Green taxes which push up energy bills will not be scrapped, says Vince Cable

October 12, 2013 by  
Filed under Green Energy News

“If you are taking a long term view about shifting the British economy onto
a less polluting, a less carbon-based system we have to provide those
incentives. What will happen in the long term is that the cost of renewable
energy will fall.”

The government has suggested that people should switch providers to ensure
that they get the best deal. However, Mr Cable admitted that he has yet to
do so himself.

He said: “I have not [shopped around]. It is good that the market does exist
and people have that choice. It is a very highly concentrated set up. More
competition would certainly help to drive prices down.”

On average, dual-fuel bills for millions of SSE customers will rise by £111 to
£1,465 a year, the highest price ever seen in the country.

British Gas and Npower are both poised to increase bills in the next few days.

Alistair Phillips-Davies, SSE’s chief executive, said: “A price rise is
never a good thing to do, but if it focuses everyone on to a debate about
what we as a nation should be spending money on, then in one way it will be

“We need to think about what people really want to pay for; maybe it’s time
to retreat from decarbonisation and focus more on the cost of living. I
think we have to have a debate about it.

“Do we want to be replacing one bit of [energy] generation that we can keep
going for a bit longer with a new bit of generation that’s going to
cost more?

He added: “I doubt the public like price increases of this magnitude, but
if we carry on firmly behind the green agenda we will continue to have price
increases like this.”

He added that SSE, which made a £1.4 billion profit last year, would be
stopping all investment in offshore wind and new power plants until the 2015
election because of the acute political uncertainty around energy since Ed
Miliband promised a price freeze if Labour wins power.

The row threatens to intensify tensions in the Coalition, with speculation
growing that the Tories want to react to the Labour leader’s pledge by
funding some green levies through tax rather than passing the cost on to
households through bills.

On Thursday, David Cameron said green levies to subsidise renewables would not
be on bills “for a moment longer than is necessary”.

But Michael Fallon, the energy minister, went further by insisting that the
Government was “looking hard” at what could be done to reduce green
costs to both industry and households. He said: “I’m as green as the
next man, but I’m a cheap green.

“We still have to deal with a legacy of underinvestment and we still have
legal obligations under climate change regulations, we need to build new
power stations, but within that, we are looking.”

Ed Davey, the Lib Dem Energy Secretary, said that wholesale energy costs were
the real reason SSE was putting up prices and that customers should react by
switching to a rival supplier.

National Grid earlier this week warned that the huge push to “go green”
and take ageing coal-based power plants out of commission meant Britain was
at a greater risk of winter blackouts this year than at any point since
2007. Britain is signed up to producing 30 per cent of its electricity from
renewable sources by the end of 2020.

Experts believe more than £100 billion will have to be spent for the country
to have any chance of reaching the target, and all of this would have to be
recouped from household bills.

The TaxPayers’ Alliance said at the weekend that it had calculated that
£22 billion of subsidies would be handed to “green” energy generators
over the coming six years to pay for new wind farms and hydro power plants,
with the entire cost passed on to consumers through bills.

The UK Independence Party joined the debate on Thursday by blaming Mr Miliband
for bringing in the Climate Change Bill in the last Labour government.

Responding to SSE’s price rise on Thursday, Mr Miliband said it was proof
the Government was letting energy companies “get away with it”.

Caroline Flint, Labour’s shadow energy secretary, added: “When times are
tough, energy companies should be helping their customers not hitting them
with more price rises to boost their profits.”

Watchdogs said it was inevitable SSE’s rivals would follow suit with price
rises of their own. As well as British Gas, industry sources said npower was
to announce a price increase as early as Monday.

Ann Robinson, the head of the price comparison website uSwitch, said there
were now real concerns that millions of vulnerable customers would be forced
to turn down the thermostat or turn off the heating altogether over the

She said: “It’s a crippling blow. We all knew increases were coming, but
when you actually see them, well, it’s devastating.

“Last year, 70 per cent of households were rationing fuel at some point,
35 per cent turned their heating down at some point. How many more people
are going to freeze to death this winter?”

SSE said it had held off from announcing an increase as long as it could. The
new higher prices will take effect on Nov 15. The company said
government-imposed levies on energy bills to pay for everything from free
loft insulation and new wind farms, had gone up by 13 per cent in the past
year, three times more than wholesale energy costs.

Will Morris, the SSE group managing director for retail, said: “We’re sorry
to have to do this. We’ve done as much as we could to keep prices
down, but the reality is that buying wholesale energy in global markets,
delivering it to customers’ homes, and government-imposed levies
collected through bills — endorsed by all the major parties — all
cost more than they did last year.”

The SSE increase will affect seven million homes in the UK. Customers in the
South East, former Seeboard customers, will have an 9.7 per cent increase,
compared with a rise of 7 per cent in the North.

The company blamed the different transmission costs charged by regional power

In addition, about 150,000 SSE customers will be hit with a new standing
charge that could increase costs if they are low-users of energy. The
company is also scrapping prompt payment discounts and loyalty discounts.
Off-peak rates on the Economy 7 tariff will rise by 18 per cent in Scotland
as SSE restructures its unit charges.

Gillian Guy, the chief executive of Citizens Advice, added: “This price
rise will be a blow for stretched budgets. The hike comes at a time when
some working households are turning to food banks to feed their families as
they struggle to cope with the rising cost of living.

“I hope other energy firms show an understanding of their customers’ financial
situation by not raising their prices.”

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