Ofgem has put forward the proposition that higher-earning households might bear a larger share of the costs associated with maintaining and modernising the º£½ÇÊÓƵ's energy infrastructure.
Jonathan Brearley, chief executive of the energy watchdog, signalled this potential shift in a briefing on Tuesday, indicating that wealthier households could see an increase in the standing charge on their energy bills, while those who are unemployed or earning less may benefit from a reduction, as reported by .
"Over the next few years, we do expect variable costs to come down, but the proportion of costs that are fixed will rise, which, if unchecked, could exacerbate inequalities that we see today," Brearley remarked at an Ofgem event.
He highlighted plans to initiate an extensive review this summer, focusing on how energy system costs are divided from the ground up.
This includes reassessing how to fairly distribute costs and examining the impact of consumer incentives.
This development arrives amidst concurrent challenges faced by the energy industry and government authorities, as they grapple with escalating electricity expenses and endeavour to stay on course with the transition towards greener technology.
"It's a question that we need to answer as we go through this transition and as we think hard about getting to a place we want to get to," added Brearley.
The announcement comes at a time when Britain's energy price cap has climbed to £1,849 annually this month – a stark increase from £1,568 in July 2024, just after Labour seized power in the general election. The recent surge in energy bills is also a result of the geopolitical ramifications of Russia's invasion of Ukraine and the economic repercussions of the Covid-19 pandemic.
The expense of maintaining wires and cables to deliver gas and electricity to homes is currently imposed through fixed daily standing charges, irrespective of the level of energy consumption.
This disproportionately impacts vulnerable consumers who frequently use higher amounts of energy.
