Scenario Modelling on Social Energy Tariff Proposal

Discussion

The fuel poverty rates for 2023 are compared to the fuel poverty rates for 2023 under the proposed social energy tariff in Table 2.

As shown in Table 2, under this proposed social energy tariff the number of households in fuel poverty is estimated to be reduced by around 135,000 households or 5 percentage points. Furthermore, an estimated 202,000 fewer households would be in extreme fuel poverty, a reduction of around 8 percentage points.

It should be noted that the depth of fuel poverty for those households that remain in fuel poverty will also be reduced.

Table 3 shows the number of households in each group[1], the estimated cost of the proposed social energy tariff per group, and the average reduction in bills per household for each group. It also includes the calibrated cost to show an alternative cost estimate. The sum of reductions in bills has been used as a proxy for the annual cost of the proposed social energy tariff. 

On average, using SHCS modelled fuel bills eligible households would receive a £1,000 reduction on their fuel bill each year, with the total cost estimated to be approximately £692 million each year. For the calibrated cost, the average fuel bill reduction per household is £700 per year with the total cost to be approximately £475 million per year. The calibrated cost would therefore be roughly two thirds of the cost based on households heating their homes to the four statutory fuel poverty heating regimes.