The poor could end up paying more with eco rollbacks, says Energy Advice Line
The Energy Advice Line has warned ministers that plans to roll back green energy schemes in order to reduce energy bills could see some families paying more in the long term.
Julian Morgan, managing director of business electricity rates comparison, switching, and advice service for energy consumers, said that scaling back insulation funding for poorer homes, for example, when lack of insulation was partly the cause of their high energy bills, was short-sighted.
“We believe the government might be looking in the wrong place to find ways to make energy more affordable for the least well off”, Mr Morgan said. “Cutting or delaying environmental programmes is a quick-fix response to dealing with the problem of spiralling bills and could actually backfire. Environmental levies are there to help and help households to use less energy in the first place, so scaling back these programmes could be ill-conceived. The proposals might save householders an annual £50 as the government claims, but they could lose out on even bigger savings if their homes are not insulated and made more energy efficient. They could end up losing out.”
Ministers have agreed to scale back the Energy Company Obligation (ECO) scheme that cuts the fuel usage of poor households, and to fund another subsidy out of taxation, in order to reduce average energy bills by £50.
The Big Six energy firms have agreed to pass on the full cuts to consumers, and most have indicated they will hold off raising prices until 2015 unless there are further rises in wholesale or network costs.
Labour, which has promised to freeze completely for 18 months if they came to power in 2015, claims the plans will not cost energy companies “a single penny”.
Mr Morgan said the government urgently needed to answer fundamental questions about how its plans will be implemented, as consumers were extremely confused. “So far the government has provided no detail about when consumers will receive the £50 saving and how it will be delivered,” Mr Morgan said. “And there are wider questions. Consumers who have just signed up to fixed tariffs in order to protect themselves from further price hikes have no idea whether they will benefit from these cuts at all. Technically, households on these fixed deals have locked themselves into paying a fixed rate regardless of whether energy prices go up or down so they might not be entitled to the savings. However, this would actually be very unfair. Energy companies will simply be passing on savings flowing from a reduction in their own green energy obligations, so it would cost them nothing to make the reductions available to all. Consumers really do need answers now and could be forgiven for not knowing what to do.”