5 December 2006
Energy regulator Ofgem has announced its decision to allow an increase in investment for the energy sector in order to support new sources of gas and electricity and maintain high levels of reliability.
Consumer groups are worried that the funding will be gathered from customers' bills and that at a time when the wholesale price drop should be facilitating a decrease in energy costs, consumers will actually find their expenditure on utilities increasing.
"Energy customers are already feeling the pressure, particularly those already struggling to pay their bills after 13 price hikes this year. News of further increases will not be met kindly," commented Geoff Slaughter, product manager at the price comparison and switching website uSwitch.
"An increase even as small as 1% will add another 40,000 households to the fuel poverty list," he added.
The news comes on the day of the chancellor's pre-Budget announcements and will put increasing pressure on Gordon Brown to encourage energy providers to lower their charges for elderly customers.
Treasury officials have already contacted energy suppliers to suggest a discount scheme for pensioners, but it is understood that several of them have rejected the chancellor's proposals because of the large amount of corporate tax they already pay.
Ann Robinson, director of consumer policy at uSwitch, urged Westminster to take the lead from its Scottish counterpart, which runs a non means-tested Central Heating Programme, providing free heating and insulation packages, worth up to £3,500, for those whose system is broken or who do not have any heating at all.