Ed Davey's vision of a low-carbon future will increase energy bills. Didn't he just say he wanted to keep prices low?

This revamp to the UK's energy infrastructure is needed, but we could do without the hypocrisy at the heart of the DECC

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The Independent Online

It’s hardly surprising that Energy Secretary Ed Davey’s outline for Britain’s low-carbon future should be accompanied by a jaw-dropping price tag; yet placing the bulk of that cost upon the shoulders of customers exposes a blatant hypocrisy taking place at the Department of Energy and Climate Change (DECC).

In just one week, the Energy Secretary has adopted two utterly conflicting policies. On the one hand he is wagging his finger at energy suppliers for raising bills by around £100 per year, and then on the other hand – and just a few days later - he mandates that bills increase an additional £100 per year.

According to his Advisory Committee, Mr Davey’s upgrades to the UK’s power grid will cost bill payers a cool £7.6bn, a result of allowing domestic energy suppliers to increase the average customer’s bill by around £100 per year.

True enough, the UK is in need of a few revamps to its ageing electrical infrastructure – yet critics are justifiably calling the move a substantial risk at best. More relevant still is the timing; this announcement of a Government-sponsored price hike arrives just one week after the Energy Secretary chastised suppliers for raising prices via his proposal to somehow magically cap domestic rates on behalf of the consumer.

Following David Cameron’s off-the-cuff promise in October that his Government would seek to protect customers from soaring energy bills, Mr Davey frantically proposed legislation last week that will stifle competition within the energy industry by limiting suppliers to just four tariffs, as well as demanding that customers are automatically placed on their supplier’s cheapest tariff. In truth, the Coalition’s intentions here seem sound – yet their methodology is embarrassingly flawed.

Not only do the majority of domestic suppliers already have less than four tariffs, but Mr Davey’s proposal has effectively given the big six energy suppliers the go-ahead to substantially increase their standard rates within the next two to three years. Assuming all customers are automatically transferred to their supplier's cheapest tariff, the suppliers would be forced to charge customers a minimum of £1,210.79 per year in order to match their current average turnarounds. Many energy customers are already paying less than that.

As fate would have it, this gaffe of a Bill has been directly followed by today’s latest proposal, which dictates that Britain’s green future will begin with a £100 annual hike in household energy bills. This prompts a worrying question: whose side is the Government on?

It’s rather difficult to assess Westminster’s true level of sympathy with regards to the plight of average bill payer – especially considering that, by year’s end, the majority of UK energy customers will have been exposed to annual dual fuel increases of 6 -11 per cent. Prior to said hikes, domestic prices had already increased 19 per cent in 12 months. Where was Ed Davey with his misguided proposals then?

At this point, it seems fair to say that Westminster is truly unable to wrap its head around the basic nature of its thriving domestic energy market. Investing in renewables is extremely vital to the future stability of the UK’s power infrastructure – yet is it wise to actively pursue this path if it can only be attained by forcing Britain’s homeowners to choose between heating and eating? Ed Davey’s Energy Bill will spell ruin for the nation’s ever-increasing number of families that are edging ever closer to fuel poverty. The DECC would do well to recognise this impact and amend the Bill’s funding accordingly. Unfortunately, with Mr Davey’s recent track record on energy proposals, it’s looking like that won’t happen.