Energy white paper – uSwitch.com comments

Following the announcement, Ann Robinson, Director of Consumer Policy at uSwitch.com, says: “The Government has joined more dots together with today’s Energy White Paper, but we are yet to see a cohesive and constructive energy policy for the future taking shape. There are elements to be welcomed, but overall this paper’s biggest success is in presenting the scope of the challenge ahead rather than providing the solutions.

“Everyone accepts that Britain needs to cut carbon emissions and have a secure energy supply, but if consumers were hoping for reassurance from the Government today that the end result will not be higher household bills and greater fuel poverty then they will be very disappointed.

“The biggest question has got to be over who will be footing the bill - there seems to be a lot of emphasis on energy companies and consumers. A third of consumers (32%) say that the cost of household energy is the most important energy issue we face today. However, the White Paper makes it clear that significant investment is required within the energy industry, which will inevitably mean higher prices for consumers. With average household energy bills currently standing at £913 consumers will not want to be left picking up the tab for the Government’s energy policy.

“The key thing for consumers now is to take up the available energy efficiency measures, get onto a smart meter as quickly as possible and shop around to get the best deal. There may well be a price to pay for our future energy policy but, individually, consumers can take steps to minimise the impact.”

Smart metering and energy efficiency – consumers ready, willing and now able to go green

“Smart metering and the introduction of visual displays are a major piece in the energy efficiency jigsaw. For the first time, consumers will be able to easily see how much energy they are actually using. This will give them greater control over their usage and allow them to change their behaviour accordingly. At the moment consumers are aware that they could do more - only three in ten households (30%) think they are doing enough. However, over three quarters (79%) don’t have enough information to become energy efficient, so smart metering combined with energy efficiency information from suppliers will help consumers come on board completely.

“There are concerns over costs though - 40% of consumers accept that the Government’s plans to make the country go green are a necessity, but are concerned about how much it will cost them personally. Smart metering must not be an excuse for energy companies to put up their prices.

Green tariffs

“The Government has missed a trick by not removing VAT on green energy tariffs. Less than 1% of consumers in the UK are signed up to a green tariff, which are typically around 3% more expensive than standard tariffs, adding £10 a year to green electricity bills. Removing the 5% VAT would make green tariffs cheaper than standard tariffs.

“It would also send a clear signal to energy companies that the Government is serious about green energy. The suppliers are obliged to provide a certain amount of renewable energy every year, but while consumers snub green tariffs and the Government doesn’t show any interest then they will only do the bare minimum to meet their quota.

“The emphasis has got to be on the Government to provide an incentive to consumers and on the energy companies to educate consumers about green products.”

Fuel poverty

“The one thing clear from this White Paper is that fuel poverty looks set to become Brown’s albatross. The Government has two objectives - to take vulnerable people out of fuel poverty by 2010 and to eradicate fuel poverty completely by 2016 - and it is set to miss both by a mile.

“The White Paper is mainly a rehash of existing policy. There is one new development that could have a significant impact on fuel poverty. The Government proposes talking with Ofgem and Energywatch about encouraging vulnerable consumers to use the energy market to get the best deal where appropriate. According to an earlier survey commissioned by uSwitch.com, over two thirds (69%) of the over 60s haven’t switched5 so this approach could have a lot of scope.

“In February, 2.3 million elderly people were in fuel poverty and a further 2.2 million were at risk. The DTI estimates that for every 1% increase in gas and electricity bills, a further 40,000 households are plunged into fuel poverty. Unless Brown can pull something spectacular out of his hat, fuel poverty will romp out of his reach and will continue to blight the lives of millions for at least the next decade.