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Energy Secretary explores 'rising block tariff' amid bill hike predictions

Energy Secretary Miatta Fahnbulleh is exploring a "rising block tariff" model for energy bills, which would offer cheaper initial usage and higher rates for heavier consumers. This comes as industry projections suggest a significant hike in energy bills in January.

  • Energy Secretary Miatta Fahnbulleh is having officials explore a "rising block tariff" (RBT) model.
  • Industry projections indicate an approximate £400 annual increase in energy bills in January.
  • The New Economics Foundation and Joseph Rowntree Foundation support the RBT concept.

Energy Secretary Miatta Fahnbulleh has instructed officials in her department to explore a "rising block tariff" (RBT) model for energy bills. This proposal would provide households with an initial allowance of cheaper gas and electricity for essential use, with subsequent units becoming more expensive for heavier consumers.

Ms Fahnbulleh has stated that her measure of success in her role is whether she can reduce bills, with "affordability" being her "top priority". Industry projections suggest an approximate £400 annual increase in energy bills in January, with "stubbornly high" levels expected for the rest of the decade.

The New Economics Foundation, which Ms Fahnbulleh previously led, is a proponent of the RBT model. The Joseph Rowntree Foundation also supports the idea, suggesting that public funding could allow bills to fall for most households, with the largest savings going to light users, who tend to be low-income households.

However, the RBT model has faced criticism from other organisations. Citizens Advice argues that low energy use is a poor indicator of low income, noting that traditional electric heaters are common in social or private rented homes where heating systems cannot be changed. Lobby group Electrify Britain has called block tariffs "hugely counterproductive" for electrification, stating that it makes it harder to encourage the adoption of electric vehicles and heat pumps if higher usage leads to higher per-unit charges.

Why this matters: The exploration of a "rising block tariff" could represent a significant shift in how energy costs are structured for households, potentially impacting different consumer groups in varying ways.

What this means for you: If a "rising block tariff" were implemented, your energy bill could be affected by your household's energy consumption, with heavier users potentially paying higher rates per unit after an initial allowance.

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