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Rising energy bills add to pressure on government

26 October 2012

12:13 PM

26 October 2012

12:13 PM

EDF’s announcement that it is raising gas and electricity bills by nearly 11 per cent will increase pressure on the government in two ways. The first is that these sorts of hikes in the cost of living mean that while ministers have been cheered by recent pleasing statistics on growth, jobs and inflation, voters might not feel as though things are going so well for them. If their own experience of the economy is one where their rent, shopping bills and energy bills are soaring while their wages are frozen, then they may not feel quite as sympathetic to the government as official statistics suggest they should.

The second is that pressure will really now be on ministers to ensure that their policies do not do anything to increase the burden on energy companies, not out of kindness to those giants, but to their customers, who pay for increased regulation through their bills. When David Cameron announced last week that he wanted to force energy companies to give their customers the lowest tariffs, the companies protested that this would cost them a great deal, which would mean their customers would have to pay a great deal more. So even if they were forced to offer the lowest tariff, that lowest tariff would still be higher than they currently charge because of the increased regulation.

Conservatives will also be increasingly vocal about any moves to decarbonise the power sector, when analysis by one backbencher suggests that doing so by 2030 would add £120 extra to bills. This could in turn lead to a stand-off with the Liberal Democrats on green energy policies.

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