Latest news with #Ofgem
The Sun
9 hours ago
- Business
- The Sun
Energy bills could RISE for wealthier households to help poorer ones
ENERGY bills could rise for wealthier households to help poorer ones, under new plans by the watchdog. Ofgem launched a major review into energy pricing this week, as it wants to ensure "fixed costs don't disproportionately affect vulnerable and low income consumers." 1 The regulator is also asking people around the country to give their views on how energy costs are shared. "We want to make sure energy system costs are shared fairly and transparently - so we're launching a review of all the costs that make up bills, looking at whether there are better ways to do this," Ofgem posted to its official X account. It said the energy pricing system needed to be updated in line with how households' energy use has changed. For example, many people are now using new technology such as smart meters to shift their energy usage to different times of the day. Some households are also using more energy than in previous years, it pointed out, thanks to the rise of electric cars and heat pumps. As part of the review, standing charges - fixed daily fees added bills by energy suppliers - could also be overhauled, as Ofgem said many consumers had complained the current system was "unfair". Ofgem boss Jonathan Brearley said: 'As we transition to a more secure, homegrown, renewables-based energy system, unit costs may decrease due to reduced reliance on expensive and volatile gas. "However, fixed costs – such as those needed to upgrade the energy network to deliver cleaner and more secure power to our homes – could rise. "This shift in the make-up of system costs means we need to review how we pay for energy and carefully consider how these costs are distributed. 'We know customers have real concerns about fairness and transparency in their bills, especially around fixed costs. That's why we're asking big questions about how and where these costs are shared – and whether there are better, fairer ways to do it. Stop Making This Air Conditioning Mistake: How to Slash Your Summer Energy Bill 'The launch of this review is the next step in developing fairer pricing for a changing energy system, ensuring more choice for consumers while protecting those most in need.' Ofgem said it was only seeking views at this stage and was not giving any recommendations. Currently, energy prices are made up of unit rates and daily standing charges. Your unit rate tells you how much you pay for every kilowatt-hour (kWh) of electricity and gas you use, while your standing charge covers the cost of supplying your electricity and gas supply to your home. The review was welcomed by some experts, who said there was a "clear need" to review how households pay for their energy. USwitch director of regulation Richard Neudegg said: 'The energy system is changing rapidly as we use more and more clean power, so the way we pay for it needs to change as well. 'There is a clear need to look at how pricing and the price cap works. 'As part of our move towards Clean Power 2030, it's vital to ensure consumers get real rewards for managing their consumption, ensuring standing charges are reasonable, as well as securing support for the vulnerable. 'These goals could be achieved within tariffs that consumers choose to be on, considering how the price cap itself works, and or through various support and grant schemes. "There are no firm proposals from Ofgem on particular shifts to pricing approaches yet, but it is good to see the regulator opening up the thinking on how this could best work.' However, others argued the plans don't go far enough to protect vulnerable families. Heat Trust boss, Stephen Knight, said: 'Forthcoming regulation of heat networks is great news for consumers, but Ofgem's proposals around price regulation do not yet deliver the level of fairness or price protection that heat network customers deserve. "Many households are still paying twice as much for heat as those using gas boilers – and that simply isn't sustainable. 'We need urgent action from government to rein in unregulated costs and reduce unacceptable levels of heat loss from poorly performing systems. 'Unless these issues are addressed, we risk undermining public confidence in heat networks at a time when they need to be a key part of our low carbon future.' He added: 'We urge government to go further than these proposals, engage more closely with consumers and their representatives and deliver the strong, enforceable protections that heat network users urgently need.' Do you have a money problem that needs sorting? Get in touch by emailing money-sm@
Reuters
a day ago
- Business
- Reuters
UK regulator to review alternative energy pricing for consumers
OSLO, July 30 (Reuters) - Britain's energy regulator Ofgem on Wednesday announced a review into how costs are allocated across the energy system, including alternative pricing models for consumers, to better adapt to more renewable energy supply. Britain has a target to largely decarbonise its power sector by 2030 which will mean reducing its reliance on gas-fired power plants and rapidly increasing its renewable power capacity. Less reliance on the price of gas is expected to bring down the variable costs of the energy system, Ofgem said. "However, fixed costs, such as those needed to upgrade the energy network to deliver cleaner and more secure power to our homes – could rise," Ofgem chied executive Jonathan Brearley said in a statement. Under the current regimes, system costs are paid for by energy system users and consumers through their energy bills, with separate stand-alone bills for electricity and gas. Given the expected system changes and increasing proportion of energy costs on household bills than previously, now was the right time to look at potential alternative models in how bill-payers are charged, Ofgem said. This included ensuring that increased fixed costs do not disproportionately affect vulnerable and low-income consumers, it added. The regulator stressed that it is only seeking views at this point and is not recommending any specific option.
Telegraph
a day ago
- Business
- Telegraph
Middle classes face threat of higher bills to pay for net zero
Middle-class households could face higher power bills than poorer families to help cover the cost of net zero. The energy regulator has launched a review of energy bill costs to 'ensure increased fixed costs don't disproportionately affect vulnerable and low-income consumers'. Ofgem is worried that the massive costs of expanding the UK's transmission system to cope with electrification will drive up standing charges, the fixed network cost that covers the pylons, cables and pipes needed to get power and gas into properties. These charges account for nearly £300 of the average £1,720 domestic energy bill and have risen sharply since 2019. The decision by Ed Miliband, the Energy Secretary, to decarbonise the grid by 2030 risks pushing them up even more. Ofgem is worried that a surge in standing charges will disproportionately hit poorer households who can do little to avoid the higher fees. Jonathan Brearley, Ofgem's chief executive, said: 'As we transition to a renewables-based energy system, electricity unit costs may decrease due to reduced reliance on gas [for power generation]. However, fixed costs – such as those needed to upgrade the energy network – could rise. 'This shift in the make-up of system costs means we need to review how we pay for energy and carefully consider how these costs are distributed.'
