Statement: ‘Don’t blame support for poorer customers for any of your future price hikes’

Following reports in the Daily Mail and the Sun today that an “unspecified industry source” cited social policies as a possible cause of increases in domestic energy bills next year, NEA has released a statement.

Peter Smith, Director of Policy and Research at NEA comments:

“Overall the impact of domestic energy efficiency policies on bills has declined dramatically in recent years. Further cuts in support are also planned for this April. Suppliers are also being given new data to deliver the Energy Company Obligation and the Warm Home Discount electricity rebates more cost effectively than ever before. If this unnamed supplier is implying they need to increase prices due to these two programmes, this risks misleading their customers and the wider public.

“Of course, in some ways, the UK Government could better balance the burden on energy bill payers and Treasury spending. We estimate the Treasury will receive approximately £14 bn from domestic energy consumers over this Parliament and yet not £1 of central government investment is planned to go into energy saving.

“Some of the new costs feeding through to bills are also deeply regressive. We are particularly worried about the additional costs domestic consumers will face, if Government plans to exempt large polluters from an increasing number of policies, goes ahead. However our message to this unnamed industry source is clear: ‘Don’t blame support for poorer customers for any of your future price hikes’.”

NEA is urging domestic customers who can move from the most expensive Standard Variable Tariff (SVT) to considering switching their supplier or as a minimum get on their own supplier’s cheapest fixed tariff this winter. NEA has also recently highlighted further steps that would help tackle exclusion in the energy market and help the Government meet statutory fuel poverty targets.

ENDS

Contact Peter Smith on 0759 578 0893

Alternatively, contact: NEA Communications Office on 0191 261 5677

Notes to editors:

1. National Energy Action (NEA) is the leading fuel poverty charity. For further information visit www.nea.org.uk.

2. There are around 4 million low income households across the UK whose health and wellbeing is being severely affected as they struggle to afford the energy they need. NEA has estimated that by 2030 over 125,000 vulnerable people across the UK could die needlessly due to living in a cold home. Furthermore, national health services could spend billions treating cold-related morbidity, in excess of £22bn in England and Wales alone over the same 15 year period.

3. The a statement written in response to this article in the Daily Mail and a similar story in The Sun on the 17th November 2016.

4. The costs of energy efficiency policies on bills had decreased since the Carbon Emission Reduction Target (CERT) and the Community Energy Saving Programme (CESP) were replaced with the Energy Company Obligation (ECO) from January 2013. ECO was launched in January 2013 and is currently in its second obligation period, which is due to end on 31 March 2017. In 2014, the programme was reduced in size by a third. The Government’s Spending Review 2015 announced similar plans for the supplier obligation to be reduced still further to an estimated level of £640m per year and run for 5 years from April 2017. The proposed new schemes will be the primary vehicles through which Government must meet its commitments to tackle fuel poverty. However, according to the Climate Change Committee (CCC) and think tanks like Policy Exchange, resources are not sufficient to meet current fuel poverty targets.

5. The Warm Home Discount scheme was launched in April 2011 and has provided assistance with energy costs to around 2 million low income and vulnerable households in Great Britain each year. Since its launch, the scheme has provided over £1.4 billion of direct assistance to low income and fuel poor households. The Government announced in the Spending Review in November 2015 that the Warm Home Discount scheme would be extended to 2020/21 at current levels of £320m per year, rising with inflation, to help households who are at risk of fuel poverty with their energy bills. NEA is working alongside the UK Government to seize the legislative opportunity to extend data sharing powers to provide the automatic electricity discount to all low income families which will further reduce the cost of the policy.

6. The UK have recently consulted on implementing an exemption for Energy Intensive Industries from the indirect costs of the Renewables Obligation and Feed-in Tariff Schemes. Based on the information within the impact assessment NEA calculates the policy will cost fuel poor households in England somewhere between £115 to £185m over the lifetime of the policy and all domestic consumers (again just in England) broadly between £1.1 to £1.7bn.

7. HM Treasury currently receive very significant sums through carbon taxes and VAT on domestic energy bills. Over the duration of this UK Parliament alone domestic energy consumers will contribute well over £14 billion to the Treasury, £30 billion over 10 years[1]. NEA highlights that thirteen EU governments channel these funds to improving the quality of life of the poorest and most vulnerable members of their societies, future-proofing their economies and helping improving national competiveness by reducing energy demand.

8. NEA’s top policy priorities can be found here.

 

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