Energy giants close in on green taxes delay

September 29, 2013 by  
Filed under Green Energy News

The ECO scheme, which began this year, requires major suppliers to cut
targeted volumes of carbon emissions by installing energy-efficiency
measures for poor customers and insulating homes.

Companies face fines of up to 10pc of turnover if they do not hit the targets
by March 2015. Ministers say the ECO should cost £1.3bn per year or the
equivalent of £50 on a household bill.

But the industry says it could cost as much as £3.1bn per year or £125 per
household. Companies complain it is hard to identify the right customers and
homes and that the scheme is being hampered by the slow take-up of the Green
Deal, a parallel, voluntary insulation scheme.

A spokesman for SSE said: “The most important consideration, as always,
is affordability for customers. With the potential for costs to escalate as
the scheme goes on and with the Green Deal still in its early days, it makes
sense to extend the first phase for 18 months in order to protect customers.”

Companies suggest costs are likely to rise toward the end of the programme as
the “low-hanging fruit” of people interested in the scheme runs
out. “An ECO extension may be attractive as it moves the deadline
beyond election day,” one industry source said. Many in the energy
industry think the costs should be paid through the tax system.

Critics say that SSE, Centrica and ScottishPower, which has also criticised
the scheme, are the three major suppliers that are already facing
multi-million pound fines for failing to meet their targets under previous
schemes. Ministers have also remained publicly adamant that they have seen
nothing to make them question their cost assumptions.

Fears are also growing that Mr
Miliband’s
price cap pledge will make it harder for energy companies
to sign contracts for gas imports. Counter-parties to any deals could be
concerned that the price cap could hamper payments on any of the contracts.

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