by The boss of Octopus Energy has said energy suppliers should “be helpful” to the Government and provide extra support to elderly people who miss out on their winter fuel payments. Greg Jackson, who founded Octopus in 2016, told the PA news agency: “We all know some people were getting the winter fuel allowance they didn’t need – that costs everyone else money.”
He said: “But then there’s the gray area where people miss out on what they need – that’s where we can help.” Under plans announced by chancellor Rachel Reeves in July, winter fuel payments will be limited to those in receipt of pension credit.
It means around 10 million people will lose out this winter, with the benefit being taken away from all but the country’s poorest pensioners. About 11.5 million people used to get it. The Government insists it is right to make the benefit, worth up to £300, means-tested to tackle what it calls a “black hole” in public finances.
But it also prompted a bitter outcry, including from some Labor MPs, with critics pointing out that the pension credit bar only up incomes to £11,300 a year for individuals, meaning many do not qualify for could still struggle paying bills. Mr Jackson, who has previously been vocal in his support of Labour’s policies, said: “In these transitional times, it’s easy for people to kick and scream.
“Alternatively, companies and others can say: ‘How can we work in this way that is best for Britain and, in our case, best for our customers?'”
He also said that the Government has to “make difficult decisions. So let’s help now to make sure that when you make those decisions, we can take care of the people who will be most affected.” However, ministers should “keep a close eye on the impact” of the policy if this winter is colder than normal, Mr Jackson said, and be “ready to act” if there is further support from required.
Octopus, the UK’s biggest energy supplier, announced last month that it will continue its £30 million relief fund into this winter for pensioners who do not qualify for state support. The company also has a range of other measures, including giving away free electric blankets to vulnerable customers.
However, energy suppliers have come under pressure to make big profits over the past two years, with bills rising due to skyrocketing gas prices. Octopus made its first ever profit of £203 million for the year ending April 2023, the latest year on record, and revenue tripled to £13 billion.
The company’s UK energy retail arm took £69 million of costs to lower customer bills over the same period. Mr Jackson’s comments come weeks before energy bills are set to become more expensive again this winter.
Regulator Ofgem said the average household bill has risen by £149 since October after raising the quarterly price cap for the winter months. Last month, Labour’s energy consumer minister, Miatta Fahnbulleh, held talks with suppliers including Octopus, asking for help with a marketing campaign to inform customers about bill support already available.
Sources with knowledge of the matter said the ministers also asked businesses about longer-term market reforms for energy bills, including a social tariff, which campaign groups have advocated for several years. The move is likely to take the form of a targeted energy discount deal for poorer customers, and could be below the price of the cheapest conventional energy tariff available.
Mr Jackson said it was “important” to reduce energy costs for everyone, but added that “the question is who pays” for a social tariff.
He said: “It will be the Government, in which case they have to raise taxes, or other energy customers will have to pay for it, in which case bills go up for everyone who isn’t getting it. The challenge is that the bills are already too high.”
Instead, Boss Octopus is pushing ministers to introduce an alternative pricing system, based on proximity to where clean energy is generated, to reform bills. The system, known as location-marginal pricing, would see people living near wind farms pay less for electricity.
Regional pricing is “the critical thing we need to do”, Mr Jackson said, citing a recent report by FTI Consulting, which claimed it could save bill payers £51 billion by 2040. Octopus offers time-specific discounts already for residents. near wind farms up to 50% in high winds, when the turbines generate more power.
The initiative has resulted in thousands of people contacting Octopus from 2021 asking for turbines to be built close to their homes, he said. Critics say it would be unfair to pay people less based on where they live.
Mr Jackson said that while the biggest discounts would be “areas that will have the most electricity generation”, such as areas in Scotland, the price would fall “in every region” because the transmission system would be “more efficient”. . The Labor Government has introduced many changes since the general election, including setting up a new state-owned energy investment firm, GB Energy, to help boost renewable energy in recent months.
He is also consulting on reforms to the planning system designed to make it easier to upgrade the power grid and build clean energy projects, which Mr Jackson said he supports. But it is “early days” for the new Government, he said. “We need to see the hard things happen to reduce energy costs for good.”
