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

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  • Hardy, A.
  • Glew, D.
  • Gorse, C.

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.

Suggested Citation

  • Hardy, A. & Glew, D. & Gorse, C., 2019. "Assessing the equity and effectiveness of the GB energy price caps using smart meter data," Energy Policy, Elsevier, vol. 127(C), pages 179-185.
    • Handle: RePEc:eee:enepol:v:127:y:2019:i:c:p:179-185
    DOI: 10.1016/j.enpol.2018.11.050
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    References listed on IDEAS

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    2. Al-Wreikat, Yazan & Attfield, Emily Kate & Sodré, José Ricardo, 2022. "Model for payback time of using retired electric vehicle batteries in residential energy storage systems," Energy, Elsevier, vol. 259(C).
    3. Ganepola, Chanaka N. & Shubita, Moade & Lee, Lillian, 2023. "The electric shock: Causes and consequences of electricity prices in the United Kingdom," Energy Economics, Elsevier, vol. 126(C).
    4. Amenta, Carlo & Aronica, Martina & Stagnaro, Carlo, 2022. "Is more competition better? Retail electricity prices and switching rates in the European Union," Utilities Policy, Elsevier, vol. 78(C).
    5. Monica Robayo-Abril & Jonathan Karver & Britta Rude & Ailin Tomio & Alessandro Silvestri & Kiyomi Cadena, 2024. "Understanding and Addressing Energy Poverty in Romania," World Bank Publications - Reports 42158, The World Bank Group.

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