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UK: Green energy policies could add £300 to household fuel bills

September 5, 2011


Downing Street advisers have warned that green energy policies could add £300 to annual household fuel bills, putting them on a collision course with the energy secretary, Chris Huhne.

Ben Moxham, David Cameron’s senior policy adviser on energy and environment and a former BP employee, said claims by the Department of Energy and Climate Change (DECC) that a 30% rise in fuel bills by 2020 would be offset by lower energy consumption through energy efficiency were “unconvincing”.

In a note written in July and copied in to other senior advisers at Downing Street including Ed Llewellyn, the prime minister’s chief of staff, policy head Steve Hilton and Cameron’s permanent secretary, Jeremy Heywood, and seen by the Daily Telegraph, Moxham said: “DECC’s mid-case gas price scenario sees policies adding 30% to consumer energy bills by 2020 compared to a world without policies.”

While the DECC, headed by Huhne, predicted the impact of green policies on household electricity bills “would be lower due to the effect of other policies, notably energy efficiency measures, in lowering electricity consumption”, Moxham said “we find the scale of household energy consumption savings calculated by DECC to be unconvincing”.

He added: “Their analysis may be based on the assumption that many energy efficiency measures will be taken up without subsidy, whereas we believe a large number of measures will need to be subsidised, given the hassle factor and other barriers to consumer uptake,” he adds.

Huhne has been pushing through energy reforms, which he has said will boost investment in low-carbon energy and allow Britain to meet its target of cutting emissions by 34% by 2020.

In July he launched the white paper on electricity market reforms, which include policies on carbon pricing, which promotes the use of low-carbon renewables and nuclear power, and obligations on energy firms to provide help in making low-income homes more energy efficient and use more renewable energy.

Huhne has also argued that without reforms, bills would still rise and called reports that they lead to the highest bills in Europe “absolute nonsense”.

A DECC spokesman said: “Reforms will not add £300 to bills. Our policies will both add and subtract from future bills because we need to build new reliable energy sources to keep the lights on, but we’ll also be helping people to cut their bills through greater energy efficiency. Our reforms to the electricity market will deliver the best deal for Britain and for consumers: getting us off the hook of relying on imported oil and gas by creating a greener, cleaner and ultimately cheaper mix of electricity sources right here in the UK.”

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