One thing we have learnt this week – OFGEM and energy prices

metersWith a big fanfare OFGEM announced its support for the Competition and Market Authorities changes to reduce energy prices.  The stand out headline was that the poorest were going to be protected.  This sounded great until you listened a bit longer.  Then you realised the those with pre-payment meters, generally those on low incomes were going to have a partial cap.  Whilst this is better than nothing it does not go far enough.

One of the most unfair aspects of the UK energy market is that those on pre-payment meters pay more for the privilege per unit in almost every case.  The one exception that I know is the not for profit social enterprise energy company I use.  We all pay the same.  That’s why the company was created since the person who did so could see direct debit customers would pay less. Whilst I appreciate pre-payment meters stop people getting into debt and can be useful for some groups (I had one when I was a student), this differential payment is outrageous.  As an aside a blind woman in church homegroup went into a housing association flat.  They gave her pre-payment meters which of course she could not use.  I helped get them removed with some difficulty.

It seems to me there are three ways to help people cope with high energy prices and cope with peak oil.

The first is a carbon ration.  We outline what these are in our book.  Although this would in many ways be redistributive there are some low income groups that would need protecting from its effects.  Namely those in very energy inefficient properties.  This is elegant for the most part but whilst simple in outline would be difficult to introduce and a hard sell, although its my personal preference.

The second is a straight tax on energy (carbon fuels).  This is advocated by James Hansen to combat climate change.  He proposes tax cuts on everything else.  I think this is a crude way of doing things, will affect many people on poor incomes and would be a hard sell, but if it could be made to work I would support it.

The third method is what is sort of happening now.  That is the rich subsidise the poor.  I think that this is a good solution to high energy prices but needs to be less piecemeal and done properly.  Two last points its said smart meters could do away with the above problem (don’t know why) and I heard this week that food banks are handing out energy vouchers so people don’t have to choose between heat and food.  This cannot be right and we really need to come up with a solution that is fair and protects the poorest against high energy prices.  OFGEM has not gone far enough.


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