Brexit prompts “less aggressive” approach to energy policy

Two of Britain’s biggest energy suppliers have called for an overhaul of the “regressive” way policy and network costs are charged to consumer energy bills.

Chief executive of British Gas owner Centrica, Iain Conn, and EDF Energy chief executive Vincent de Rivaz said the levies placed a disproportionate burden on the poorest customers.

About 13 per cent of a typical British household electricity bill is made up of environmental and social levies to fund green subsidies and insulation schemes, while a further 25 per cent of an electricity bill consists of levies to fund network infrastructure.

Post-Brexit, Mr Conn said it would be less regressive to recoup policy costs through general taxation.

“The poorest people in our society have energy as a higher proportion of their outgoings, and they are the ones that end up paying if it all gets slammed on the bill,” he told the Utility Week Energy Summit, as reported by The Telegraph.

Energy suppliers are particularly keen to see the levy system overhauled because green levies are forecast to keep rising in coming years to fund new infrastructure, forcing companies to put through price rises that bring added scrutiny of their profits.

Mr de Rivaz suggested the current model of network charging was unfair as it allowed wealthy people who installed solar panels to “free ride” on the costs of the networks that they required as back-up.

Network costs and other levies are all factored into the prices that energy suppliers charge for electricity drawn from the grid.

A household that installs solar panels – usually in return for subsidies – will buy less power from the grid and so will contribute far less to the network costs, despite being equally dependent on it when the sun doesn’t shine.

“Is it fair that someone who benefits from generous tariffs to put solar panels on their large house depends on a system disproportionately paid for by others? Why should a customer living in tower block pay a greater share than any other customer using the same grid? In winter and on cloudy days those with solar panels will need that system as much as everyone else,” Mr de Rivaz said.

“So we need to give some thought about how to achieve a fair socialisation of network and policy costs, and how to incentivise the efficient evolution of the electricity system for the benefit of all.”

Earlier this year Ofgem chief executive Dermot Nolan told theTelegraph he was concerned about how to charge for the grid and that the energy regulator was studying the issue. He said one option would be for households to “pay an insurance premium for access to the grid”.