Energy companies have come under the microscope once more, as ministers confess the ‘big six’ stand to greatly benefit from a deal made in December, regarding green levies, which was mishandled by the government.
Analysis from the Insulated Render and Cladding Association (INCA) sheds further light on the situation, showing households are set to overpay by roughly £23 a year for a hack energy efficiency scheme, unless there are reductions in bills or energy companies demonstrate that they will utilise the money productively and in the publicís interest.
Under the conditions of the December deal, the ‘Big Six’ agreed to slash prices by £50, seemingly saving households money. However, the subsequent policy changes saved them heaps of cash ñ cash which had been collected from the taxpayer in return for nothing.
Companies that enrolled in the Energy Company Obligation (ECO) scheme, which compelled suppliers to provide insulation for homes, collected a duty from every household to fund the scheme. Yet, the modifications made to energy policies decreased the number of homes that needed to be insulated and as such, saved energy supplier’s over £30 a year per household ñ a total potentially amounting to a collective £2bn.
The current predicament was anticipated by INCA back in April, when the trade association spearheaded a joint letter, signed by other energy efficiency organisations, addressed to the prime minister which said:
ìThe actual savings to the ‘Big Sixí go far beyond the £35 you have persuaded them to give back to customers, representing a £1bn-£2bn windfall to energy suppliers over the next three years.”
These claims were played down at the time by the government, but now it has been forced to U-turn confessing that energy companies are “likely now to be in a position to make greater savings than they had originally projected in December.”
Despite this declaration, the government is being criticised for its simpering position on the matter. Having merely ìinvitedî the UKís energy giants to pay customers out, there are many who believe the government arenít taking a firm enough stance. One such critic, Labour MP John Robertson, of the Energy Select Committee, had his say:
ìI believe the energy companies have been conning us for years: raising prices while their profits soar,î said Mr Robertson.
ìThey insist this isnít true, so I challenge them to prove it. Their costs have gone down, so now their prices should as well.î
Government admission was made in irrefutably meek fashion – a terse paragraph buried in a consultation document, which outlined the executiveís expectation that energy suppliers ought to reimburse each consumer.
However, when the time came for a show of strength, there was none.
Andrew Warren, director of the Association for the Conservation of Energy, appeared particularly disillusioned about the matter, saying: ìThe upshot is that, even though they concede that the Big Six are receiving a further windfall this year directly as a result of the over-generous proposals, DECC has no intention of trying to claw back any of these windfall profits handed out to the Big Six.
ìInstead they are simply ‘inviting’ them to make philanthropic gestures. Yet again, the end score is: Big energy companies, 6: rest of the world, nil.î
A source at the DECC stated: ììThe major energy suppliers have publicly committed to reduce customer bills by around £30-35, in line with the agreement reached last December. An additional 600,000 homes will benefit from warmer homes as a direct result of changes to ECO.
ìWe expect companies to continue passing onto consumers no more than the actual costs of the scheme; and we are challenging them to set out publicly how they propose to do this.î