UK Government Announces a New Initiative to Tackle Fuel Poverty

At the end of July, 2021 the UK Government announced once again that they are frustrated with the behavior and charging habits of energy suppliers throughout the UK. In particular the UK Department of Business, Energy & Industrial Strategy released a statement stating that energy suppliers in the UK have been complicit in predatory behavior that seek to overcharge their own loyal customers, a behavior that has been defined as a “Loyalty Penalty“.

What this means is that energy customers that allow their contracts to end are automatically defaulted onto a tariff plan that typically charges as much as possible without going over the current Energy Price Cap.

What this does is it capitalizes on customers that are not monitoring their energy tariffs closely, leaving millions of households vulnerable to steep rates for their energy. While this has generally always been the case for energy suppliers within the UK, the policy has recently come under fire from the UK Government as it has been considered a direct contributor to fuel poverty, or the inability for a household to meet the financial requirements to consistently afford energy.

As fuel poverty has been an increasingly relevant issue during the covid-19 lockdowns of 2020 and 2021, it has been made a priority issue for politicians.

In their recent announcement, the UK Government stated two proposed solutions, both of which are being seriously considered for implementation:

• Develop and implement an “automatic switching” option for energy tariffs, allowing customers to automatically switch or renew their energy tariffs without any effort.
• Extend the Energy Price Cap in order to allow it to continue beyond 2023, in order to save UK households an average of £ 75-100 annually.

In summary the UK Government is showing its commitment to supplying energy consumers in the UK with fairly priced energy while also trying to avoid over-regulating energy suppliers. The goal, as stated in the announcement, is to create an abundance of healthy competition within the energy sector while also maintaining affordable costs for individuals.

In summary the UK Government is showing its commitment to supplying energy consumers in the UK with fairly priced energy while also trying to avoid over-regulating energy suppliers. The goal, as stated in the announcement, is to create an abundance of healthy competition within the energy sector while also maintaining affordable costs for individuals.