Ofgem to unveil new household energy bill price cap on Thursday morning – business live


First, the scheme would mean that customers pay less when wholesale prices are high, but more than they would otherwise have done in future when prices fall. This smoothing of bills over time will still be helpful, but is it important that people understand that any savings now will be offset later.

Second, it would still be better (and potentially less expensive) to target more support at those that really need it. The savings being suggested (perhaps £200 per household) would still leave many poorer families struggling with their bills. This scheme would therefore need to be part of a bigger package that includes extra help for low-income households, such as a further top-up to the Warm Homes Discount (though this seems likely to be part of the final announcement too).

Third, the taxpayer will bear the risks of fluctuations in wholesale energy prices, and the risks of loans not being repaid. This might be justified in an emergency. But in general, businesses should be expected to manage and hedge their own exposure to changes in their costs, and it is not the government’s job to do this for them.

Fourth, the proposed scheme is described as ‘temporary’ and ‘self-funding’, but it cannot really be both. The scheme would need to be in place for an uncertain but probably long time if taxpayers are ever going to get their money back.



Read More: Ofgem to unveil new household energy bill price cap on Thursday morning – business live

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