renewables

A price hike by one of the UK’s biggest utilities has thrown renewable energy subsidies into the spotlight.

SSE, one of Britain’s so-called ‘Big Six’ utilities – the others are British Gas, E.ON, EDF, npower and Scottish Power – yesterday announced a price increase of 8.2 per cent, which would add £93 to an annual dual fuel bill.

Other energy firms are expected to announce their own increases in coming weeks and the SSE increase has been slammed by politicians and consumer groups.

Some have used the price rise to attack subsidies for renenewable energies, which make up a portion of all utility bills.

And SSE’s chief executive Alistair Phillips-Davies  has said that bills per household would drop by £110 straight away if these subsidies and other environmental costs were paid for via the tax system.

He told the Daily Telegraph newspaper: “A price rise is never a good thing to do, but if it focuses everyone on to a debate about what we as a nation should be spending money on, then in one way it will be helpful.

“We need to think about what people really want to pay for,” he said, adding that “maybe it’s time to retreat from decarbonisation and focus more on the cost of living. I think we have to have a debate about it.”

“Do we want to be replacing one bit of generation that we can keep going for a bit longer with a new bit of generation that’s going to cost more?”

But think-tank IPPR argues network charges and wholesale gas prices are the main reason for the tariff increase, not the cost of green policies, which it says account for only a sixth of the rise.

Reg Platt, IPPR senior research fellow, said:Some people will try to claim that the cost of green policies is the main reason bills are going up, but this is not the case. Breaking down SSE’s announcement it is clear that network charges and wholesale gas costs are the main reasons, with government policies making up a smaller proportion of the rise.

“This still leaves a substantial amount of the rise unaccounted for by SSE but presumably for internal operating costs and profits. If consumers are to be confident they are not getting a raw deal, we need urgent action from the government to radically improve transparency on suppliers costs and profits, and greater competition in the market to drive down these costs and profits.”