Government plans levy to subsidise development costs

GOVERNMENT plans to increase investment in the energy sector will cost consumers more than £100 a year on their household bills, it has been revealed.

Westminster plans to allow energy companies to introduce new levies on bills in order to pay for £7.6 billion investment in power stations in its Energy Bill next week.

However, the expected annual £110 increase this will mean for consumers is causing concern among campaigners, who say too many people are already struggling to pay their bills.

Energy and Climate Change Secretary Edward Davey said: “The decisions we’ve reached mean we can introduce the Energy Bill and have essential electricity market reforms up and running by 2014 as planned.

“They will allow us to meet our legally binding carbon reduction and renewable energy obligations and will bring on the investment required to keep the lights on and bills affordable for consumers.”

However, John Robertson, Labour MP for Glasgow North West, said: “There are already enough people living in fuel poverty and adding another £100 on top of their bills is only going to make things worse. I really believe that Ed Davey does not understand the difficulties people face.”

The Westminster government says the levy is necessary to pay for investment in infrastructure – including changes which will reduce carbon emissions. But campaigners say further hikes in the price of fuel could lead to real hardship.

Ann Robinson, director of consumer policy at uSwitch.com, said: “The fact remains that any additional cost on top of the hikes already seen will be unaffordable for many consumers. The average household energy bill today is already £1,334 a year and this is hurting people.

“Last winter three-quarters of households went without heating at some point to keep their costs down – 15 per cent admitted this had an impact on their health and wellbeing. “

Norman Kerr, Energy Action Scotland’s director, said: “Looking at details of what will be in the Energy Bill, it’s apparent that the amount that fuel companies will add to people’s fuel bills will triple in order to pay for the environmental and structural developments required by government, and this is a hefty price tag.

“Adding substantially to customer bills, as these proposals will, is unfair and regressive. Raising such high sums of money via a blanket levy on all fuel bills, regardless of ability to pay or energy usage, amounts to being a stealth tax.

“Instead, we believe the government should operate via the tax system which would make allowances for income levels.”

Scottish energy minister Fergus Ewing said: “Although we welcome today’s commitment to funding support for low-carbon electricity for 2020, the UK government must also ensure that the cost imposed on consumers is reasonable, which should not include support for new nuclear at the expense of renewables and carbon capture and storage.

Ofgem’s senior partner for markets Andrew Wright said: “Ofgem welcomes today’s announcement on the future of energy policy. We will continue to work constructively with government to get the best outcome for consumers.”