Big Six to cut energy prices after green levy shake-up

 

Households are to be spared the full force of recent bill hikes after power firms pledged to pass on savings from a Government shake-up of energy levies.

British Gas will cut dual-fuel bills by an average of £53 from January 1, but this is still less than half the increase imposed on customers last month.

Other energy firms made similar announcements, with SSE expecting a dual-fuel saving of around 4% before the end of March, equivalent to around £50. Npower does not plan to increase energy prices before spring 2015, unless there are increases in wholesale costs or network charges.

The moves come after Chancellor George Osborne confirmed that the costs of some energy-efficiency and social schemes will be rolled back in this week's Autumn Statement.

It also marks a concerted effort to regain the initiative on the energy issue, which has dominated the political agenda since Ed Miliband promised to freeze prices for 20 months if he wins the general election.

The Government said it will cut the cost of the energy company obligation (ECO), an insulation scheme delivered by major energy suppliers, in a move that should shave £30-£35 off bills, on average, next year.

The Department of Energy and Climate Change also announced a rebate on the warm homes discount, which helps those in fuel poverty. This will save the average customer £12 on their bill for the next two years, although the subsidy will instead be met by the taxpayer.

Electricity companies will take voluntary action to reduce network costs in 2014/15, funding a one-off reduction of around £5 on electricity bills.

Energy and Climate Change Secretary Ed Davey said: "Today's announcement confirms a serious, workable package which would save households around £50 on average."

British Gas said it will reduce gas and electricity prices by an average of 3.2%, equivalent to £41 from an annual dual-fuel bill, with an extra £12 rebate for the Government's warm home discount scheme. The change will apply to all customers, whether on variable or fixed tariffs.

The cut in British Gas bills comes two weeks after it hiked electricity bills by 10.4% and gas tariffs by 8.4%, adding around £123 to the average annual bill.

That increase was blamed on the cost of wholesale energy, Government energy initiatives and higher network charges for delivering power to customers' homes.

British Gas managing director Chris Weston said today: "British Gas is pleased to be cutting energy bills by an average of £53 from January 1.

"We've been able to do this because the Government has committed to making changes to the environmental and social obligations that are paid for through energy bills. These changes will now allow us to help more people at a lower cost."

The Government said it will introduce measures that will boost energy efficiency, worth £540 million over three years.

These include offering buyers of new homes up to £1,000 to spend on energy-saving measures - equivalent to half the stamp duty on the average house - or up to £4,000 for particularly expensive measures.

The Government will introduce a scheme to support private landlords in improving the energy-efficiency of their properties, which will improve around 15,000 of the least energy-efficient rental properties each year for three years.

A further £90 million will be spent over three years improving the energy efficiency of schools, hospitals and other public sector buildings.

Mr Davey conceded that household bills would still rise in the future if wholesale prices went up.

"Of course that is the case," he told BBC Radio 4's Today programme. "One of the reasons why Labour's proposal is economic illiteracy is that if wholesale prices went up during their price freeze, what would happen is the smaller companies, who wouldn't be able to trade for a loss like the bigger companies, would go out of business and that would reduce competition."

The Energy Secretary insisted that the "fuel poor" are still being protected and the energy companies would pass on the savings that are being made.

He said: "They are going to have to reduce bills for households by an average of £50 compared to what they would have been."

Mr Davey said today's plans were "a really big major investment in energy efficiency" and denied there would be fewer solid-wall insulations as a result of the changes.

For Labour, shadow energy secretary Caroline Flint said that it would be the taxpayer rather than the energy companies who would be left to foot the bill for the changes.

"Even after these changes to levies, energy bills are still rising and the average household will still be paying £70 more for their energy than last winter," she said.

"Any help is better than none, but you can judge this Government by who they're asking to pick up the tab - the taxpayer. The energy companies have got off scot-free.

"This shows why nothing less than a price freeze and action to reset the market to stop the energy companies overcharging again in the future will do."

It is understood that the deal on energy bills was among the final elements of the Chancellor's Autumn Statement to be agreed following what one Government source described as "particularly fraught" negotiations between the coalition parties and power companies.

It was only signed off following the last meeting of The Quad group of senior ministers on Friday morning.

