This way the least well off can have at least a minimal amount of heating and power to cook etc without worrying about horrendous bills.
Anyone wanting to use more, and can afford to do so, is then helping to subsidise the price for those less able to pay .
Seems to allow an element of choice whilst encouraging less energy use and therefore having green credentials
Sure there are flaws but seem to be some advantages too ?

The problem with Kiers plan is that it is staggeringly expensive and we cannot tell
where the high prices - and the support required - are going to end. The advantage with a tiered system is that if it is made ludicrously expensive to have high energy use, people will change habits. Those that can will plough money into making their homes more energy efficient.

Poorly insulated rental properties would become much less attractive and command lower rents. Just think, if you rented a place with no central heating and an outside loo you’d expect to pay a lot less. If you rent a place with no insulation and single pane glazing in the future you could expect to pay a lot less too.

Uncoupling electricity from gas prices would be excellent too. Is gas that’s expensive. All of a sudden an electric hob, electric heating and a few solar panels sounds much more attractive.

isn't this what is already happening? £400 back for everyone (universal kW you proposed) and £600 for those in certain benefits (additional kW).

Like PP pointed out it would be a challenge to go any further by need. We have solar so don’t use much during the day but have EV and are high users at night. I wouldn’t want the job of someone trying to figure out whether we should get more or less allowance :)

That's expensive.conpared to areas like Grimsby, Cleethorpes, Scunthorpe, Doncaster etc etc.

They often have quite odd rents like 88.17weekly. why the 17p I don't know.

It's a decent idea OP (and better than any of the politicians have come up with). However I think the problem is too big for a bit of tinkering. The government needs to produce it's own power through nationally owned companies (North Sea Oil and Gas, wind power, tidal power - we have the means) and introduce a national provider into the market. It'll easily drive out of business the private companies profiteering off everyone else's misery - no need for expensive buy outs. By producing our own power Britain would also be less at the mercy of international prices and could provide power as a service at cost rates. Why not? The current system is clearly broken.

They missed the point too that they don't actually have to use more. They can choose to and pay extra for it, but don't have to. Can't expect Christians to have compassion or brains though. 😂

Price of needing disabled accessible housing - ie, somewhere with step free access to the front door - in the only area you have family ties to (ineligible for housing in any other area). And nobody from the cheaper areas is interested in a swap for obvious reasons.

The idea has flaws but I think it's one the the best for achieving the long term goal of reducing energy consumption, even after this current crisis has passed.

Allocation by council tax banding - not great but the categories already exists and generally mean the bigger the house, the bigger the allocation. Use averages for each sized home to determine their cheaper allowance and everyone who uses up to that amount gets to do so cheaply. Anyone who uses over pays more heavily for the units over and above their allocation.

No reason why averages cannot be specific to country, so Scotland has its own average allocation calculation. As does Wales etc.

Social tarriffs can exist for those who need to use more than the average for medical reasons.

I am pretty sure we'd personally end up worse off with electric bills but may be ok with gas. But I could see this working and it encouraging us to keep cutting down on energy use permanently.

I’m not sure what the council tax bandings have to do with it. Why should a big house have a different energy tariff than a small house?

It would work in the same way winter fuel allowance, energy rebates etc simply don't happen for the most vulnerable in society on the least income.

I’m not sure what the council tax bandings have to do with it. Why should a big house have a different energy tariff than a small house?

Because, in theory, a bigger house = more people in it.

It's not always true, of course, but it seemed like a reasonable/blunt tool to get to a quick answer. Which is what I meant by "not great but the categories already exists".

How else would you do it?

Sod those with disabilities then that have to use extra electrical equipment etc

Council tax bandings would fuck over everybody who lives in social housing built after a certain year and in areas they have no control over living in in the first place, as they have to take what they're offered when homeless or need a particular type of property.

Combined with already higher council taxes, energy use because they don't own the heating, insulation or windows to decide to have more economical versions installed and rents that don't bear much relation to those charged for a council house in, say, Doncaster, for the sin of being born in Tooting, somebody could be paying thousands more but ineligible for council tax relief, low emissions zone charging, and now would also be expected to pay more for electricity because they have no choice about how much is used beyond breaching tenancy regulations by not having the heating or hot water on at all and causing damp and frozen pipes?

Like tax you mean ?

So imaging the average house uses 150kwh a month (I haven’t a clue how many kWh a house uses, this is just an example). The first 100kwh are paid at April 2022 rates. 101-150kwh are paid for at October 2022 rates and anything above that is January 2023 rates. Everyone has a massive incentive to reduce your energy intake.

if you’re poor you’ll get a grant for the first 100kwh every month. You are incentivised to reduce your usage but things are still doable. If you have medical equipment everything apart from the first 50kwh is free. The reductions for the poor and ill are paid for on windfall taxes on the gas and electricity generators (I.e. BP etc who are currently making a killing) and a small rise in the highest tax band.

I can’t see why this wouldn’t be fair. I also can’t see why the house size / council tax band matters. I live in a big draughty house so my bill will be big, but Like most who live in a big house I have access to funds to insulate it better - which is a good thing for net zero.

I'm not following 100% but don't think this would be the case, would it?

I think your point about paying more council tax means you are worried about those in higher bands through no 'fault' of their own? But they would benefit from banding being used because they'd essentially have a higher allowance at the cheaper rent.

It's those in artificially low bandings that might need tweaks to aid them: so that they have an allowance that is still fit for basic needs.

That said, I'm all for making sure everyone gets what they need, so it might be that those in social housing are just on the cheaper rate, full stop?

The advantage of tiers is that the energy user feels that they have some form of control on the costs they face.

I also can’t see why the house size / council tax band matters.

