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Huhne hits back at "nonsensical" green tax critics

Posted on: 2011-07-12 07:28:35


As government prepares to unveil electricity market reforms, Energy and Climate Change Secretary slams critics' "arithmetically wrong" calculations

The Energy and Climate Change Secretary yesterday hit back at a media-led campaign against the cost of green taxes, insisting that the calculations used to justify the criticism of environmental levies were "extraordinarily rubbish" and "arithmetically wrong".

Speaking on the BBC's Andrew Marr Show, Huhne criticised the recent campaign by the Mail and Telegraph newspapers, which has blamed green taxes for recent energy bill price hikes.

The Sunday Telegraph reported yesterday that green taxes would cause electricity bills to rise 30 per cent within the next 20 years, while the Mail newspapers have argued in recent weeks that green taxes are adding 15 to 20 per cent to the average household's energy bills.

The stories come after Scottish Power and British Gas both announced price hikes, with other energy companies expected to follow suit in the coming weeks.

But Huhne insisted the calculations underpinning the paper's stories were "arithmetically wrong", and challenged those think-tanks undertaking the calculations to sit down with the Department of Energy and Climate Change's chief economist.

He said that far from environmental levies accounting for 15 to 20 per cent of average energy bills, Ofgem calculations had shown they account for around 10 per cent. Moreover, these costs include levies that fund energy-efficiency schemes that in turn lead to a net reduction in energy bills for households.

Huhne dismissed outright claims that the UK has some of the highest energy bills in Europe.

"We are not going to have the highest prices in Europe," he said. "That's absolute nonsense. The reality is that we have some of the lowest energy prices and we can get them even lower."

He added that in the long run the government's Electricity Market Reforms, further details of which are expected to be announced later this week, will result in lower energy bills as the shift towards cleaner energy sources such as renewable and nuclear power will help protect the UK from volatile fossil fuel prices.

He also rejected accusations that the reforms would provide a subsidy for nuclear power, something the government has said it will not do, arguing that the proposed carbon floor price will provide support for all clean energy sources.

Huhne's comments come just days ahead of the anticipated unveiling of a whitepaper on the proposed Electricity Market Reforms that is expected to provide fresh details on a package of measures designed to accelerate investment in low carbon energy infrastructure.

However, according to Reuters' reports the paper is expected to leave many investors disappointed, with sources suggesting that it will not contain specific details on the level of support renewable and nuclear developers can expect under the reforms.

The proposals are expected to include so-called contracts for difference that would guarantee generators of low carbon electricity a set price for the power they generate – a move that is intended to bolster investor confidence and free up billions of pounds of fresh funding for the sector.

But one source familiar with the paper told Reuters that it will not provide details on the guaranteed purchase price or how it will be acquired. "I think they'll do a review and analysis closer to the time," he said.