Leading energy union Prospect has published a new report calling
on the government to urgently reform the retail energy market
after soaring gas prices caused the collapse of many smaller
providers. The union says that reforming the market and
introducing a social tariff would improve trust, protect the
poorest and most vulnerable, and help deliver our net zero goals.
Research by the
union highlights how policy errors, weak regulation, and
poor planning have come to a head, fundamentally threatening the
viability of the current energy retail model. This was
demonstrated by the collapse of many smaller companies and the
effective nationalisation of Bulb which has tested the limits of
the existing regulatory regime.
Prospect has written to the Energy Secretary , and to MPs, asking them to
take the opportunity provided by the current energy price hike to
ask fundamental questions about what should replace the current
approach, which has led to worse outcomes for consumers and
workers. In particular, poorer customers have been hit .
In 2005, the poorest households spent an average of 5.5% of their
total expenditure on electricity and gas; by the winter of 2021,
this had risen to 8.5%. The Resolution Foundation has forecast
that by Spring 2022 energy expenditure by the poorest households
will hit 12% of total spending, as fuel bills rise, real wages
fall, and welfare benefits are cut.
Prospect is calling for an urgent overhaul of the energy retail
market, including:
- Putting the energy retail market into new local control,
through publicly-owned regional energy companies – ending the
current confusing mix of private energy providers
- Making local authorities responsible to the delivery of
energy efficiency measures, such as SMART meters and insultation,
to better target support at households most in need
- A new social tariff for the poorest and most vulnerable
households from rising prices and fuel poverty
Allowing local control and administration of energy retail would
improve trust, improve resilience and protect the poorest
households from damaging price fluctuations
Prospect senior deputy general secretary Sue Ferns
said:
“The recent energy crisis with soaring prices, the collapse of
multiple small energy retail companies and effective
nationalisation of Bulb have highlighted the total unsuitability
of the current energy retail model.
“The current approach is not working for customers or the
workforce. The lack of a long-term energy strategy has
undoubtedly contributed to the current crisis, in retail and more
broadly.
“With the crisis ongoing now is the time for policy makers and
stakeholders to look seriously at alternatives. First of which
should be the option of bringing the energy retail market into
public hands, controlled locally.
“There is now an opportunity to rethink policy in a way that
responds positively to the challenges of climate change and gives
greater emphasis to social equity.”
