Social tariff drive in U.K. doubles uptake


London, U.K. — (METERING.COM) — December 30, 2008 – A drive to increase awareness of energy suppliers’ social or discounted tariffs by the energy regulator Ofgem and the industry over the past year has doubled the uptake of these deals to more than 800,000 with total savings up by more than a third.

In a new review of suppliers’ social programs in 2007-08, Ofgem found that the collective social expenditure of the suppliers over the year was £57.12 million. Most of this social spend was directed at social tariffs, rebates and trust funds, which provide direct assistance to customers in, and vulnerable to, fuel poverty. And the savings to customers on social tariffs – up to more than 800,000 at the end of October from 365,000 at the end of August 2007 – was £33.87 million, an increase of 36 percent on the previous year.

In addition almost 303,000 customers received some form of annual rebate from their supplier in 2007-08, giving them savings totalling £7.97 million.

Ofgem says the very real difficulties in identifying and targeting the fuel poor are widely recognized. The suppliers have all taken different approaches to how they target and market their schemes in an attempt to devise effective ways to reach their most vulnerable customers. In a situation where there is no simple solution, this innovation and variety of approach is to be welcomed.

Ofgem also notes that in its July 2008 review it set stricter qualifying criteria for social tariffs. For a supplier’s tariff to qualify as a “social tariff” it must be at least as good as the lowest tariff offered by that supplier to a customer in that region on an enduring basis. This is regardless of that customer’s payment method and includes online tariffs. As a result Scottish and Southern Energy and Scottish Power have made a number of changes to their social tariffs to ensure they are consistent with this new guidance. In December 2008, E.ON launched a new tariff, Warm Assist, which is also consistent with the new definition. The other major suppliers are considering their positions.

Ofgem says it will continue to count other discounted tariffs that suppliers offer to vulnerable customers but which do not meet this stricter criteria towards their social spend commitments. However these other discounted or reduced tariffs should not be marketed or labelled as social tariffs. The stricter definition is aimed at ensuring the “social tariff” label is credible, providing consumers and consumer advisers with assurance and a much simpler message.

Looking ahead, all suppliers have confirmed that they expect to meet the target spend of £2.10 per customer agreed with Government for 2008-9, Ofgem says.