Social Tariff

A social tariff is a discounted rate for energy services to eligible vulnerable consumers.

• Criteria for eligibility is established and energy companies are required to provide the special tariff to consumers who meet the eligibility criteria.
  
  
• The tariff can be designed around usage levels or other criteria like a percentage of the consumer’s income. The latter approach may vary if the consumer is a single person household, or the account holder for a large household.
  
  
• While sometimes complicated for governments and energy companies to administer as they are restricted to a sub-set of vulnerable consumers, they are less distortionary than subsidising or capping tariffs for all consumers.
  
  
• The level of a social tariff is sometimes set by an independent regulator or directly by a government.
  
  
• Options include a discount against a standard tariff or a hard cap on what the vulnerable consumer can be charged based on estimated prices and usage.