The Guardian
2 days ago
- Business
- The Guardian
Shield poorer households from costs of clean energy plans, says Ofgem
Britain's clean energy future risks creating 'winners and losers' if lower-income households are not shielded from the costs added to energy bills to pay for it, the head of the energy regulator has said. Jonathan Brearley, Ofgem's chief executive, said a 'systematic approach' to sharing the rising costs of the government's green power ambitions was needed to avoid poorer households facing soaring monthly payments. The regulator for Great Britain launched a root-and-branch review on Wednesday into how the costs of upgrading the energy networks can be recovered through home energy bills in a way that is fairer. The review could include plans to cut standing charges for lower-income households while wealthier customers pay a higher cost for upgrading the energy system. Brearley told the Guardian: 'All of these changes that one might make to create a better energy system will have winners and losers. It may well be that the best thing to do is to have a more systematic answer to the question of affordability.' This would allow the country to make sweeping changes to the energy system 'without always living in fear that you're going to make some people on low income even worse off', he added. Energy affordability has become a rising concern in Whitehall in recent years as gas and electricity bills have become a larger part of each household's total costs, while the levies used to support grid upgrades and low-carbon energy projects have become a larger part of energy bills. This trend is likely to accelerate, according to industry experts. As Great Britain begins to rely more on cheaper homegrown renewable energy the cost of electricity may fall but the fixed costs levied on to bills will continue to rise to cover the costs of a changing energy system. Currently the cost of maintaining the pipes and wires that deliver the gas and electricity to homes and businesses is recouped through standing charges on home energy bills. These fixed daily charges, which also include the cost of fitting smart meters and other policy costs, are applied to energy bills regardless of how much energy a bill payer uses. This means cash-strapped households who are unable to heat their homes still bear the full brunt of covering energy network costs while vulnerable consumers – who are often high users of energy for medical or health needs – will also end up paying above the odds to maintain the grid. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion The standing charge has ballooned in recent years from an average of £182.27 a year five years ago to an average of £334.07 a year – or almost a fifth of the average annual energy bill. These costs have been described by the consumer champion Martin Lewis as 'a moral hazard', and could climb further as the UK prepares to invest heavily in upgrading its electricity grids to meet the government's goal of creating a clean energy system by 2030. 'We want to get under the skin of how those costs are allocated across the system,' Brearley said. 'Is it still right that we have variable charges by region? If we are wanting to encourage people to use energy when [renewable energy] is more abundant, then is there a way to allocate these costs to do this? And should this be on the volumetric charge or the standing charge?'
Bangkok Post
3 days ago
- Business
- Bangkok Post
UK wants Thai investors for modern industry plans
The United Kingdom is inviting Thai investors to participate in "Modern Industrial Strategy 2025", a 10-year plan it recently launched to bolster future industries and strengthen UK-Thailand relations. During an exclusive interview with the Bangkok Post early this month, Rhiannon Harries, the UK's Deputy Trade Commissioner for the Asia Pacific (Southeast Asia), said the strategy is intended to ease business entry and offer long-term investment certainty -- particularly for Thai firms looking to establish or expand their presence in the UK. Launched on June 23, the strategy outlines the UK's ambitions to become a global leader in eight industries of the future: advanced manufacturing; clean energy; creative industries; defence; digital and technologies; financial services; life sciences; and professional and business services. Ms Harries emphasised that the initiative is designed to reduce investment barriers and streamline regulatory processes. "The UK is open for business with Thailand," she said. "We want to work with Thai investors to deliver long-term growth across strategic sectors." The strategy includes concrete measures to address longstanding bottlenecks. For instance, to support Thai investment in grid infrastructure, the UK government will introduce a new connection accelerator service by the end of the year to speed up access to the national grid. Simultaneously, the energy regulator Ofgem is reviewing the entire grid connection process to enhance efficiency. The UK's Planning and Infrastructure Bill will further support these efforts by allowing the government to designate key strategic documents, such as the Industrial Strategy, to guide infrastructure approvals. This includes reserving grid capacity for priority projects and cutting wait times for major investments. Ms Harries noted that planning delays and regulatory burdens have often discouraged investment. To mitigate this, the UK will hire more planning inspectors and simplify planning permission processes -- while ensuring environmental obligations are met. The UK government also plans to spend £1.2 billion (52.1 billion baht) annually by 2028–2029 on skills development, including training 6,000 new construction workers. Other supportive policies include reducing electricity costs by up to 25% for energy-intensive industries by 2027 and improving access to skilled talent through global talent schemes and visa reforms. Thai investors have already made significant inroads in the UK's clean energy sector. With the UK holding the largest offshore wind market in Europe, the strategy aims to double investments in clean energy, expanding into hydrogen, carbon capture, and civil nuclear power. A £1 billion clean energy supply chain fund and a £2.5 billion investment in small modular reactors (SMRs) have been pledged, she said. In the digital sector, another area of Thai interest, the UK will invest £2 billion in artificial intelligence. A new AI Growth Zone will be established to accelerate investment in digital technologies nationwide.
