Researchers from Foundational Economy Research want a system introduced where utilities are charged based on household income
Energy bills are forecast to rise again this summer(Image: GETTY)
The UK should charge for energy based on income, so that richer people pay more and households with less income pay less, a new report argues.
Researchers from Foundational Economy Research want a system introduced where utilities are charged based on household income, arguing that low income households carry a heavier burden.
It claims that 30% of higher income households would be worse off, while middle-income households would pay roughly the same as they are now.
The report reads: “Energy justice is about the poor paying less and the rich paying more in a considered scheme where, for example, the charge per kWh is varied upwards according to household income.
”The outcome is not only distributive justice for the poor but also distributive justice between all income groups.”
It continues: “Higher bills are not attractive for regulators nor politicians if they increase an already heavy charge on low-income households.
“Thus, more progressive charging for energy can also be a major contributor to environmental and intergenerational justice insofar as it facilitates investment in renewable electricity generation and updated electricity grid distribution and gas storage.”
It comes as energy bills are predicted to soar this July due to the Iran war, with analysts at Cornwall Insight forecasting the price cap could rise to £1,837 a year.
In early March, it had warned that annual household energy bills could surge by £332 to £1,973 from July when the next cap comes into effect.
The lower than previously forecast rise signals some easing back in wholesale energy costs since the start of the war on February 28.
The price cap is currently set at £1,641 a year, with Ofgem set to announce its July price cap level by May 27.
The Government has said it will look at further targeted support as part of contingency planning efforts.
Earlier this week, the Government also extended upcoming electricity bill support to 10,000 firms, which will offer some respite to companies, given they are not covered by the household energy price cap.
Wholesale energy costs are not seen coming back down to pre-war levels until the Strait of Hormuz, through which a fifth of the world’s oil and seaborn gas is carried, is reopened.
Its blockage and the disruption to supply, combined with attacks and stoppages at energy infrastructure across the Middle East, has sent gas prices soaring and the cost of crude surging as high as $120 US dollars a barrel.
