Richer households could be charged more for their electricity, with Ofgem launching a review into its billing structure.

One option being looked at by the regulator is differing electricity rates based on household income levels.

If adopted, the plan would mean a richer household paying more than a less affluent one for usng the same amount of power.

The Financial Times reports Ofgem chief executive Jonathan Brearley said the watchdog would begin a review this summer into how network and other costs are charged on consumer bills.

He said: “Over the next few years, we do expect variable costs to come down, but the proportion of costs that are fixed will rise, which, if unchecked, could exacerbate inequalities that we see today.

“So, in the summer, we are launching a wide-ranging examination of how we best allocate costs within the energy system from first principles. We will look at the best way to share out costs, including the incentives they put on consumers.”

Any decision and implementation of a new approach to billing remains some way off.

Brearley, speaking at an Ofgem event which was attended by industry leaders, added: “We want to at least ask the question - whether or not we can allocate costs more progressively."

However, he conceded there would be logistical challenges to implementing a pricing policy "related to income".

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