House size doesn't really. But more people in a home = greater need. So there needs to be a way of allocating greater kwh to multiple occupancy houses and we don't currently have an up to date record of how many people live at an address, including children etc and to introduce one is likely to increase admin costs and cause privacy concerns.

But maybe I'm missing a better way we can get an allocation that matches the number of people in the home?

This also has an advantage of further incentivising multiple occupancy which is better for the planet and better for the housing shortage, Much as I loved living alone, it's a really inefficient way to house everyone.

It's complex (or I'm not being very clear!)

Premise:

Everybody who lives in Council Tax Bands A-D gets to use 200 at £1 each
Everybody who lives in Council Tax Bands E-H gets to use 200 at £2 each

This is fair because somebody living in a house in a higher band must have a bigger property/higher income

Household A,

Band C, Three bedroom semi. Has a new boiler and additional insulation fitted in the last 5 years because the property is 30+ years old.

Rent £500, Council Tax £100, Pays £200. Total = £800

Household B,

Band G because they're been housed in a place with fewer bedrooms than A somewhere else in the country because that's the only area they are eligible for housing. Property is smaller, newer but doesn't have a combi boiler or anything more than the legal minimum insulation. Housing Association will not be replacing anything for around 10 years.

Rent £650, Council Tax £240, Pays £400. Total = £1290

Income of Household A = £2500/pcm
Income of Household B = £1900/pcm

(amounts chosen because they're above the earnings level for UC in the case of both households)

They both have the same appliances and use exactly the same amount of energy. Energy is down as a generic 200 units of something at £1/2 for ease.

Household A also received £400 Council Tax support because of their banding. Household B didn't. And now A's fuel costs are lower as well because they live in a place that has a lower banding (and in a cheaper area). It's not B's fault the only place they can live is deemed to be of greater value, they had to take what they were given and were eligible for (and they are grateful for it, the alternative was homelessness, after all), but they have to pay more in rent, council tax and energy bills as a result.

Same way C and D could live in exactly the same band property in the same town, but D doesn't own theirs, so has no influence upon the landlord to fit insulation, double glazing or a combi boiler, but they do have to buy and run a dehumidifer to prevent damp as it's a condition of their tenancy. C uses 200 at £1 = £200, D uses 400 at £1 = £400.

It's not D's fault that they can't get approved for a mortgage, but they have to use and pay for more energy for reasons completely outside their control. As a result, they fail affordability checks for a mortgage and can't save a deposit anyhow with double the amount going on fuel bills.

It would be beneficial to introduce a system that helps people in areas of lower property values and perhaps that would lead to those areas being more likely to vote for the party who put it into action at the next election. But that's political, not environmental or ethical.

Effectively, the suggestion is a way to make people less able to pay the increased bills more because they don't have a way to live in the cheaper areas or mitigate their expenses through making home improvements or moving.

Ah!

No, the cost doesn't go up with the banding. Your allocation of cheaper energy does. As an example...

Household A, Band C gets to use 10,000 kwh at 10p a kwh and anything above it at 50p a kwh.

Household B, Band G gets to use 20,000 kwh at 10p a kwh and anything above it at 50p a kwh. They have a greater allocation of cheaper energy using a blunt assumption that a bigger home = more people living in it (far from perfect, I know).

Both actually use 15,000 kwh over a year.

Household A pays £3,500 for that usage.
Household B pays £2,000 for the same amount of energy.

Oh, OK, I see where you're coming from - but;

Wouldn't this then make it unfair on those in lower banded properties that are in poor repair in either area?

Seems like whatever happens, somebody loses unfairly if they're at the poorer end of the spectrum/don't have the ability to improve their homes' efficiency because they don't own it and/or can't afford to purchase new appliances/are forced to tumble dry, dehumidfy or buy a heated airer for their home because it, for example, doesn't have space from drying things outside?

Seems like whatever happens, somebody loses unfairly if they're at the poorer end of the spectrum/don't have the ability to improve their homes' efficiency because they don't own it and/or can't afford to purchase new appliances/are forced to tumble dry, dehumidfy or buy a heated airer for their home because it, for example, doesn't have space from drying things outside?

Yep, I think so. And I think that is happening now - probably to an even greater degree - under the 'same price for all the kwh' model we have.

Whatever is done is has to go hand in hand with:

a) greater UK energy security
AND
b) greater power/incentive to improve all property efficiency, but especially rental properties.

I am pretty convinced that some form of energy rationing will be put in place at some point, but I'm pretty sure "you can go to a warm bank if you like" is the plan for the least well off.

I mentioned this on another thread, the idea wasn't to get us in the middle to pay more to subsidise others. The idea was we would get an allowance of X then everyone would pay more above that as it's unsustainable use. That excess use could be paid down on the system we are having installed, so our solar panels will largely power our house but if we want to keep the hot tub running and all the gadgets we would buy that off the grid out of our allowance. Driving down the amount we consume means demand is less and therefore market forces should bring down the unit cost as the demand won't be there.

The idea is it stops people buying large amounts of unsustainable energy as they will invest in green technology like panels, air/ground source heat pumps. This should also be available on interest free finance. Would be interesting if heating could have a maximum setting to stop excessive gas consumption, we live in the far north not far south of the Scottish Borders.

I wouldn’t be giving people in large houses more energy at the cheap price than others in smaller houses. The people in bigger houses are more likely to be able to afford high bills and address the energy efficiency of the property they live in. Why should they get more cheap tier energy?

But you also can't give 10 people living in one house the same allocation as one person living alone.

But we don't have an easy/already available way to determine the number of people living in a home (only voters). If one can be devised cheaply and easily - so much the better.