New report: Energy prices higher than necessary

New report: Energy prices higher than necessary

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.


  1. Peter Brown

    News of the report did not mention the effects of privatisation. If a single nationalised industry is privatised between a number of companies, each one has to have its own administration (HR, finance, marketing, etc.), its own chief executive & board, it has to produce a profit for its shareholders and has to advertise to attract customers and facilitate switching between suppliers. Surely this must cost more than the “overmanning” in the nationalised industry? Technology increases productivity, but perhaps privatisation decreases it?

  2. Over the last 18 months the average unit cost on electricity has risen by about 30%. Gas has almost remained stagnant which is a good thing. Predictions for 2018/2019 are further increases as CCL/Fits and other taxes and levies are set to increase. The actual cost of electricity is much lower than the rate the customer sees I think all of the elements need to be shown so the consumer has a better understanding of how their bill is made up, they may be less quick to blame the energy companies who only make around 2% profit on each bill.

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