Will Ed Davey's energy price shakeup lead to lower bills?
LIVEEd Davey plans to make energy companies cut competing tariffs and put consumers on the lowest suitable price option. But will households really get cheaper energy bills as a result?
Energy shakeup. Photograph: Action Press/Rex Features
Two organisations have suggested the government should be focusing on the bigger picture - cutting overall consumption, and moving to greener generation.
Andrew Horstead, risk analyst for energy management firm Utilyx, is another commentator who believes consumers are misguided if they think that this will lead to cheaper energy bills. He said: "Bills will continue to rise due to the impact of environmental taxes and social obligations, while the outlook for UK wholesale energy costs shows no sign of improvement.
"In Germany, for example forward wholesale prices have actually dropped to their lowest level, in part due to a surge in solar and wind capacity, levels which the UK can only dream about. However, German energy suppliers have just raised domestic bills by 13% blaming rising environmental costs. Focus on tariffs is misplaced, what the government really needs to do is to engage with consumers and businesses to reduce energy consumption and promote energy efficiency.”
Friends of the Earth’s head of policy and campaigns, Andrew Pendleton, continues this theme. “Action to simplify energy tariffs is certainly welcome, but if David Cameron really wants to cut bills the thing he should regulate is his gas-guzzling chancellor," he said.
“If George Osborne’s plans for more gas-fired power stations go ahead they will lock the nation into dirty and increasingly expensive fossil fuels for decades. To create a long-lasting solution to soaring fuel bills, and tackle climate change, we need to invest in a massive energy saving programme and develop the UK’s huge clean energy potential from the wind, waves and sun.”
Meanwhile keen politicos interested in the tensions around the cabinet table should take a look at this piece on the New Statesman's political bloghttp://www.newstatesman.com/politics/2012/11/how-will-ed-davey-strike-back-osborne, which suggests Ed Davey has been undermined by the chancellor's machinations on wind power. He must reassert his authority, it suggests. Is today's events just that, or was the Lib Dem minister bounced into the whole thing...?
Updated at 3.26pm GMT
Meanwhile Ofgem's chief executive, Alistair Buhanan, has welcomed the government's move, which he says is based on his own organisation's Retail Market Review.
“These proposals will put an end to consumers being bamboozled by complex tariffs and deliver choice that consumers easily understand. We are also proposing much simpler information for consumers such as making suppliers give consumers their cheapest tariff on their bill. Ofgem is also going to enforce fair treatment of consumers using licence standards backed by fines.”
What are people saying?
Asked if the government would regard the policy as a failure if it led to some people’s fuel costs rising, Cameron’s official spokesman told a regular media briefing in Westminster: “Our objective has been to work to help hard-working families who often struggle to pay their energy bills.
“That is what our proposals are designed to do. Our objective here is to cut people’s bills and get people on to the lowest tariffs and that is what we are going to do.”
In a message on micro-blogging website Twitter, Cameron said: “My promise to ensure energy customers get the lowest tariff is being delivered, despite Labour saying it couldn’t be done.”
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