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Tackling Tariff Design - managing the tariff transition

19 May 2016

Distribution networks are the pipes and wires that take gas and electricity from the central energy network directly into consumers’ homes. They are an essential service, playing a crucial role in ensuring that lights stay on and homes stays warm.

The Tariff Design (report cover)

Operating and maintaining the distribution networks form a significant part of consumers’ bills. The average consumer spends £310 on network costs a year, around a quarter of their total bill. It is the second largest component of consumers’ bill, after the wholesale cost of the energy itself.

This research considers the fairness of how this money is recovered from domestic consumers through distribution tariffs. Citizens Advice represent the interests of all consumers at the highest levels of energy policy making. Our goal is always to deliver fairness for vulnerable consumers and minimise all consumers’ energy bills. As consumer champions, we also help shape networks’ services, ensuring that they meet people’s needs.

As technology changes, we expect the way that we pay for energy networks will evolve. In the Tariff Transition [ 2.4 mb], we commissioned economic modelling of how different reforms to distribution tariffs would impact on different consumers, with a particular focus on low-income consumers. 

In Tackling Tariff Design [ 290 kb], we summarise the main results of this modelling and provide a series of recommendations on how industry and the regulator should approach reforming distribution tariffs.