Delivering a National Energy Guarantee

Meeting net-zero targets while protecting households against future price shocks

The National Energy Guarantee (NEG) is a proposal from the New Economics Foundation (NEF) to reform the UK’s energy billing system. The NEG involves a new energy billing structure which lowers and fixes the price paid by households on their essential energy needs. A higher price is then charged by retailers for higher levels of usage. The policy is accompanied by a simple set of allowances, which act in a similar way to a social tariff. These are aimed at households with specific vulnerabilities and/​or additional energy needs, as well as households making the transition to all-electric energy consumption. The proposal builds on the popular Energy For All campaign coordinated by Fuel Poverty Action that gathered 652,000 signatures last year.

Most analysts predict that the remainder of this decade will be marked by high energy bills, compared to 2021 levels, prolonging the pain for families across the country. On top of this, the government is considering levying further charges on energy bills that could pay for new hydrogen, nuclear, and carbon capture and storage infrastructure. These levies on electricity are already making the transition to heat pumps less attractive to consumers and sustaining the use of gas. Notwithstanding these new levies, without a change of approach, the fixed costs of the energy system, such as building and maintaining the national electricity grid, will further increase the burden on household bills.

But these outcomes are avoidable and consumers can be protected against both current elevated prices and future increases in their energy bills through system reform. The National Energy Guarantee is a direct response to these volatilities, offering a robust safety net that is universal, cost effective for consumers and government, and a net positive for the environment.

Photo: iStock

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