Fleeced by the power giants

Power companies are under increasing pressure to pass on the benefit of the plummeting price of oil.

Watchdogs are angry that domestic energy bills have continued to rise sharply since the summer even though wholesale prices have nearly halved.

Millions of families are desperate for gas, electricity and heating oil bills to fall as their household incomes are squeezed elsewhere.

Despite falling inflation, families still face rising food costs and hefty council tax increases next spring.

And pensioners, who already spend a major proportion of their cash on heating their homes, are seeing their savings income slashed by interest rate cuts.

Yesterday oil closed at below 45 dollars a barrel, more than 100 dollars below its July peak, and experts predict that it could drop as low as 25 dollars.

David Hunter, of energy consultants McKinnon & Clarke, said the 'big six' firms - British Gas, E.ON, Scottish Power, Scottish & Southern, EDF Energy, and npower - enjoy a 'stranglehold' on the power market, and claimed: 'The market isn't working.'

He insisted the firms should have room for 'double digit' cuts as soon as next month.

Mr Hunter said: 'It is clear there will be room for reductions in prices, and there will be huge political pressure for them to act.'

Gas and electricity prices are inextricably linked to the price of oil, and utilities say it takes time to pass on lower wholesale costs to customers because they buy power and gas several months in advance.

But the cost of wholesale gas and electricity has tracked the fall in oil prices.
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Scheme to help homes save energy

Plans to equip 40,000 homes with energy saving equipment aimed at cutting bills and creating jobs, have been unveiled by the assembly government.

The £12m programme is also designed to tackle child and fuel poverty in the Heads of the Valleys area.

Leighton Andrews, deputy minister for regeneration, said it was anticipated the 15 year initiative would attract millions of pounds of investment.

It is hoped the measures will make the area Europe's first low carbon zone.

The programme aims to install sustainable energy measures into 40,000 socially owned homes, have 65,000 homes assessed for energy efficiency and 39,000 energy reduction measures implemented.

It is hoped this will result in the reduction of domestic energy bills of £1.7m and reduce emissions of at least 139,200 tonnes of CO2 a year.

Mr Andrews said the programme was designed to tackle fuel poverty and create a new industry base in the region linked to job creation, skills development and the development of local businesses in the sector.

Details of the first round of investment and the first low carbon town will be unveiled in the New Year, he said.

"Energy costs have a disproportionate impact on household income in deprived areas and less money spent on fuel bills means more money available to spend in the local economy," said Mr Andrews.

A pilot project in Ebbw Vale saw the United Welsh Housing Association getting help from the programme to fund the installation of a range of measures to tackle carbon emissions in 28 new homes.

Exhaust air recovery heating, under floor heating, rainwater recycling and thermal water heating systems have been among the measures introduced.

The pilot will test the effectiveness of these systems.

Further projects have been undertaken with Rhondda Cynon Taf Homes and Bron Afron Homes to introduce energy-saving technologies including solar power during the refurbishment of existing homes.

Leighton Andrews said these projects formed part of the wider economic and social regeneration of the Heads of the Valleys region.

"They are taking forward several strands of our environmental theme with the ultimate aim of adding value to the fuel poverty and economic regeneration agendas," he said.

"These projects are leading the way in delivering a step change in the economy of the region."
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Climate change targets will push up energy prices

Household electricity bills will rise by a quarter over the next decade to pay for sharp reductions in greenhouse gas emissions, the Government's climate change advisor has warned.

Lord Turner recommended the UK reduce output of carbon dioxide and other gases linked to global warming by more than a third in the next 12 years.

He admitted the cuts will be tough, shrinking the economy by one per cent by 2020 and demanding big changes in consumer behaviour.

The biggest impact will be on energy prices which are expected to rise by 25 per cent for the average family, pushing 1.7 million people into fuel poverty.

Britons will also notice a change in everyday life. It is estimated 40 per cent of cars will be plug-in hybrids or electric, smart meters that ensure more efficient use of electricity will be installed in every home and the cost of "carbon heavy" goods and services that use a lot of energy are likely to go up.

The key points

• Power

+ Renewables will have to generate at least a third of electricity, with the majority of growth in the short term expected in onshore and offshore wind.

+ Nuclear will form part of the mix, with the possibility of new stations being built in the future.

+ Coal will continue to be used but will only be viable in the long term if technology is developed to store the emissions underground.

• Transport

+ Cost of flights expected to go up as airlines face penalities for producing emissions.

+ Increased use of public transport through Government policy to cut carbon.

+ At least 40 per cent of cars will be hybrid plug-ins or completely electric as taxes increase on polluting cars and new technologies come online.

• Agriculture

+ Increased use of feed additives that increase productivity of cattle but decrease methane produced.

+ Reduced use of fertiliser by using organic alternatives or different plants.

+ More energy efficient machinery for example hybrid tractors.

• Consumer

+ People will be expected to eat less “carbon intensive” meats like beef and lamb.

+ Carbon heavy products such as vegetables transported from abroad will increase in price with energy prices.

+ People will be expected to turn off lights and cut down on air conditioning or heating as electricity becomes more expensive.

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More than 195,000 wind turbines to appear outside homes by 2020

A "feed-in tariff" will be introduced to ensure any household generating power through renewable power sources like wind, solar or biomass will be paid for the energy they produce, as part of measures to tackle climate change.

The Energy Saving Trust, the independent body in charge of improving energy efficiency in the UK, predicted that the introduction of the tariffs could persuade 8.6 million people - around a quarter of households - to invest in combined heat and power, wind turbines or other low carbon technologies.

Most of the "micro-generation" will be done through installing combined heat and power (CHP) boilers that heat the home by generating electricity from fuel or gas.

However, wind turbines and solar panels are also expected to become part of the landscape in the rush to "micro-renewables".

The EST study predicts 195,100 wind turbines will be installed over the next 12 years. Some 112,000 will be small enough to be attached to the roof, while 83,000 will be bigger free-standing models.

A further 921,000 households will install solar panels to heat water and generate electricity. And 805,000 will invest in air source heat pumps, usually installed outside the home.

Environment campaigners said the expected boom in microrenewables will help the UK to meet ambitious targets to cut greenhouse emissions by 80 per cent by 2050.

However, heritage groups said the rush to build micro-renewables like wind turbines must be done sensitively to protect historic buildings and the countryside.

At the moment just 100,000 homes in the UK have installed microgeneration, which is thought to be partly because there is no guarantee of payment for electricity produced.

In Germany, where feed-in tariffs have already been introduced, more than one million households generate their own electricity.

Earlier this month, Ed Miliband, the new energy and climate change minister, added feed-in tariffs to the Energy Bill currently going through Parliament.

The EST predict that if the tariffs are introduced by the end of next year and offered high enough rates per unit of electricity fed produced, 8.6m people would install micro-generators.

If other measures were introduced, such as advice for home owners, improved technologies and a requirement for new zero carbon homes to produce their energy on-site, the number of British homes producing their own clean energy could multiply to ten million – about one in every three households – within 12 years.

This would save 10m tonnes of carbon emissions and help the UK towards its 2050 target.

Dave Timms, of environment campaign group Friends of the Earth, said micro-generation must be a key part of the UK's drive to cut carbon emissions.

He said the tariffs must be introduced as soon as possible and the price per unit of energy produced set high enough to make investment in the technology worthwhile.

Also, larger microgenerators should be paid to encourage communities and businesses to invest in the new technology.

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