Baby Ace: Households win reprieve from fuel price rise after Mail on Sunday report

Saturday, March 15, 2014

Households win reprieve from fuel price rise after Mail on Sunday report

By

Jon Rees, Financial Mail On Sunday

New charges for power firms that could have seen consumers’ annual bills leap by as much as £20 will be delayed for two years after a Mail on Sunday report.

The delay is likely to be welcomed by the Coalition, which cut annual energy bills by £50 last year by slashing green levies, after Labour leader Ed Miliband promised to freeze energy bills if elected.

Ofgem had been planning to charge energy companies for using the National Grid’s network of cables. However, after this newspaper’s report in December last year revealed that Ofgem had failed to consider new information supplied by an independent consultancy, the regulator has delayed the scheme until April 2016.

Threat: How the Mail on Sunday revealed Ofgem

Threat: How the Mail on Sunday revealed Ofgem’s plans

Nera, which was commissioned by supplier npower, said the move could see consumers face an extra cumulative charge of up to £6billion by 2030 as power firms passed on costs – though Ofgem disagreed.

Now Ofgem has sent a letter to energy firms saying the scheme will be delayed after it was forced to hire new consultants to update the economic model originally provided by the National Grid.

The proposal is meant to make it easier for smaller suppliers to introduce renewable, low-carbon electricity generation into the nation’s power supply.

However, experts say this will also subsidise Scottish wind farms at the expense of English power stations.

A power industry source said: ‘We need to be able to balance the need for low-carbon power generation against the cost this means for consumers.’

Ofgem, which has faced criticism from Labour over its efficacy as a regulator, has also come under fire from power companies, which say that rather than regulating the industry it is formulating policy.

Ofgem said it was still ‘minded’ to implement the scheme as planned, but would launch a new four-week consultation on its proposals shortly.

‘We have engaged with the parties who raised the new information and reviewed the analysis and evidence. We have also received further submissions from industry during this period,’ Ofgem said in the letter.