Producers may pass on cost of energy package to consumers

Producers may pass on cost of energy package to consumers

The government's vaunted £1bn energy efficiency package was called into question last night when the energy producers said they would have to pass on much of the cost to consumers, and industry sources said fewer than 150,000 extra homes could be insulated by this winter as a result of the new money.

Another important plank of the package - a commitment to increase funding for the government's Warm Front programme by an extra £74m over two years - does not restore spending this year to the levels planned before a £55m cut imposed on the programme last year.

Brown said he did not expect the electricity companies to pass the prices on to the consumer, adding: "I do not think they need to do so."

But David Porter, spokesman for the Association of Electricity Producers, said: "Whenever people impose costs on an industry like ours, inevitably the bill to some extent always ends up with the customer ... There are competitive pressures, but in the end someone has got to pay for this just as someone has got to pay for the green agenda, which is already costing a lot."

Advertisement starts

---

---

Advertisement ends

He described Brown's suggestion that the costs would not be passed on as "too sweeping".

Unions and Labour MPs said they would continue to press for a windfall tax. One leading rebel, Frank Field, said: "The government has spent all summer roaring about the package it will produce and now out pops a mouse of a proposal that will probably do very little for many of the poorest pensioners meeting this year's winter fuel bills."

Announcing the measures at Downing Street, Brown said: "Our objective is nothing less than a sea-change in energy efficiency and consumption, at the same time as helping the most vulnerable households this winter. This is the right approach - the offer of lasting benefit for pensioners and families."

The government would introduce legislation requiring an estimated £910m commitment from energy companies including, for the first time, electricity generating companies to invest in making homes more energy efficient. This is in addition to the existing obligation on companies to spend £2.8bn over the next three years on energy efficiency.

The government said the extra funding could help 2m households, with pensioners and those on benefits able to recoup the full cost of insulation, and everyone else able to receive a subsidy for half the cost. Neil Marshall, of the National Insulation Association, said only 150,000 additional households could be helped this winter.

Cold weather payments will be increased from £8.50 to £25 a week, but only when the temperature drops below freezing for seven successive days.

guardian.co.uk © Guardian Newspapers Limited 2008