Big Debate: Energy Prices

The Prime Minister has blamed green levies for the rise in prices.

The Prime Minister has blamed green levies for the rise in prices. - Credit: Archant

This week, Cllr Peter Golds, leader of the Conservatives in Tower Hamlets, and James Bloodworth, editor of the blog Left Foot Forward, debate why prices are rising and what to do about it.

James Bloodworth, editor of the blog Left Foot Forward

James Bloodworth, editor of the blog Left Foot Forward - Credit: Archant

James Bloodworth, editor of the blog Left Foot Forward

Cllr Peter Golds

Cllr Peter Golds - Credit: Archant

The worst thing about David Cameron’s recent attack on green levies is not so much that he is misguided (although he is), but that he is being wilfully dishonest.

The Prime Minister is well aware of the real reasons for rising energy bills, but he has instead gone after a soft target – in the process reneging on previous commitments (to lead the “greenest government ever”) and further cementing Britain’s reliance on insecure gas supplies.

So-called green levies account for just a fraction of recent increases in energy bills, and even then there is evidence that over the long-term green measures will actually save consumers money by reducing Britain’s reliance upon gas and encouraging energy efficiency.

According to a report from the Department of Energy and Climate Change from March, average household dual fuel bills have increased by about 13 per cent in real terms between 2010 and 2012.

Increasing wholesale prices, rather than “green levies”, were the main drivers of price increases.

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The hypocrisy of the energy companies is also astounding. Scottish Power last week announced it is to put up the price of its gas by 8.5pc and electric by 9pc from December 6.

Predictably the company blamed “green levies” for the increase.Yet last year the company more than doubled its pre-tax profits to £712million, with the company’s chief corporate officer Keith Anderson pocketing a £129,000 bonus, taking his total pay for 2012 to more than half a million pounds.

David Cameron is so attached to market dogma he feels more comfortable standing up for the energy companies than he does formulating a real long-term energy policy which moves away from dependency on foreign gas.

Over the long-term this will see bills going only one way: Up!

Cllr Peter Golds, leader of the Conservative Party in Tower Hamlets

Everybody uses energy. Ed Miliband, as a former energy secretary, knows exactly when energy companies announce their tariffs and therefore timed his proposed price freeze accordingly.

However, as energy secretary he was responsible for the extremely expensive policy of decarbonising the energy sector by 2030 and was party to reducing the original 17 energy companies into the “big six”.

Labour’s post-election plan to freeze prices is not economically realistic. By announcing it in advance, companies will set high prices just before the freeze comes in to effect and raise them afterwards. What is required is more than just the “big six” energy companies, which would provide a choice as to supplier. Genuine competition will also keep prices under control.

There needs to be a reduction in excessive green taxation, which currently adds £100 to our bills and seems only to result in the growth of wind farms.

We need to enhance science and research to produce clean, safe and modern energy.

Certain groups may not like this but modern nuclear power and the extraction of shale gas are the solutions for the future. Other countries are working on safe and sustainable energy supply now.

We were left seriously exposed in energy supply during the last Labour government when they delayed the decision to upgrade existing nuclear power. There is now a game of catch-up to stop black-outs or a supply that is prohibitively expensive.

To reduce bills the companies currently offer a range of fixed price deals, with no rises until as late as 2017 in some cases.

We should be as careful in our energy supply as we are in choosing a supermarket when purchasing groceries.