Energy price "concern"

A senior official from the energy regulator, Ofgem, has voiced concerns about government plans to make sure gas and electricity customers benefit from the lowest prices.

Andrew Wright, Ofgem's senior partner for markets, told MPs that "Not all consumers will be in positions where they will necessarily want to be moved onto the cheapest deal with their supplier."

The Prime Minister said on 17th October that he would legislate so that energy companies "have to give customers their lowest tariffs".

Suppliers were shocked by the remark, which implied that they could be forced to switch customers to their standard tariffs.

But later David Cameron clarified the policy saying that the coming Energy Bill would "ensure that customers get the lowest tariffs".

Today Mr Wright explained Ofgem's worries, saying: "It would be a concern if someone who was paying a modest premium for a green tariff, for example, was automatically switched onto the standard tariff."

He added: "Similarly the choice between fixed term and variable is one where a consumer may choose to pay a higher price in the short term in order to get the stability in the longer term."

He said he understood that the government was fully aware of the concerns and he expected any policy proposals which emerge would recognise that.

Andrew Wright to the Energy & Climate Change Committee:

"It would be a concern if someone who was paying a modest premium for a green tariff for example was automatically switched onto the standard tariff and similarly the choice between fixed term and variable is one where a consumer may choose to pay a higher price in the short term in order to get the stability in the longer term.

"Not all consumers will be in positions where they will necessarily want to be moved onto the cheapest deal with their supplier. My understanding is that the government is fully aware of that and I would expect any policy proposals which emerge would recognise that.

"One way in which that could be guarded against is providing customers with the opportunity of opting out of any automatic switch, that does give a safety valve."

£280 on energy bills

The Energy Secretary Chris Huhne has revealed that the cost of policies to deal with climate change will add £280 to household energy bills by 2020.

The policies, including support for renewable energy, will add 27% to the price of electricity.

However, he said that energy efficiency measures, such as home insulation, would cut bills by more than that. So the overall effect would be a £94 reduction in bills, a drop of 7%.

The figures ignore any increase in the underlying price of gas and electricity, which will add significantly more to the cost of heat and power.

The government is introducing a Green Deal next year, enabling households to pay for insulation out of the future savings they achieve from having it installed.

Energy companies will have to provide £1.3 billion a year to ensure everyone is able to benefit from the Green Deal, no matter their income or the type of house they live in.