Davey has attracted criticism for not doing more to prevent energy suppliers from raising their prices, but at this week’s Fair Energy Summit in London, he vowed to do everything within his power to ensure consumers are not left out in the cold – literally.
On the eve of the summit, a report carried out by the think tank IPPR indicated that the coalition’s new Energy Company Obligation (ECO), which will provide energy efficiency measures to low income and vulnerable consumers, will actually have a negative impact on two million households.
According to the IPPR, fuel-poor households that do not receive support from energy companies will be pushed even further into fuel poverty.
Fuel poverty is classed as spending more than ten per cent of household income on heating the home – something that affects 6.3 million UK homes, or 23 per cent.
Some critics have accused the government of misleading the public with its social and environmental policies and the impact they will have on energy bills.
However, speaking at the summit, which was organised by The Independent and Policy Review Intelligence, Mr Davey said ensuring consumers get a good deal is one of his “top priorities”.
Though the IPPR report suggests that the ECO policies will add as much as £116 to some consumers’ energy bills, as opposed to the £50 that current policies add, Mr Davey said there is “no good basis” for this claim.
He added: “We estimate the overall cost of ECO at an average of £1.3 billion per year – that’s the same as the current supplier obligations. So ECO should impose no new costs.”
Lack of transparency
According to the energy secretary, one of the key difficulties in reaching estimates has been the lack of transparency from energy companies.
“They have not given us a clear picture of how much they were spending to comply with previous obligations. And we don’t know what costs they’ve been passing through to consumers,” Mr Davey stated.
As a result, he has urged energy providers to do their bit in tackling the “growing shame” of fuel poverty, particularly as the coalition’s Fuel Poverty Advisory Group has estimated up to 300,000 more people could fall into the fuel poverty trap by Christmas.
Though the energy secretary has vowed to do his bit to help curb escalating energy bills, representatives from the ‘big six’ and other energy providers say the government also has a part to play.
People over prices
Phil Bentley, managing director of British Gas and an attendee of the summit, said that the policies could be amended to benefit consumers more.
“The better targeting of Winter Fuel Payment would, alone, make a significant difference in helping to tackle fuel poverty,” he suggested.
The view was echoed by Tony Cocker, chief executive of E.ON UK, who said the summit will do much to highlight that people themselves are more important than prices.
“As today has shown, the more all participants in the energy debate help consumers understand why energy costs are going up the more likely they will be to get engaged with managing their own spending,” he added.
The blame game
Though much finger-pointing has ensued, the key to improving the market for consumers and giving them a fairer deal will be to work collaboratively.
That is the view of Reg Platt, from the IPPR, who said the “blame game” needs to stop.
“Government needs to make sure its energy efficiency policies are as cost effective as possible,” he said.
“But it is vital to recognise that energy efficiency is by far the cheapest way to tackle fuel poverty and reduce emissions and we need to do everything we can to make sure that the government’s new policies work.”
In it together
After the summit, Gavin Hayes from Policy Review Intelligence said it is important that the concerns of government, energy suppliers and consumers are all taken into account and addressed.
“The key challenge is finding solutions to ensure that consumers have the confidence that they are paying a fair price for the energy they use; that they are receiving a fair service from their supplier and they are getting a fair deal from government,” he explained.
“If trust on this basic level can be improved, then it will be easier to engage customers in checking their tariffs and improving energy efficiency levels.”
Mr Davey’s job will now be to persuade consumers that they are getting the fairest possible deal, but in order to do this he must first get energy providers on board and convince them the ECO is the solution.
If this fails to happen, even more consumers will be left out in the cold.