Cameron’s pledge to roll back green charges ‘could push up energy bills’

November 16, 2013 by  
Filed under Green Energy News

An influential parliamentary committee has warned David Cameron that his promises of new policies to roll back green charges could push up the cost of energy bills rather than reduce them.

The energy and climate change committee argues that Britain needs £110bn of new investment in electricity generation and transmission infrastructure that could be at risk if there are policy U-turns.

Sir Robert Smith, a Liberal Democrat MP and chairman of the committee, is particularly concerned that mounting pressure over power prices could encourage the government to reduce subsidies to wind and other low-carbon technologies.

“Backtracking on these legally binding contracts will damage policy credibility, seriously undermine investor confidence and could increase the cost of capital for new energy investments – thus pushing up energy bills,” writes Smith, who asks Cameron to confirm that he will not undermine these contracts.

The letter argues that the energy efficiency of Britain’s housing stock is crucial to insulate consumers from rising energy prices and support those on low-incomes struggling to heat their homes.

“However, the increasing use of levies on bills to fund energy efficiency policies like the Energy Company Obligation (ECO) is problematic since it is likely to hit hardest those least able to pay,” writes Smith. “We have previously noted that public funding is less regressive than levies in this respect. Will you consider moving these sources of funding to general taxation?”

There has been mounting speculation that George Osborne could unveil changes to green and social levies in the autumn statement on 5 December.

British Gas owner Centrica and other power companies have said that they would immediately rescind bill increases if the government transforms the cost of supplying home insulation or fuel poverty measures by switching the burden from tariffs to general taxation.

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