Power plants exempt from review of 'green tariffs'

The government has confirmed that the review of “green tariffs” on energy bills will not cover those charges which support the development of low carbon infrastructure.

Prime minister David Cameron yesterday pledged to “roll back the green charges” on consumer’s energy bills, as well as introduce a new competition test for energy utilities designed to ensure prices are kept down.

However a spokesperson for the Department of Energy and Climate Change (DECC) confirmed today that this review of “green charges” would not look at changing tariffs that support the construction of low carbon energy generation infrastructure, such as this week’s deal to support construction of Hinkley Point C nuclear power station.

In addition the spokesperson said the review would not cover charges which support the payment of feed-in tariffs for domestic renewable generation.

Referring to the review of green charges, the DECC spokesperson said: “The government is looking at how to get people’s energy bills as low as possible to help hard-pressed families. We’ve already increased competition, brought new players in to the market to offer consumers real choice and the most vulnerable are getting direct help with their bills this winter. We’ll continue this work to make sure consumers are getting a good deal.

“No one is talking about changing support for large-scale renewables or feed-in tariffs, which are essential for investor confidence in the renewables sector and our commitments to a low-carbon economy.”

Liberal Democrat sources have accused Cameron of “panicking” over the issue after being put under pressure by Labour leader Ed Miliband’s pledge to freeze energy prices if elected. The UK Green Building Council has already expressed serious concern at the move, which has the potential to hit the £1.3bn spent annually by energy companies on the installation of energy efficiency measures under the ECO programme.

Miliband mocked Cameron’s move at prime minister’s questions yesterday, saying “this is the man who said ‘vote blue, go green’.”

The government is reported to be considering slackening the ECO – which pays for the energy efficiency retrofit of homes through a charge on all energy bills – to try and ease the pressure. This is despite the fact that in total “green charges” amount to just 9% of average energy bills, with the ECO accounting for 4%.

The latest Department of Energy and Climate Change figures, published last week, showed that the ECO has led to the installation of 244,882 retrofit measures through to the end of August, with 215,705 properties benefitting from the installation of one or more measures through the scheme.

Paul King, Chief Executive the UK Green Building Council, said Cameron’s comments on rolling back green charges on energy bills were “incredibly short-sighted and potentially very damaging”.

He said: “With the cost of energy bills going up, policies such as ECO are essential in ensuring the homes of vulnerable and poorer income people are well insulated and will help to keep their bills down in the longer term. The government’s own analysis shows that, without these policies, bills will be much higher in the future.”