Sir Robert Smith, acting chairman of the energy and climate change committee at Westminster, writes exclusively for the Press and Journal and Energy Voice on why the group has summoned the bosses of the Big Six firms to explain rising consumer bills.
The high cost of gas and electricity prices are being felt more and more by consumers. As winter approaches the recently announced increases will squeeze households even further. There is no doubt that the high cost of energy will push more households into fuel poverty and will mean that other households will have to reduce their spending in order to spend more on heating and electricity.
When the select committee inquired into the profits of the Big Six energy companies we concluded that more transparency is needed if the consumer was going to be able to have confidence that the energy companies are not making excessive profits. The regulator should use its power to force the companies to be more open. The select committee has called in the energy suppliers next Tuesday so that we can question them on their prices.
We live in a world where the global cost of energy looks like rising and is very likely to keep rising in the future. That is why one of the most effective ways of keeping energy bills down is by helping households improve their energy efficiency and reduce the amount of energy that they use. Whilst support for those who are struggling with high energy bills is important, investment in energy efficiency measures will lead to a permanent reduction in consumers’ bills. That is why schemes to provide energy efficiency measures for low income homes are so important.
However the costs of many of these schemes are currently being added to everyone’s bills including those households on the lowest incomes. It is estimated that energy efficiency schemes and also financial support to reduce the bills of pensioners add about £60 to the average annual bill. The committee has already suggested that it would be fairer to transfer these levies from consumers’ bills and fund them from general taxation.
Finally, the UK needs to make significant investment in its energy infrastructure – to build new power stations and new sources of low-carbon energy and to replace much of the ageing power cables and electricity network across the UK. Due to our ageing power stations this investment would be required in any case, but the need to decarbonise the economy and to reduce carbon emissions makes this even more of a necessity.
The advantage of new low-carbon sources of energy is that they will reduce the UK’s demand for imported energy that has pushed up energy prices over the years. Such an investment, however, will require companies to make a profit. It is therefore crucial that the regulator ensures the market is working effectively to keep companies costs as low as possible minimising the burden on hard pressed consumers.
The regulator, Ofgem, has been asked to appear before us as well next Tuesday.
Sir Robert Smith is a Liberal Democrat MP for West Aberdeenshire and Kincardine.
Recommended for you
