Utility Week

UTILITY WEEK | SEPTEMBER 2022 | 21 Energy retail Industrial Strategy (BEIS) Committee recom- mended the government introduce such a tariff alongside a relative price cap for the rest of the market, once wholesale energy prices have stabilised. Although mooted as a possible solution to alleviate the current cost of living crisis, social tariffs are not a new concept in the energy sector, and in the mid-2000s retailers were voluntarily offering them to their poorest customers. They were, however, superseded by the Warm Home Discount (WHD), which was seen by the government as a more effective solution. Matt Copeland, head of policy at NEA, tells Utility Week there is now "significant momentum" behind the idea of reintroducing social tariffs in the sector. "There's quite a lot of political salience behind the idea of a social tariff now, but it's not limited to politics … there are a number of utilities calling for a social tariff in energy," he explains. Despite this enthusiasm, there is no consensus on what a social tariff in today's market would actually look like, with differing views on how one should be funded and what additional support should be available. In NEA's case, the charity would like to see a combination of a mandatory social tariff for the poorest consumers, the existing price cap for the rest of the market, as well as retaining the WHD. Copeland says: "Through the same mechanisms that suppliers can identify low income households for the Warm Home Discount, they could automatically identify all of their customers who are in receipt of means-tested benefits and then be mandated to offer them a social tariff, which would be below the price cap cost, so a lower unit rate. "You could do different things like remove the standing charge … You could have a com- pletely different tariff structure." Using WHD data to identify households who are in the most need of additional help is an option also favoured by Lickorish who, as former chief operating officer of EDF Energy, oversaw the introduction of the com- pany's social tariff in 2006. He tells Utility Week: "At the moment there are three million people on the WHD. That is determined by the Department for Work and Pensions [DWP]. They tell the sup- pliers who to pay. "The DWP has got data on a lot of other benefits, so data science should enable us to identify other potential recipients." Lickorish believes tapping into DWP data could mean up to eight million people receive support in this way. An expanded WHD? Social tariffs are just one solution and there have been calls advocating more funding to help tackle rising bills. Dan Alchin, director of regulation at Energy UK, asks: "One of the interesting things about the social tariff is we do have a social price support scheme already. One of the key questions for me is – and this is not to say social tariffs are a bad thing – what's the objective and how is that different to the objective of the Warm Home Discount? And is a social tariff the best way of delivering that? "If we're trying to target the same people continued overleaf

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