National Energy Action (NEA) published its response to the Department for Energy Security and Net Zero (DESNZ) call for evidence on default energy tariffs for households on 16 May 20241. The charity argues that the benefits of the current price cap should be maintained, that reform should address how the cap treats households with multi-rate meters, and that DESNZ should recommit to consulting on a social tariff1.
NEA cites research by Public First which found that more than half of surveyed households believe the price cap is the only thing stopping suppliers charging more, that it protects vulnerable and low-income households, and that it means consumers are not charged unfair prices1. Around 86% of consumers are currently on default tariffs, and NEA says that although the cap was not intended as deep price support, consumers rely on it as a form of price support1. It adds that the call for evidence does not explore how deeper price support could work for low-income consumers in future1.
The response identifies two groups it says the cap serves poorly. Around 1.4 million households in Great Britain use storage heating, and around 3 million households are on multi-rate arrangements; NEA says these households do not see the full benefit of lower wholesale electricity costs at night and face significant variation in Economy 7 tariffs depending on supplier, region and payment method1. It states there is an opportunity in default tariff reform to lower costs for these households without adding costs to other bills1.
"DESNZ should recommit to consulting on the introduction of a social tariff, or other form of deeper price support for low-income consumers."
A separate NEA response to a discussion paper on the future of price protection, published 17 May 2024, repeats the call and states that DESNZ was due to consult on long-term arrangements for price protection, including the potential reintroduction of a social tariff, last summer2. It says consumers are now paying 49% more than at the beginning of the crisis despite the cap and further government intervention, and that any significant reform should not come at the cost of current consumer protections2. NEA also states it helped design the Default Tariff price cap and worked with Ofgem on the earlier Safeguard Tariff cap for prepayment and other vulnerable customers2.
Why it matters for households
The price cap sets the maximum a supplier can charge for a unit of gas or electricity on a default tariff, so it governs the bills of the roughly 86% of households NEA says remain on those tariffs1. NEA's argument is that reform of default tariffs carries a risk to that protection, and that a social tariff could de-risk the process by ensuring households now relying on the cap receive protection through another mechanism1. For homes with storage heaters or multi-rate meters, the practical question is whether off-peak electricity is passed through at a rate that reflects cheaper overnight wholesale prices; NEA says the current arrangements do not do this adequately and that Economy 7 rates vary widely by supplier, region and payment method1. The energy price cap therefore matters differently depending on how a home heats and when it uses power, and the social tariff question is whether support reaches low-income households if default tariff rules change.
What happens next
NEA states that DESNZ was due to consult on long-term price protection arrangements, including the potential reintroduction of a social tariff, last summer, and calls on the department to recommit to that consultation2. No date for a government response to the call for evidence, or for any consultation, is given in the published responses1.