UK energy secretary explores rising block tariffs despite electrification concerns

UK Energy Secretary Miatta Fahnbulleh has asked her department to examine a rising block tariff for energy. The model would give every household a cheaper initial allowance of gas and electricity, with the unit price increasing for later blocks.

The proposal is being discussed as annual energy bills are projected to rise by about £400 in January. Fahnbulleh has called affordability her top priority, while Chancellor John Healey is expected to consider £1bn in additional winter support for poorer households.

Who would gain most

The Joseph Rowntree Foundation supports the model and has suggested it could be funded with roughly £5bn of public money. It says the largest reductions would go to households with lower consumption, which often have lower incomes.

Citizens Advice argues that low energy use is not a reliable proxy for low income. Electric heaters with high power consumption are more common in social and private rented homes, where residents may be unable to change their heating systems.

Tension with electrification

Critics also say a rigid block structure would fit poorly with flexible tariffs designed to shift use into windy or sunny periods when wholesale electricity is cheap. Higher prices for additional consumption could also weaken incentives to adopt electric vehicles and heat pumps.

Electrify Britain called block tariffs “hugely counterproductive” for electrification, arguing that households should not be encouraged to switch to electricity while being charged more per unit for higher use.

Other options under discussion include a targeted social tariff and making a temporary electricity VAT cut permanent while moving some energy-transition levies into general taxation. The article argues that a targeted scheme would be simpler to administer.