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Reports: Government calls on energy companies to freeze prices

Reports: Government calls on energy companies to freeze prices

The government has reportedly called on the Big Six energy companies to commit to freezing prices through to the next election, barring a major change in wholesale prices.

The BBC reported that leading energy companies have been asked to hold down prices through to the middle of 2015, effectively in return for ministers agreeing to energy companies' requests for the ECO energy efficiency scheme to be watered down.

However, separate reports suggested both Number 10 and the Treasury had categorically denied the claims.

Reports earlier this week suggested the government was planning to announce a new package of reforms in next week's Autumn Statement that would knock around £50 off the average household bill by moving the Warm Homes Discount onto general taxation, easing some network costs, and extending the deadlines for the ECO scheme by another two years.

It remains unclear at this stage whether the extension of the ECO scheme will result in a sizable watering down of efforts to enhance domestic energy efficiency or if new targets and rules governing the scheme will increase the number of households energy companies have to fund improvements for.

Now industry sources are claiming ministers want to extend the agreement with the energy companies so that they commit to holding prices at current levels through to 2015, barring any major changes in wholesale costs, in an attempt to avoid another controversial round of price hikes this side of the election.

One energy industry source told the BBC that they were keen to freeze prices for as long as possible, but another source rejected the plan as unworkable, arguing that energy suppliers "can't make that commitment while our costs are still increasing". He said that extending the ECO scheme would only defer costs, while energy companies will still face increased policy costs next year through the Carbon Price Floor and Renewables mechanisms.

Labour, which has said it would introduce a price freeze if it wins the next election, seized on the reports as evidence of the government failing to stand up to the companies and impose a binding price freeze.

"David Cameron is making himself look weaker and weaker with every passing day," said shadow energy and climate change secretary Caroline Flint. "For months he has been saying Labour's energy price freeze is a con. Now he is begging the energy companies to do the very same thing. But the truth is that only by legislating for a freeze can we guarantee that it will happen. David Cameron won't do that because he's not prepared to stand up to the big energy companies."

The news came as Labour today launched a new energy green paper, setting out its 10-point plan to reform the energy market, including a commitment to introduce a decarbonisation target and allow the Green Investment Bank to borrow.

The Department of Energy and Climate Change said the latest reports were speculative, adding that details about the government's review of green levies would be announced next week.

Meanwhile, fresh reports have emerged this week of ECO projects being shelved ahead of the anticipated decision on the future of the scheme. The Guardian reported that at least one project in Sunderland worth around £500,000 had been suspended leaving 100 properties that had been earmarked for work without energy efficiency improvements.

The energy efficiency industry has been warning for weeks that the uncertainty over the future of the ECO scheme has already disrupted projects, while fears are escalating that the proposed watering down of the scheme could lead to thousands of job losses across the insulation sector.


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