Tories ‘to cut aid given to poorest customers by energy companies’

Ministers may reduce levies on firms as SSE blames latest price rise on cost of subsidies

Senior Conservative ministers are attempting to cut the amount of money energy firms have to spend helping their poorest customers reduce the cost of their bills, The Independent understands.

Today SSE became the first of the “Big Six” energy firms to announce it will raise gas and electricity prices by up to 10 per cent from next month – adding around £100 to a typical bill. But the company claims that this rise could have been restricted to around £50 if it was not forced to spend £300m a year subsidising energy efficiency improvements for poor households.

Yesterday Alistair Phillips-Davis, the chief executive of SSE, also told The Telegraph that fuel bills will go up every year for a decade unless the Government decides to take responsibility for funding green, low-carbon energy initiatives through the tax system – or simply scrapped them altogether.

Senior Tories are said to be sympathetic to the company’s argument and believe the Big Six could restrict overall price rises significantly if the £1.3bn a year Energy Companies Obligation (ECO) was scrapped or watered down. However, they are being strongly opposed by the Liberal Democrats who point out that such energy saving measures directly help those who run the greatest risk of fuel poverty.

Under the ECO, the Big Six are obliged to pay for the installation of energy efficiency measures in low-income households and areas, and in properties that are harder to treat. The scheme began in January and is due to run until 2015.

But following Ed Miliband’s pledge to freeze energy prices should Labour win the next election, senior Tories have raised the possibility of scrapping the ECO as a way to restrict price rises.

David Cameron said he was looking to address the “causes of prices” adding that “green levies shouldn’t be there for a moment longer than they’re necessary”.

But Lib Dem sources said they would fight off any attempt to scrap or downgrade the measure, warning it was “essential that vulnerable people got the assistance they needed to keep their home warm,” adding: “This is not something we are prepared to give ground on.”

It is widely believed that SSE’s announcement will herald a series of rises among the other big energy suppliers – Centrica, EDF, Scottish Power, E.ON and npower.

Will Morris, group managing director of retail at SSE, apologised to customers but said it had been forced to raise tariffs amid rising costs. The company said wholesale energy prices were up 4 per cent, paying to use newly-upgraded networks by 10 per cent and Government-imposed levies up 13 per cent. It argued that the cost of funding the low-carbon energy ECO ought to be shifted to the taxpayer.

“We know we will come in for a great deal of criticism for this decision and politicians will no doubt be lining up to condemn us,” Mr Morris said. “But over many years policymakers themselves have failed to highlight adequately the cost to consumers of the policies they have pursued in Government. They can’t expect to have power stations replaced with new technologies, the network to be upgraded and nationwide energy efficiency schemes all to be funded for free.”

But the Energy Secretary Ed Davey said the cost of wholesale energy far outweighed the proportion of the bill that goes on levies. “This is clearly unwelcome news for customers,” he said.

Martin Lewis, founder of the MoneySavingExpert website, said customers should not switch to another firm that might announce price rises in the near future. “The most important thing to understand is that the Big Six energy companies are like sheep – where one goes, the rest will almost certainly follow in the next three months,” he said.

Ed Miliband said SSE’s announcement showed why there needed to be an energy bill freeze.

Suggested Topics
News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
News
news
Arts and Entertainment
Nick Frost will star in the Doctor Who 2014 Christmas special
tvNick Frost, Natalie Gumede and Michael Troughton step up
Arts and Entertainment
Matthew Beard, Ben Schnetzer, Douglas Booth and Jack Farthing in ‘The Riot Club’
filmReview: Sheer nastiness of Riot Club takes you aback
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
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

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week