Energy reforms could leave hard-up consumers with higher electricity bills

Hard-up consumers could be hit by higher electricity bills if major government energy reforms are adopted, experts have warned.

The draft energy bill, announced yesterday, aims to reduce carbon emissions and boost the supply of clean energy by drive billions of pounds of investment into new nuclear plants and renewables.

The proposals could be the biggest shake-up seen by the UK energy sector in 20 years.

They include the introduction of long-term contracts that pay a steady rate of return for energy over the lifetime of new low-carbon generators. The move is aimed at overcoming the high cost of building nuclear power plants or offshore wind farms.

Announcing the proposals, Energy Secretary Ed Davey said: “Leaving the electricity market as it is would not be in the national interest. If we don’t secure investment in our energy infrastructure, we could see the lights going out, consumers hit by spiralling energy prices and dangerous climate change.”

He said that the government is battling a bias towards gas and said the proposals would ensure low carbon sources “can compete on a level playing field”.

The Department of Energy and Climate Change (DECC) has warned that £110bn of investment over the next decade is needed to boost electricity generation.

But an examination of DECC’s figures by the Renewable Energy Forum (REF) suggests consumers will bear the brunt of the costs.

REF said its analysis suggests the Government expects only around a third of households will have lower energy bills as a result of the net impact of the Government’s energy and climate change policies, leaving two-thirds – 17 million –worse off.

Audrey Gallacher, director of energy at Consumer Focus, said: “With a hefty price tag attached to the changes to be made, consumers need to be assured that not a penny of the funding that comes out of their bills will be wasted.

“That means the Government must guarantee that any subsidies for new power generation and any rate of return to suppliers are fair, and not overly generous at consumers’ expense.”

Meanwhile, Maria Wardrobe of National Energy Action, warned: “The Government can do little to disguise that these proposals will add substantially to already soaring energy bills and place much more risk on domestic energy consumers.”

Which? executive director Richard Lloyd said the proposals contained “many unknowns. We want to see more evidence and the small print before we can judge whether this will work for all of us who are expected to foot the bill.”