Why mayors and ministers should launch state-backed energy firms. If there was ever a British consumer market in need of new thinking, it’s the energy market. Pretty much everyone agrees it’s not working for the people in it, and especially for people on low incomes. Those people can end up paying almost £400 more to heat and light their homes than people who have more money. This poverty premium has many components. Poor customers are more likely to have pre-payment meters: suppliers charge more for them. They’re more likely to receive not electronic but paper bills: suppliers charge more for them, too. And they’re less likely to switch deals and suppliers, using competition to drive down their price. That inertia can cost more than £300 a year in higher bills. At the Social Market Foundation, we’ve been talking to the people who suffer that poverty premium to see what would actually work for them. One message that comes out of that research -supported by the Joseph Rowntree Foundation – is that there is real scope for a third way, an approach that offers a new role for the public sector within a competitive market. This approach is for the public sector to become a player in that competitive market, with publicly-owned, non-profit energy suppliers. Britain already has one in the form of Robin Hood energy, set up by Nottingham City Council in 2015. The Scottish government is also considering creating its own supplier. London is a striking example: almost one in five households in the capital has a pre-payment meter, exposing them to higher prices. Sadiq Khan has already shown interest in this area: his City Hall is now an energy supplier to Transport for London. Our research suggests Mr Khan and his fellow mayors should be thinking hard about going into the energy business properly to make the market work better for their low-income voters. And ministers who want to put power in the hands of local communities and get a better deal for consumers should be looking at how to help.