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New government energy scheme could add £94 onto bills

An independent report examining the costs of the Government's new energy efficiency programme, the Energy Company Obligation (ECO) scheme, has found it could add £94 to consumer energy bills next year.

The Energy UK report's findings also revealed that the cost of the Department of Energy and Climate Change's energy model is significantly greater than was originally estimated.

The industry has long been concerned that the Department of Energy and Climate Change had underestimated the costs of its new ECO scheme. This independent report by NERA supports our fears as it shows when the right numbers are put in, the cost to households doubles or more. This has to be sorted out now and we are calling on Government to work with us so that customers get the insulation they need in a sensible and cost-effective way. We have also written to consumer groups asking them to come and discuss these findings and help with the solution.

– Angela Knight CBE, Chief Executive of Energy UK

Ofgem: Energy industry faces 'unprecedented challenge'

Energy regulator Ofgem has welcomed the Government's energy bill plans, but warned the industry faces an "unprecedented challenge" ahead.

In a statement, the regulator's Senior Partner for Markets, Andrew Wright said:

Ofgem welcomes today’s announcement by DECC on the future of energy policy. We will continue to work constructively with Government to get the best outcome for consumers both now and in the future.

Ofgem has played a key role in advising consumers and Government of the challenges Britain faces in attracting significant investment. In 2009 Project Discovery warned consumers that Britain’s energy industry faced an unprecedented challenge and concluded that changes to the current energy arrangements would be needed to deliver secure and sustainable energy supplies.

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Industry insiders: Lower bills are an 'heroic assumption'

Drax Power Station near Selby, as the Government outlines an Energy Reform bill that will see energy bills rise by around  £100 by 2020.
Drax Power Station near Selby, as the Government outlines an Energy Reform bill that will see energy bills rise by around £100 by 2020. Credit: PA

Energy Secretary Ed Davey has claimed that adding around £100 to annual household energy bills by 2020 will reduce costs in the long term, but this was described by an industry insider as an "heroic assumption", ITV Business Editor Laura Kuenssberg said.

Another industry source cast doubt on the government's assumption that energy efficiency will offset increasing costs.

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CBI says Energy Bill is a 'strong signal' to investors

John Cridland, CBI Director-General, supports the energy bill, but warned that vulnerable consumers should be protected.
John Cridland, CBI Director-General, supports the energy bill, but warned that vulnerable consumers should be protected. Credit: PA

The CBI welcomed the Government's energy plans, but warned that vulnerable consumers should be protected from price hikes.

Its Director-General, John Cridland, said: “This package will send a strong signal to investors that the Government is serious about providing firms with the certainty they need to invest in affordable secure low-carbon energy.

“We now have political agreement on this critical issue and the Government should get the bill on the statute books as quickly as possible.

“As more details emerge, the Government should ensure that those households and businesses most vulnerable to increased energy prices are protected.”

No 10: Energy efficiency plans mean bills will come down

by - Political Correspondent

The Government has reached a long-term agreement that’s going to deliver "a clear, durable signal to investors," the Prime Minister's spokeswoman said today.

She was speaking as details of the deal on energy policy within the Coalition began to emerge.

She said investments in green energy would form a bigger percentage of bills in future, but insisted energy efficiency measures would mean overall bills would come down.

The biggest impact on prices was the rising cost of gas, followed by the need to replace outdated infrastructure.

Investment in green energy actually had the least impact on consumer bills, she said.

Green energy will boost economy, Energy Secretary says

Drax Power Station near Selby, as the Government outlines an Energy Reform bill that will see energy bills rise by around  £100 by 2020.
Energy Secretary Ed Davey says the Energy Reform bill will see energy costs increase by around £100 a year by 2020. Credit: ITV News

A new energy-efficient electricity infrastructure will create "a massive increase in jobs" now, while the impact on household bills will rise gradually, Energy Secretary Ed Davey told ITV Business Editor Laura Kuenssberg.

The Liberal Democrat MP said that the average consumer is currently paying 2% of their energy bill to supporting clean energy and this will rise to 7% by the end of this decade, but this increase will pay for a system that will actually reduce energy bills in the long term.

"We think [the rise will be] slightly under a £100 in eight years time, but the offsetting measures of things that will go the other way, and all our policies together, will mean that we think the average household will see a bill that's reduced by 7% than it otherwise would have been."

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