Britain's Broken Energy Policies...?

British Energy companies are owed £3.2 in bad debt. That's debt from consumers who probably won't ever be able to pay back the money they owe.

These consumers will mostly come from the bottom 10% of households by income, and be considerably more likely to be on benefits. These are the people who face the daily choice, in the winter months, between eating or heating.

We see plenty of these people in Citizens Advice every week, people in debt because their incomes (be that from benefits or work) haven't kept up with the increasing cost of living. In many cases their situation isn't helped by living in poor quality, badly insulated housing which increases the cost of bills.

The government's solution...

The government's solution to this bad debt is, via OFGEM, to allow energy companies to add a one off additional £16 charge to household bills from April 2024/ 25 to allow companies to recover this bad debt.

This is kind of like everyone paying a specific energy tax to cover the costs of the poorest sectors of society. As far as I can tell this includes the poorest households too, even though presumably most of them won't be any better off than they were last year.

All of this while energy firms have made almost £2 billion in profits over the past year.

And these profits benefit those wealthy enough to have shares in those companies.

So what we have here is a massive, government facilitated shift of wealth from the middle to the richest. The poorest effectively get let off anything they can't pay to the rich in profits, the rest of us just make up for it.

Why not just set up a social tariff..?

If having a warm home is a human right then set up a social tariff for the poorest households, have them pay less and then allow energy companies, within regulated reason, to charge whatever to the rest of us. Simply don't allow energy companies to profit from the poorest households.

The end result would be the same as the above, in that the rest of us would still pay for the poor and the profits, but it would avoids the bad-debt situation in the first place, which is BETTER because it gives the poorest more breathing room.

Alternative solutions

There are more radical solutions....

1. Don't treat a warm home as a right and just let the market market. I.E. if people go into debt, just allow energy companies to cut them off. Personally, for the sake of saving £16 on my energy bill next year I'm not sure I'd like to go down this route, seeing as that this drastic measure would probably mean people dying (cold houses and health complications).
2. Nationalise the energy industries... Don't allow profit to be made at all. If £2 billion in profit were divided by 30M households then that's around £60 a household saved per person, but this would solve all of the faff with OFGEM having to constantly set new energy price caps as fuel prices go up and down.

Given the figures and given the hassle with regulating the energy markets I think nationalisation might actually be worth a serious look, I certainly wouldn't rule it out.

That's IF you think a warm home in winter is a basic human need, and even a human right...?

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