Consumers face paying tens of millions of pounds too much for energy this winter because companies will be allowed to bill them for a government scheme that is no longer running. Ministers yesterday urged energy companies to voluntarily cut tariffs after it emerged that the government’s price cap, supposed to ensure fair pricing, would enable suppliers to charge customers for costs that they are no longer expected to incur. The government was forced to halt operation of its “capacity market” scheme, which pays subsidies to power plant owners to keep them running through the winter, after a European court ruling on Thursday. The scheme is designed to guard against blackouts by ensuring that Britain has enough back-up power stations to keep the lights on even if wind farms are not generating. The costs of the scheme are collected from energy suppliers, which in turn bill their customers for it. It was due to cost £1 billion this year, accounting for £11 on a typical annual household bill. All payments and collections under the scheme were suspended after the General Court of the European Union decided to annul state aid clearance that had been granted by the European Commission in 2014. Consultants at Cornwall Insight said that this put energy suppliers in line for an “unexpected windfall” because their costs would fall but the prices they charged consumers would not. Although the government’s price cap is due to force suppliers to cut their prices from January, the level of the cap was set before the court decision and includes an allowance to cover the expected costs of the scheme.
Times 17th Nov 2018 read more »