Study to separate fact from fiction over energy bills

An independent review into the cost of energy has been launched by the government amid concerns about rising bills.

Factors affecting bills, including pricing and regulations, will be considered. Picture: Damien Meyer/Getty

The study will look at how the government can meet its climate change targets while keeping bills down for consumers.

Oxford University professor Dieter Helm will lead the work, which he said would “sort out the facts from the myths about the cost of energy”.

The government wants the UK to have the lowest energy costs in Europe for households and businesses.

But the review’s launch came days after energy giant British Gas hiked electricity prices by 12.5 per cent for 3.1 million customers.

Prof Helm’s work will not look at whether a cap should be imposed on price rises – a flagship Tory election commitment which has been watered down since Theresa May lost her Commons majority.

The UK is legally obliged to reduce greenhouse gas emissions by at least 80 per cent from 1990 levels by 2050, and the review will consider how to meet climate change targets while ensuring the security of energy supply in the most cost-effective way.

It will consider the implications of changing demand, including the shift to electric vehicles and new developments in energy storage, robotics and artificial intelligence.

The review will also examine options for auctions and other competitive mechanisms within the energy market, and for reducing complexity in the supply chain.

The investigation, which will report by the end of October, will consider the key factors affecting bills, including energy and carbon pricing, efficiency measures and regulation.

Prof Helm said: “The cost of energy always matters to households and companies, and especially now in these exceptional times, with huge investment requirements to meet the decarbonisation and security challenges ahead over the next decade and beyond.

“Digitalisation, electric transport and smart and decentralised systems offer great opportunities. It is imperative to do all this efficiently, to minimise the burdens. Making people and companies pay excessively for policy and market inefficiencies risks undermining the objectives themselves.

“My review will be independent and sort out the facts from the myths about the cost of energy, and make recommendations about how to more effectively achieve the overall objectives.”

Officials insisted the government is already taking action to cut bills and has asked energy regulator Ofgem to come forward with proposals to extend the price protection in place for vulnerable consumers.

But critics said the measures fall short of the cap on price rises for 17 million households promised by May.

Business and energy secretary Greg Clark said: “All homes and businesses rely on an affordable and secure energy supply, and the government is upgrading our energy system to make it fit for the future. We want to ensure we continue to find the opportunities to keep energy costs as low as possible, while meeting our climate change targets.

“The review will consider how we can take advantage of changes to our power system and new technologies to ensure clean, secure and affordable supplies over the coming decades.”