The Government is considering “a range of support” for vulnerable households struggling with rising costs, the Energy Secretary stated ahead of an anticipated energy price cap increase.
Miatta Fahnbulleh also acknowledged standing charges are “too expensive” for many, adding that ministers are working alongside regulator Ofgem to review “how these fixed costs could be recovered in the fairest way”.
She indicated further policy costs might be removed from bills to help lower household expenditure.
Families are preparing for energy costs to reach their highest winter level in three years, despite Prime Minister Andy Burnham’s plan to remove VAT from electricity bills starting in October.
On Wednesday, Ofgem will announce the upcoming price cap for typical gas and electricity usage across England, Scotland and Wales for the October to December period.
Forecasts suggest annual bills will climb another 4 per cent to £1,729, driven by the conflict in the Middle East pushing up wholesale energy prices.
Ms Fahnbulleh on Tuesday said she understood “why people are worried and frustrated about energy bills”, and that Mr Burnham’s Government is “doing everything we can to make them more affordable”.
The Peckham MP indicated households most in need could be in line for more support when she was asked during an “ask me anything” session on the Reddit online network whether she believed the existing £150 warm home discount is enough.
She replied: “I know in Peckham that our warm home discount will assist nearly a third of households. It’s a start, but I also know that households struggling need more help.
“That is why we are looking at a range of support for vulnerable households that are under pressure. From long-term targeted bill support through to upgrading millions of homes with measures that can save over £500 on bills.”
Ms Fahnbulleh also suggested there could be changes to the fixed charge on bills paid every day regardless of energy usage.
She wrote: “I know for lots of people, standing charges are a real bugbear. The reality is that they cover fixed costs that we have to pay to keep the energy system running.
“We understand that for some, this is too expensive. But removing those costs would simply increase prices elsewhere on the bill, so we are working closely with Ofgem to look into how these fixed costs could be recovered in the fairest way.”
Urged to remove all policy costs from bills, Ms Fahnbulleh said the Labour Government had “started” doing so, including by ditching an energy efficiency programme which was paid for through levies on bills.
She said: “These policy costs fund important things like supporting vulnerable consumers with the costs of their bills and upgrading the energy system so that we can lower bills.
“We have already started doing this and did so at the budget, where we took a load of policy costs off of bills. We’ll keep looking at how these costs are recovered in the fairest way.”
Mr Burnham’s pledge to cut VAT from household electricity bills, which he predicted would knock around £45 off the annual Ofgem price cap from October, will be more than offset by the recent swing in global energy prices.
Ms Fahnbulleh said: “I completely understand why people are worried and frustrated about energy bills and we are doing everything we can to make them more affordable.
“As a start, we removed VAT from electricity bills to give everyone some breathing space. This is on top of the £150 we removed from energy bills in the budget in April.
“We are providing extra support for six million families under pressure with our £150 warm home discount.
“But we know there is more to do and we are getting on with the job of driving bills down.”
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