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Backstop Britain – Do we need an energy tariff for vulnerable consumers February 2015

This article discusses the need for an energy tariff specifically designed for vulnerable consumers who are disadvantaged in the competitive energy market. It explores the inadequacy of current social bill support and proposes interventions such as a backstop tariff, reform of the Warm Home Discount, exemption from environmental/social levies, and a cap on tariff spreads. The article also highlights the ongoing work of Citizens Advice and the Centre for Sustainable Energy in addressing this issue.

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Backstop Britain – Do we need an energy tariff for vulnerable consumers February 2015

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  1. Backstop Britain – Do we need an energy tariff for vulnerable consumers February 2015

  2. The Problem • Parts of society systematically disadvantaged by competitive energy market • Current social bill support inadequate; • Not open to/claimed by all those who need help; • Doesn’t address detriment caused by ‘stickiness’. • Public support for certain groups to receive a special tariff • Competition and Markets Authority (CMA) review of energy market

  3. Phase 1 – Parameters Citizens Advice Consumer Service Citizens Advice Consumer service • Centre for Sustainable Energy working on behalf Citizens Advice • Identification of proxy group – Cold Weather Payment (CWP) recipients • Identification of possible interventions & desirable features • Workshop with the Government, the industry and key stakeholders

  4. Phase 2 - Modelling Citizens Advice Consumer Service Citizens Advice Consumer service • Economic modelling to establish effect of interventions on proxy group and wider redistributive consequences of; • Backstop Tariff – Guaranteed supplier cheapest deal, transfer of inactive customers, operated on opt-out • Reform of Warm Home Discount (WHD) – Automatic receipt for Broader Group, offered by all suppliers, new determination method • Exemption from Environmental/Social Levies – Average 11% reduction for electricity/6% for gas, cost moved to general taxation • Cap of permitted spread – regulated difference between suppliers’ lowest/highest possible tariff offer

  5. Next Steps • Final report due March, findings to be submitted to CMA; • Launch event in Holyrood and possibly Westminster • Seeking to mobilise Bureau support • Want to gain stakeholder endorsement

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