Officials in the Department for Energy Security and Net Zero are exploring a rising-block tariff that would charge households a lower price for an initial allocation of gas and electricity, then a higher rate for use beyond that threshold. The model remains under consideration, not an announced government policy.
The idea is being examined as ministers face pressure over household energy costs. Its appeal depends on how the lower-priced allowance, higher rates and safeguards are designed. Those details have not been settled in the evidence available.
How the tariff would work
Under the basic model, each household would receive a set amount of energy at a discounted rate. Consumption above that allowance would cost more. The design aims to protect a level of essential use while making heavier consumption more expensive.
Thinktanks have published related proposals, but neither represents adopted government policy. The New Economics Foundation’s 2023 “National Energy Guarantee” set out tiered prices intended to protect essential energy use and discussed safeguards for low-income households with high needs.
The Joseph Rowntree Foundation’s 2026 “Affordable Energy Guarantee” also proposes a discounted block for all households, with additional protection for some people based on factors including income, disability, children or energy needs. These proposals illustrate possible designs, not a settled government plan.
Why the idea is being considered
Energy Secretary Miatta Fahnbulleh previously led the New Economics Foundation, from 2017 to 2023. A Guardian report published on 6 October said department officials were working on proposals to reduce tariffs for poorer or lower-use households, and described a rising-block tariff as an alternative to a social tariff. That reporting indicates the option is being examined, but does not show that ministers have selected it.
Supporters argue that a protected basic allowance could reduce bills broadly while delivering larger savings to lower-income households. Some published designs add protections for households with children, people receiving benefits or people whose disability-related needs require more energy. The effects would depend on the thresholds, prices, funding and safeguards ultimately chosen.
Critics caution that energy consumption does not reliably indicate a household’s income. The Guardian column reported Citizens Advice’s concern that some renters with traditional electric heating may use substantial amounts of energy despite having limited means. If higher rates applied above a threshold without adequate protections, some households could face a heavier bill for reasons other than discretionary use.
Questions still unanswered
The available evidence does not specify the size of any discounted allowance, the rate charged above it, or how the system would account for differences in homes and household needs. Nor does it establish whether the government will proceed. Those decisions would shape who benefits and who might pay more.
Separately, the government has been discussing other ways to address bills. On 28 September, Fahnbulleh told the Guardian that ministers were considering how energy-system costs are recovered, including whether some green levies should move from bills to taxation. That is a distinct debate from charging different prices according to household consumption.
The Guardian reported estimates that shifting some costs to taxation could save consumers about £120 on average and cost up to £3bn. These were reported estimates, not an enacted change.
Recent bill figures also provide context, but do not determine the outcome of the tariff debate. Guardian reporting on 1 October said the typical annual price-cap bill in Great Britain had risen 4% to £1,723. It also cited a Cornwall Insight forecast of a further 16% increase to £1,999 from January, a projection rather than a confirmed future bill.
On 6 October, the Guardian reported that Chancellor John Healey was understood to be considering a £100 increase to the Warm Home Discount. The Treasury declined to comment on speculation, so the reported possibility should not be treated as confirmed support.