Energy market shake-up to hike bills by £6bn as households will be forced to pay extra £20 a year, warn experts
A massive shake-up of the energy market to be announced this week will lead to a fresh hike in bills and subsidise Scottish wind farms at the expense of power stations in England, warn experts.
Regulator Ofgem has overhauled the charges paid by companies that use the National Grid, but critics say consumers face an extra £20 a year on the average bill as costs are passed on.
This would make a major dent in the £50 cut expected from the slashing of green levies that was trumpeted by the Government earlier this month.
Bills hike: Energy firms say Ofgem is introducing changes that appear to favour Scotland at the expense of the rest of the country
An energy industry source said: ‘We strongly believe that the Government should be creating energy policy rather than Ofgem and that all subsidies should be clear and transparent to customers. This proposal will be hidden and not at all clear in either delivery or cost to customers.’
A report by respected independent economic consulting group Nera on behalf of npower and submitted to Ofgem claims the changes ‘would materially increase consumers’ bills by around £6billion’ by 2030.
Network charges will rise from next April following the first of the changes, while Nera reckons extra investment in transmission systems would be needed and new power stations required as the economic costs of the existing network go up. Most of the increases come from the cost of subsidising low-carbon energy production.
Energy firms say the regulator is overreaching itself by introducing changes that appear to favour Scotland at the expense of the rest of the country. They claim it is reacting to a political agenda aimed at favouring Scotland ahead of next year’s referendum on independence.
Ofgem denies this. Ofgem admits that its proposals may result in wind generators in the north of Scotland paying on average £13 per kilowatt less than at present to access the National Grid while those in the South West of England may pay £5 per kilowatt more.
The regulator wants to smooth the path for low-carbon energy producers as the Government moves to hit its legally binding target of halving carbon emissions by 2025 based on 1990 levels.
Ofgem claims any increase in bills will be minimal following the changes.
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