Davey Asks Big Six to Come Clean on Green Charge After EDF Rise

U.K. Energy Secretary Ed Davey asked energy companies to explain the “wide variation” in what they charge consumers for a government green program.

There needs to be “much greater transparency on the costs that companies are claiming,” Davey told a conference in London today. “Despite asking lots of questions, we are not getting very good answers.”

Energy department figures show the Energy Company Obligation accounts for 4 percent of household fuel bills this year, or 47 pounds ($75), the biggest share among environmental or social programs. EDF Energy Plc said today the levy will cost customers 98 pounds next year, while SSE Plc (SSE) has said the measure will add 59 pounds for 2013 to 2014.

The ECO charge is subject to a review ordered by Prime Minister David Cameron’s government last month after energy companies raised prices, in part blaming the levy. EDF today became the fifth Big Six utility to raise prices, at a slower pace than its peers because it anticipates reduced social and environmental charges. It may review tariffs if cuts fail to materialize, it said in an e-mailed statement today.

The levy, which pays for insulation and other efficiency measures for poor households, is expected to cost 1.3 billion pounds a year, the same as a similar program it replaced, Davey said.

“You don’t have to have a Ph.D in maths to work out ECO shouldn’t be having any impact on bills because it just replaces what another scheme cost,” he said.

General Taxation

Davey said in an interview in the Sunday Telegraph on Nov. 10 that two of the green levies could be paid for by taxation, a suggestion played down by a person familiar with Chancellor of the Exchequer George Osborne’s budget plans. Davey said today announcements on reducing the impact of subsidies on bills would be made on or before the Autumn Statement due Dec. 5.

EDF said ECO is expected to cost each dual-fuel, or gas-and-electric, customer 98 pounds next year, noting the cost of the levy is rising. In evidence to the Energy and Climate Change Committee published this month, the utility said energy-policy costs added 83.17 pounds in 2012 and 101.33 pounds this year.

SSE Plc said in its evidence that ECO added 55 pounds in 2012 to 2013 and 59 pounds in 2013 to 2014. Centrica Plc (CNA)’s British Gas said climate change policies added 112 pounds in 2012, 133 pounds in 2013 and will add 183 pounds in 2014. RWE Npower Plc said “obligations” fell from 67 pounds in 2011 to 65 pounds in 2012.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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