Big Six energy companies set to pass on Osborne’s green levy tax-cut reforms to consumers

George Osborne, Chancellor
George Osborne, Chancellor

Speculative reports in various London-based newspapers today suggest that the UK Chancellor George Osborne will announce reforms to the energy company obligations (ECO) that could cut £1 a week off the typical household energy bill.

The move to ‘row back on green crap’ – the ECO tax levies that energy companies are required to impose on consumer electricity bills – is, according to reports, the quid pro quo for wider Government reforms to energy levies.

The Financial Times said: “The Big Six energy companies have been engulfed by a public storm after they announced price rises averaging about 8% for the coming year-  far in excess of inflation.

“The Chancellor has made clear that he expects the Big Six to publicly promise to limit price rises in return of for his reforms.”

In response, Perth-based Scottish and Southern Energy, promised to pass on any costs savings resulting from a change in government green tax levies ‘penny for penny and pound for pound’.

Npower said that “if green levies are rolled back, then we will cut prices to customers as soon as possible.”

Chancellor Osborne is expected to confirm the Government’s reforms to the ‘green tax’ levies in his Autumn spending statement in the House of Commons on 4 December.

 

Scottish Energy News comment:

“Think global, act local” is a well-known management-school maxim. In the current context of the politics of energy, what Prime Minister David Cameron is flagging-up here is his political adaptation of that maxim which states; “Think strategic, act political.”

What this means is that the Conservatives – well aware of the likely positive impact on voters of the pledge by Labour Leader Ed Milliband to impose a price-freeze on any proposed energy prices rises by the Big Six which dominate the UK energy supply market – have now devised a party-political answer to Millband.

Irrespective of regulatory mechanics, Milliband’s ‘energy price-freeze’ pledge is politically potent.

But it is not as potent as the ‘double-death taxes relief’ speech by then Shadow Chancellor George Osborne at the 2007 Tory party conference, which largely stalled then prime minister Gordon Brown from calling a snap Autumn general election. The delay then resulted in Labour’s defeat in the subsequent election.

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