GOVERNMENT MUST ACT FAST ON ENERGY BILLS WHILE IT IS STILL ALLEGEDLY SUMMER
August 7, 2008 7:00 AM
In North Devon Journal
In North Devon Journal
We are all reeling from higher fuel bills, yet worse still is predicted. British Gas and EDF - the French company which bought SWEB - are increasing gas and electricity prices by a third and a fifth respectively. This comes on top of industry-wide increases at the start of the year.
People on very low incomes are worried about they will get through the coming winter. The Government should act fast while it is still - allegedly - summer.
The energy companies received a multi-billion-pound windfall in free permits to emit CO² under the EU's Emissions Trading Scheme. That windfall was reckoned at £9 billion, but is now estimated to be even higher.
Surely some of this money is fair game - it was a government giveaway! Many people will wonder how energy companies can enjoy a massive subsidy at a time when many families are facing an increasingly desperate struggle to pay their energy bills.
The companies should fund a hugely scaled-up programme to insulate homes properly, reducing both fuel bills and carbon emissions - possibly by a fifth or more. At least 12 million houses are currently inadequately insulated, costing households around £200 in lost energy.
We must also end the extra high bills charged to people with pre-payment meters, sometimes up to £142 more than for people on direct debits. We need a social tariff to protect low income customers. Installing smart meters in homes, which show clearly your rate of consumption as you go, could also reduce bills by up to £175.
Average bills are now well above £1000 per year. This raises the question of whether the Government's target of eradicating fuel poverty by 2016 is any longer credible. There are currently 2.5 million households so defined.
Many people feel instinctively that there is something wrong when companies - such as BP last week - are reporting exceptionally high profits at a time when people are struggling to afford their fuel bills.
The competitive electricity market which once existed has largely disappeared, with six major companies now dominating it. Even the claim that consumers can shop around for good bargains is undermined by a recent analysis showing that a third of switchers actually make themselves worse off, and half of customers never switch.
The energy companies have led a charmed life, with an EU windfall and a regulator reluctant to enforce the full rigours of competition rules.
If action is not taken now, many families are going to face a tough time paying their bills this winter.
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