The rising costs of net-zero policies could disproportionately hit low-income households, Britain’s energy regulator has warned.
Ofgem has announced that it will look at how to better protect families from rising energy bills in the future as the country continues to explore sustainable fuel sources such as heat pumps.
However, the regulator said it was “very concerned” that poor households were not adequately protected from future energy price shocks.
This comes amid growing concerns that many consumers are stuck in debt and repayment plans.
High costs of debt recovery could be devastating the UK’s retail energy sector, according to Ofgem.
Regulators questioned the risks posed by the high investment costs of net-zero policies that encourage clean energy with knock-on effects for low-income customers.
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Low-income households could face energy bill shocks amid net zero drive, Ofgem claims
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In recent years, the government has launched initiatives such as the Boiler Upgrade Scheme, which covers the cost of equipment to replace gas boilers.
However, experts stress that the available support is not enough to cover the entire cost of transitioning to greener energy alternatives.
Low-income households are less likely to invest in technology or change their behavior to cushion rising costs, Ofgem argues.
As part of the warning, the regulator announced it would seek feedback from stakeholders to “take steps” to protect households from further significant increases in energy bills.
This will “ensure that the debt burden does not leave us with an unsustainable situation that could lead to higher future bills,” the group said.
Additionally, Ofgem will be looking at how it can better support consumers in the changing energy market.
The latest call for comments from the country’s energy regulator will be accepted until Monday 13 May 2024.
Tim Jarvis, director general of Ofgem, outlined concerns about the impact of net zero policies on household energy prices.
He explained: “Prices are gradually coming down as energy markets stabilize, but with many people struggling to pay their energy bills amid unprecedented levels of debt, there is a risk that this legacy will become a permanent problem. there is.
“While a number of interventions have been undertaken to support different customer groups, delivering long-term solutions requires taking a step back and looking at the big picture, so this comment on affordability Recruitment has started.
Latest developments:
Ofgem is calling for a review of the level of utility support provided by suppliers
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“We need to look at energy affordability as a whole: what’s working, what’s not working, and where are the gaps?”
Recently, regulators changed the rules regarding recurring fees to ensure that repaying customers are not charged more than other customers.
It is also calling on energy suppliers to be more considerate of their customers, but Ofgem’s chief executive believes more needs to be done.
Mr Jarvis added: “However, rising debt levels strengthen markets, protect struggling consumers from future price shocks, and ensure that all consumers benefit from the transition to a security regime. This means that a more long-term approach is needed to create a new, cleaner and safer energy system. ”
