POLITICS
29/10/2013 12:43 GMT | Updated 29/10/2013 16:21 GMT

Energy Giants Blame Rising Bills On Green 'Stealth Taxes' (VIDEO)

Energy giant bosses blamed controversial rises in customers' bills of over 9% on green taxes in a tense confrontation with MPs of the Commons Energy and Climate Change committee.

Tony Cocker, CEO of energy giant E.ON, described government green schemes as a "stealth tax" or a "poll tax", as he called for environmental reforms to be toned down.

Labour committee member Ian Lavery branded the energy giants' price rises an "absolute outrage", while another committee member John Robertson asked: "Do you understand that people in this country do not trust you?"

Sitting alongside the assembled energy giant bosses, Ovo Energy boss Stephen Fitzpatrick said the big firms charged the "maximum they feel they can get away with" and that they had "almost entirely failed" to ensure a competitive energy market.

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Environmental campaigners hit back at the energy firms for offering a "fig leaf" of a defence, with Greenpeace policy director Doug Parr saying: "For the Big Six to try and use green taxes as a fig leaf for rising energy prices marks a new low for them, which is saying something.

"Gas prices, not renewable energy, have pushed bills up. Green taxes remain a fraction of household bills, and are one of the best investments that can be made today to reduce costs for consumers over time."

Guy Johnson, external affairs director of Npower, which has unveiled average rises of 10.4%, told MPs that the largest driver of price rises had been the cost of the so-called climate obligation on power firms.

The green taxes cover the period to March 2015, so the energy firms will have to fulfil a large part of their obligation next year, he said. The Npower executive insisted: "We are not raising them in anticipation of a price freeze."

William Morris, managing director of SSE, which has announced an 8.2% price rise, said that Government-imposed green levies up 13%.

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An analysis by industry regulator Ofgem showed that, while the increases announced so far this autumn by some of the companies have averaged 9.1%, wholesale prices have risen by 1.7% - adding just £10 to the average household bill of £600.

Other energy firms have unveiled price rises, like British Gas's 9.2% increase and Scottish Power's 8.6% rise.

Pressed on whether his company would unveil price rises, E.ON chief executive Tony Cocker said: "We will hold our prices as long as we can."

A Department of Energy and Climate Change spokeswoman said: "The Government is working hard to help people with their rising energy bills by improving competition, making the nation's homes cheaper to heat and providing targeted help for the most vulnerable.

"The Energy Company Obligation helps people to save energy and money on their bills, through prompting energy companies to green-proof their customers' homes.

"Having warmer and more energy-efficient homes, as a result of the Energy Company Obligation, will result in lower energy use, and by default lower energy bills."

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Labour leader Ed Miliband announced last month that he will impose a freeze on energy bills for 20 months until a tougher regulation system was introduced if he wins at the next election. Andrew Wright, interim chief executive officer of Ofgem, it was "absolutely right" that there should be a debate about its powers to regulate the industry. Our job is to make the market work as effectively as we can," he told the committee.

Ramsay Dunning, of the small operator Co-operative Energy, said that the way the "Big Six" operated looked to outsiders like a cartel and was deterring competition.

"As an industry we have a problem. From the outside it looks a bit like an oligopoly, it looks a bit like a cartel. I actually don't believe it is, but it looks like it from the outside. That in turn deters competition," he said.

"We need to do something to change that appearance. That is where we need complete operational, managerial, reporting separation of the generation side of the industry from the supply side of the industry." Labour MP John Robertson warned that "thousands" of people were dying of hypothermia because they could not afford to pay their bills.

He said customers who fell into debt were being moved onto pre-payment meters which effectively forced them to "self-disconnect" because they could not afford to buy any credits. Ian Peters, managing director of energy at British Gas, said that moving people onto pre-payment meters was a "responsible" way of repaying debt, and that the company "pro-actively" monitored their consumption.

"To the extent we watch consumption patterns drop - and we do - we contact those customers to find out the explanation behind it," he said. Neil Clitheroe, the chief executive officer, retail and generation for Scottish Power, said that if a pre-payment customer did not charge their key within 30 days, they were contacted by the company.

Mr Robertson retorted: "They could be dead by that time Mr Clitheroe. That's the problem. There are thousands of people who die because of government policy.

"The big reason is they die of hypothermia and they can't afford to keep the heating on. By the time you have gone to look for them it's too late." Mr Clitheroe acknowledged that more could be done to identify and protect vulnerable customers. "Can we ensure that no one falls through the net, can we use data from government in terms of benefits profiles better, can we create better signals that we identify customers better? Yes," he said.

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