Millions of families are to be hit with another rise in energy bills this winter because of Ed Miliband’s dash for Net Zero.
Energy regulator Ofgem said government ‘policy costs’ were a key driver in the latest rise, which takes the price cap to £1,758 a year. Bills will rise even though wholesale energy prices have fallen by four per cent.
The cap is £190 higher than when Labour came to power last year, despite Mr Miliband’s pre-election pledge to cut bills by £300.
The situation is so embarrassing for the Government that Rachel Reeves is now considering action in next week’s Budget to remove the cost of things like connecting wind farms to the grid from energy bills and pay for them through general taxation.
But critics tonight called on Keir Starmer to ‘rein in’ Mr Miliband and bring a halt to the remorseless rise in UK energy costs, among the highest in the developed world.
Tory energy spokesman Claire Coutinho said Mr Miliband’s flagship pledge to decarbonise the entire electricity system by 2030 was ‘making people poorer’.
Writing in the Mail, she added: ‘We already have some of the cleanest electricity in the world, but it is also the most expensive. The priority for any government must be cutting people’s bills.’
Martin Lewis, of MoneySavingExpert.com, said the latest price cap announcement ‘just shows the ludicrousness of the situation’.
The energy price cap is £190 higher than when Labour came to power last year, despite Ed Miliband’s (pictured) pre-election pledge to cut bills by £300
Tory energy spokesman Claire Coutinho (pictured) said Mr Miliband’s flagship pledge to decarbonise the entire electricity system by 2030 was ‘making people poorer’
He told BBC Radio Four’s Today programme: ‘The reason we are seeing these costs going up on electricity is not the normal reason of the wholesale rates – the costs that energy firms to buy in electricity and gas. That is going down.
‘These are policy costs. These are the costs of paying the Warm Homes Discount, these are the costs of connecting renewables to the grid, the costs of new nuclear. These are all policy costs.’
In the run-up to the election, Mr Miliband claimed his plans would deliver a ‘mind-blowing’ reduction in bills. Downing Street today insisted the Prime Minister remains committed to reducing bills by £300 by the next election.
But experts have warned the speed of the dash to Net Zero is likely to push bills up even further. A report this week found green levies are set to add a further £264 to bills by the end of the decade.
Ofgem today said that wholesale energy costs have fallen by four per cent since the last price cap review three months ago.
But the regulator said the cost of other factors, meant the price cap would have to rise again.
These include upgrading the grid to take power from wind and solar farms, the cost of building the new Sizewell C nuclear power station in Suffolk and the extension of Mr Miliband’s Warm Home Discount Scheme, which will cut £150 from the bills of low income households but add about £7 to average bills.
And experts are already predicting a further rise in the spring.
Higher electricity rates have driven the latest change, while gas rates will fall slightly – meaning that households who use electric heating could see the biggest impact.
The latest increase in the cap will add a relatively modest £3 a year to bills. But analysts had predicted a cut. And the overall figure masks big differences, with electricity costs rising five per cent while the unit price of gas drops six per cent.
Mr Lewis said it was ‘perverse’ that electricity costs were rising compared to gas at a time when ministers are telling people to switch to electric heat pumps.
Mr Miliband today acknowledged that bills remain ‘too high’ but said he was taking ‘urgent action’ to help those in most need.
The Energy Secretary insisted that bills ‘remain high due to Britain’s dependence on fossil fuel markets’.
