‘Bewildering’: Government won’t stop Bulb collapse adding to energy bills, MPs warn

Costs will ‘ultimately be passed down to bill payers’, says cross-party committee

Adam Forrest,Holly Bancroft
Thursday 13 October 2022 20:11 BST
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Liz Truss’s government is failing to prevent the cost of energy supplier Bulb’s demise from being passed on to bill payers, a cross-party group of MPs has warned.

Independent experts have warned that households could pay more than £150 extra on their energy bills, with the cost of bailing out Bulb set to top £4bn by next year.

MPs on the Business, Energy and Industrial Strategy (BEIS) select committee wanted the government to make sure the collapse of the firm – which went bust in November 2021 – was paid for through general taxation.

In a response to the select committee, the government said bailout costs would be levied on energy companies using a “shortfall mechanism”. But MPs said this would not stop energy companies from passing on the costs.

Labour MP Darren Jones, chair of the select committee, said: “It is bewildering that, at a time when average household energy prices are still double what they were a year ago, ministers intend to increase bills further.”

“This is all the worse given that the government has added unnecessary costs to the administration of Bulb by preventing it from buying gas ahead of time – ironically in the name of ‘value-for-money’ guidelines,” he added.

The cross-party group said costs have been pushed up unnecessarily by the government’s failure to let Bulb’s administrator hedge gas and electricity costs, forcing them to buy more expensively at the price on the day.

The committee did not accept the argument that energy firms would cover the cost, saying the government had “swerved” its recommendations.

Mr Jones said that “when most of these firms are failing to make a profit, it’s clear these additional costs will ultimately be passed down to bill payers”.

It comes as the head of Energy UK – the trade association for the energy industry – attacked Ms Truss’s government for the “baffling” decision not to roll out an energy-saving public information campaign this winter.

Emma Pinchbeck, its chief executive, urged the government to launch a major information campaign advising customers to reduce energy use in their homes.

Addressing Energy UK’s conference in London, she said: “It remains baffling to me that the government isn’t grabbing this opportunity to reduce our gas demand this winter and beyond by communicating simple ways to reduce our energy use in homes, and by ramping up our investment in buildings.”

She added: “It’s not just me but everyone, from the Institute to Economic Affairs to the Green NGOs, agree on this point … I want to remind government that acting with speed is not the same thing as acting with haste.”

Ms Truss raised eyebrows in the Commons on Wednesday when she said that No 10 was working on a plan to help households and businesses use energy more efficiently.

But the prime minister’s official spokesman made it clear that the government was only looking at ways to “expand” the existing “Help for Households” website, which features advice on cost of living support and energy efficiency.

Cabinet Office minister Nadhim Zahawi said at the weekend that a BEIS proposal to launch a £15m public information campaign had been ditched on cost grounds.

“What the prime minister quite rightly ... has done is to say, ‘We don’t need to spend £14m or £15m on another campaign if National Grid and Ofgem are doing that work’,” he said.

Ms Pinchbeck also criticised the Truss government’s reported plan to block solar panels from being installed on much of England’s farmland.

“Cuts to green policies in 2015 have added costs to bills today. It seems scarcely believable to me that we would make the same mistakes again with, for example, reforms that make it harder or banning cheap solar power,” she said.

Business secretary Jacob Rees-Mogg is said to be opposed to plans to block solar panels. He believes it would be “unconservative” to instruct farmers what they can do with their land, according to The Guardian.

In a piece for the newspaper, he insisted that he was “not a green energy sceptic” and said the government was “exploring options to support low-cost finance to help householders with the upfront costs of solar installation”.

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