Energy price rise: David Cameron defends green subsidies
PM says green levies necessary to fund wind and nuclear power after energy giant SSE partly blames 8.2% price hike on state-imposed subsidies
David Cameron has defended "necessary" green subsidies on energy bills to fund wind and nuclear power after large energy supplier SSE partly blamed government-imposed levies for forcing it to raise gas and electricity prices by 8.2%.
The prime minister said the best way of reducing energy bills is tackling the root causes of high wholesale gas prices, including improving competition between energy companies and pushing ahead with fracking.
Cameron said green levies to subsidise renewables will not be on bills "for a moment longer than is necessary" but added that the UK needs to have a "balanced energy mix" including nuclear power and wind power. To achieve this "some of those subsidies have been necessary", he said.
He also criticised Labour's promise to freeze energy bills for 20 months as a "con" because it would be impossible to keep the pledge if wholesale prices shoot up.
His comments follow criticism of SSE for announcing higher prices, meaning the average annual bill for its customers will rise by £106 to £1,380.
They also come amid speculation that the Treasury will respond to Labour's price freeze by removing some green levies on bills that go towards subsidising wind, solar and other renewables as well as energy efficiency and fuel poverty programmes. Some Conservatives have been pushing for further cuts to subsidies.
The Liberal Democrats would strongly resist the move if it were to have any effect on the UK's ability to hit targets on reducing carbon emissions and tackling climate change.
The government is under pressure on energy prices as household bills rise to a record high, mostly driven by rising wholesale gas prices. Green levies - which include subsidies for renewables and social programmes to fund energy-saving measures for low-income homes and pensioners - make up £112 of the average £1267 dual fuel annual bill, according to Department for Energy and Climate Change figures.
On Thursday, SSE blamed a raft of factors for its decision to raise prices from next month.
"We're sorry we have to do this," said SSE's Will Morris. "We've done as much as we could to keep prices down, but the reality is that buying wholesale energy in global markets, delivering it to customers' homes, and government-imposed levies collected through bills - endorsed by all the major parties - all cost more than they did last year."
Ed Davey, the energy secretary, said rising wholesale gas prices are the biggest factor in the increase, rather than government-imposed costs. He also encouraged people to consider switching their supplier to make sure they are getting the best deal.
"Half of an average energy bill is made up of the wholesale cost of energy," he said. "This far outweighs the proportion of a bill that goes to help vulnerable households with their bills and to cut energy waste, and to encourage investment in the new low-carbon energy generation we need to keep the lights on."
Rowena Mason, the Guardian
This article first appeared at the Guardian
edie is part of the Guardian Environment Network