Deputy Prime Minister Nick Clegg defended the measures as "good for the environment, good for employment and it's also good for keeping people's bills down".

Speaking on a visit to small businesses on an industrial estate in Chiswick, west London, he contrasted the Government's efforts with Labour's "con" of a promised price freeze.

"What we are trying to say to people is we are going to deliver you something you can believe in," he said.

"This is a set of measures that we have thrashed out with the energy companies which means that your bill will on average be £50 lower than it would have been otherwise.

"I know for Labour they would rather deal in fiction than fact but this is £50 off people's bills compared to what it would have been otherwise and a commitment from some of the energy companies that as long as global wholesale prices don't suddenly increase they will keep the prices steady for some time."

Although there had been "tweaking" of green measures, the stamp duty rebate for insulation offer helped ensure the package was carbon neutral "so that we don't abandon our commitment to the environment".

PA

Suggested Topics
Arts and Entertainment
books
Voices
Caustic she may be, but Joan Rivers is a feminist hero, whether she likes it or not
voicesShe's an inspiration, whether she likes it or not, says Ellen E Jones
Arts and Entertainment
The Doctor and the Dalek meet
tvReview: Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Sport
Diego Costa
footballEverton 3 Chelsea 6: Diego Costa double has manager purring
PROMOTED VIDEO
News
Dr Alice Roberts in front of a
peopleAlice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Arts and Entertainment
The 'three chords and the truth gal' performing at the Cornbury Music Festival, Oxford, earlier this summer
music... so how did she become country music's hottest new star?
Life and Style
The spy mistress-general: A lecturer in nutritional therapy in her modern life, Heather Rosa favours a Byzantine look topped off with a squid and a schooner
fashionEurope's biggest steampunk convention heads to Lincoln
News
i100
Arts and Entertainment
Star turns: Montacute House
tv
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
i100Steve Carell selling chicken, Tina Fey selling saving accounts and Steve Colbert selling, um...
Arts and Entertainment
Unsettling perspective: Iraq gave Turner a subject and a voice (stock photo)
booksBrian Turner's new book goes back to the bloody battles he fought in Iraq
News
The Digicub app, for young fans
advertisingNSPCC 'extremely concerned'
News
i100
Arts and Entertainment
Some of the key words and phrases to remember
booksA user's guide to weasel words
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Law Costs

Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...

Network Engineer (CCNP, CCNA, Linux, OSPF, BGP, Multicast, WAN)

£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...

DevOps Engineer (Systems Administration, Linux, Shell, Bash)

£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...

Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

Day In a Page

The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Fashion walks away from the celebrity runway show

Fashion walks away from the celebrity runway show

As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

Meet the stars of TV's Wolf Hall...

... and it's not the cast of the Tudor trilogy
Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

Europe's biggest steampunk convention

Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
Don't swallow the tripe – a user's guide to weasel words

Don't swallow the tripe – a user's guide to weasel words

Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

Daddy, who was Richard Attenborough?

The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor
She's dark, sarcastic, and bashes life in Nowheresville ... so how did Kacey Musgraves become country music's hottest new star?

Kacey Musgraves: Nashville's hottest new star

The singer has two Grammys for her first album under her belt and her celebrity fans include Willie Nelson, Ryan Adams and Katy Perry
American soldier-poet Brian Turner reveals the enduring turmoil that inspired his memoir

Soldier-poet Brian Turner on his new memoir

James Kidd meets the prize-winning writer, whose new memoir takes him back to the bloody battles he fought in Iraq
Aston Villa vs Hull match preview: Villa were not surprised that Ron Vlaar was a World Cup star

Villa were not surprised that Vlaar was a World Cup star

Andi Weimann reveals just how good his Dutch teammate really is
Bill Granger recipes: Our chef ekes out his holiday in Italy with divine, simple salads

Bill Granger's simple Italian salads

Our chef presents his own version of Italian dishes, taking in the flavours and produce that inspired him while he was in the country
The Last Word: Tumbleweed through deserted stands and suites at Wembley

The Last Word: Tumbleweed through deserted stands and suites at Wembley

If supporters begin to close bank accounts, switch broadband suppliers or shun satellite sales, their voices will be heard. It’s time for revolution