Change the rules for energy tariffs in 2012

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The National Association of Professional Inspectors and Testers argue that the government's stance on energy tariffs is "completely at odds" with the need to conserve energy for the climate-change agenda.

One government stance that the National Association of Professional Inspectors and Testers (NAPIT) has been especially concerned about this year is the current system of energy tariffs in the UK.

Currently energy tariffs within the UK are based upon either a 'standing charge', followed by a flat rate or, the larger the consumption, the cheaper the tariff.

We feel that this approach is completely at odds with the urgent need to conserve energy for the climate-change agenda, the minimisation of the impact on consumers of the relatively high cost of energy, and the need to support energy security.

As NAPIT sees it, there are two key problems with the current tariff system. Firstly, the inclusion of a standing charge means that the cost of energy falls more heavily on those who use the least, with this component adding significant cost to small energy consumers, including many of the 'fuel poor'.

Secondly, the high cost of the first units of energy used, with the tariff falling as consumption increases, once again means that energy costs are highest for those who use the least.

Both are bizarre tariff anomalies, given the need to minimise energy costs and encourage energy frugality.

Instead, what we would propose to the government for 2012, via the regulator OFGEM, is that they insist that, right across the board for energy usage tariff rates, the rules are changed to ensure that the standing charge is changed to a 'minimum charge'.

This charge should also cover the first few units of energy used at a low rate. We also advocate that the first units after the 'minimum charge' continue to be charged at a low tariff, with the cost per unit rising as consumption increases.

It has to be accepted that energy companies have to ensure that they have sufficient income to cover infrastructure costs, so the standing charge, minimum-recovery concept cannot disappear. Were it to be replaced by a minimum charge, however, then the infrastructure costs are secured, without unfairly penalising the small energy consumer.

Energy tariffs that rise in line with consumption would ensure that heavy or irresponsible users were penalised for their heavy usage, while protection was built in for single-energy-source users. Of course, industry sectors that need very heavy energy consumption must also be protected from over-burden or the increase of energy cost that this proposal could produce, with special tariff rates. Also, families where a heavy demand is needed for medical or other special reasons must have access to lower tariff rates too.

But these are the exceptions; they should not be the rule for the vast majority of consumers.

Whilst it is imperative that energy consumption is minimised and that households and businesses are encouraged to be frugal with energy usage, a potential change in tariff rules in the New Year should not be an excuse for an increase in energy bills across the board. Rather, moving forward, we would recommend that energy companies be obliged to follow the new 'rules' when offering all future tariff 'deals'.

A lot of emphasis and political initiatives are placed upon energy production, but it is always cheaper in the long run to pursue initiatives that encourage the use of less energy than to pursue initiatives that encourage the production of more.