Ovo Energy chief calls for ‘progressive’ scheme for bills similar to tax system

theguardian.com:

The chief executive of UK’s third largest energy supplier, Ovo Energy, has called for the government to introduce a “progressive” scheme for energy bills that would give greater support for poor households but taper off for richer users, similar to the UK’s tax system.

The proposal for a banded energy subsidy is part of a 10-point plan put forward by Stephen Fitzpatrick, whose energy company serves 4.5 million customers.

It would involve reducing the price of energy, but only for a limited amount of use per household, meaning that energy consumption beyond that level would be charged at a higher price. This would aim to prioritise support for poorer customers, since higher-income households typically use more energy, he said.

The proposal is a variation of the “deficit tariff scheme” already backed by energy firms including Scottish Power, which would involve freezing prices at current levels and cover the difference through a central fund repaid over a number of years.

“The scale of the shock of the recent price rise this winter threatens to tip the economy into a deep recession and will be catastrophic for millions of low income households,” Fitzpatrick said on Thursday. “It is right that we find ways to smooth further price increases in the short term.

“But this scheme can’t be open-ended and unlimited. It should be progressive just like the tax system,” he said.

Fitzpatrick said there would be exceptions, given that some vulnerable customers, such as those who have at-home medical care, would use more energy. However, those customers should be identified through the fuel poverty taskforce and helped through targeted support, Fitzpatrick added.

Overall, his proposed scheme would also incentivise people to cut down on their