Assessing the equity and effectiveness of the GB energy price caps using smart meter data

A. Hardy, D. Glew and C. Gorse

Energy Policy, 2019, vol. 127, issue C, 179-185

Abstract: Keeping homes at a comfortable temperature and reducing household fuel bills are priorities for many governments. In the UK, several interventions have been implemented to achieve these objectives. This paper investigates one such policy lever - the Energy Price Cap - to understand if it has been designed and implemented efficiently and equitably. The price cap was introduced for customers on prepayment meters to combat increased levels of fuel poverty and a lack of competition in this group. However, the price cap was based on several assumptions of how energy is used. In this work, we assess how well the price cap accounts for real energy use using smart meter data. Households on economy 7 (EC7) tariffs were found to spend more than those on standard rate tariffs, as EC7 customers use more electricity during peak hours than assumed in government calculations. Additionally, many of the EC7 customers in this sample still use a considerable amount of gas, suggesting the EC7 heating product is either not sufficient, or is not being utilised in a cost-effective manner. Revisions to the input assumptions in government models for EC7 customers would therefore be beneficial in future price cap levels.

Keywords: Energy price-cap; Economy 7; Smart meters; Fuel poverty (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:127:y:2019:i:c:p:179-185

DOI: 10.1016/j.enpol.2018.11.050

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