Ovo Energy CEO Advocates for Social Tariff Amid Rising Energy Prices

Households across Britain are facing increasing energy costs this winter as a result of the regulator’s decision to elevate the price cap starting in October. Ovo Energy‘s chief executive, David Buttress, has proposed significant reforms to the energy bills system in the UK, advocating for subsidies aimed at poorer households.

In an interview with the PA news agency, Buttress urged the Government to adopt a social tariff, a pricing mechanism already implemented in the telecommunications sector to aid individuals receiving benefits like Universal Credit with their broadband expenses. Supported by various campaign groups for several years, the social tariff would offer a targeted discount on energy costs to financially disadvantaged customers, providing a rate lower than the least expensive standard energy tariffs available.

“A social tariff would allow us to address the cost of energy for the poorest in our communities in a way that means, collectively, we could give them the protection they need to get through the winter months,” expressed Buttress.

His remarks emerge as the average household energy bill is poised to increase by £149 beginning October 1, following the industry watchdog Ofgem‘s decision to heighten its price cap. Ovo Energy, recognized as the fourth-largest domestic electricity provider in the UK, recently unveiled a £50 million energy bills support initiative for the winter period.

Furthermore, Buttress emphasized the need for a strategic shift away from temporary annual handouts in addressing high energy costs, advocating for more enduring reforms. At a governmental roundtable in late August, which Ovo Energy attended, discussions were initiated regarding long-term market reforms, including the consideration of a social tariff.

“The Government should be pragmatic … and look at the most efficient way” to finance this initiative, whether through minor increases to others’ energy bills or through general taxation, Buttress proposed.

The announcement of rising energy bills coincides with ongoing criticism directed at Government plans to limit winter fuel payments to Pension Credit recipients. This policy adjustment means around 10 million individuals will be excluded from the benefit this winter, impacting those who are not among the poorest pensioners. Previously, approximately 11.5 million people were eligible for the benefit.

Addressing this policy, Buttress commented, “You have to look at it in the round. The Government has come in and had to take a view of the various different mechanisms and schemes, as well as the new Budget at the end of October.” He further insisted on a “grown-up conversation” to determine optimal strategies for safeguarding the most vulnerable sectors of society, underscoring that “a social tariff will protect all those that need that extra help with the cost of energy, not just one group or another.”