Citizens Advice response to DESNZ call for evidence on the future of default tariffs

Citizens Advice response to DESNZ call for evidence on the future of default tariffs 182 KB

Citizens Advice strongly supports reforms which reward flexible electricity usage, lowering bills for those who are able to use electricity at less expensive times, and minimising costs associated with electricity generation and grid infrastructure for all consumers as we transition to an energy system dominated by renewables.

Following Marketwide Half Hourly Settlement (MHHS) we expect suppliers to offer more Time of Use (ToU) tariffs. While this will help deliver the overall benefits of a more flexible system, these changes will also give rise to new distributional impacts and some new risks for consumers who don’t engage and are on non-ToU (single rate) default tariffs. These are currently used by the large majority of households. 

At the same time, some consumers may struggle to engage with time of use products or can’t be flexible in their energy usage and face higher costs as a result, potentially including those who have higher heating needs or who use medical equipment. 

There are also important considerations around protections for consumers coming to the end of their contract, and some new harms that could arise as a result of moving onto a default contract with different features. These reforms also offer an opportunity to consider the possible benefits and risks of a market-wide move to ToU tariffs - for both active and default tariff customers - as a way of maximising flexibility in the energy system. 

We welcome the Government’s review of default tariff arrangements to consider these issues and find the best way forward. Ensuring these reforms are taken forward in a way that is fair is important to manage consumer risks and maintain public consent for the move to a net zero power system. We’re keen that any new rules are proportionate and do not limit scope for innovation, or prevent the benefits of a flexible system.