The cost of energy in the UK for businesses and consumers is higher that it needs to be to meet the Government’s climate change targets, a report has found.
The report by Professor Dieter Helm CBE said that consumers and businesses have been “locked in to higher renewable and other low-carbon generation costs than necessary to achieve future de-carbonisation objectives”.
Contrary to the modelling and forecasting of both the Department of Energy & Climate Change (DECC) and the Committee on Climate Change (CCC), the price of coal, gas and oil has fallen significantly since 2014. However, this has not been passed onto the consumer.
The report said: “Margins should be falling as competition should be increasing. Yet in this period, households and industry have seen limited benefits from these cost reductions. Prices have gone up, not down, for many customers.”
Helm also suggested a default tariff to replace variable tariffs. This would cap the amount of profit made by energy companies, although would not control prices.
The report comes two weeks after a draft bill, published by government, to cap charges on single variable tariffs (SVTs), which would affect 12 million customers.
Carbon capture and storage (CCS) was also praised for the role it has played in energy efficiency.