Updated: Clegg reveals major Big Six tariff deal in green speech
Deputy PM Nick Clegg
Deputy Prime Minister Nick Clegg has today (Wednesday) announced a “landmark deal” with the UK’s ‘Big Six’ energy companies to give customers a “guaranteed” best tariff.
Mr Clegg, who delivered a wide-ranging speech at the KPMG headquarters in Canary Wharf in London, said the government has secured agreement from all the Big Six energy companies (EDF, E.ON, British Gas, SSE, Scottish Power and Npower) that all customers will be contacted at least once a year to specifically tell them what tariff will be best for their individual circumstances.
“Right now, seven out of ten customers are on the wrong tariff for their needs, so are paying too much,” he said. “Yet people rarely switch, despite the fact some families could save up to £100 a year. There are currently over 120 different tariffs, making it very difficult to know where to start.
“That is going to change. As of this Autumn, your supplier will have to contact you with the best tariff for your needs. And if you call them, they’ll have to offer you the best deal too.”
Reacting to the announcement, a spokesperson from energy regulator Ofgem said: “We welcome the initiatives announced by government. Our retail market review showed that the energy market is too complex and that further action is needed to make sure it works in the interests of consumers.
“Ofgem’s reforms include proposals to open up the electricity market, and to make it easier for consumers to choose the tariff that is right for them. They also set out tougher standards of conduct so that suppliers treat customers fairly.”
Turning his attention to the green economy, the Lib Dem leader called for a “waste not, want not” attitude to both the environment and the economy, emphasising that “greening our lifestyles and decarbonising our economy is the right thing to do, economically.”
“However, while sceptics say that it’s all too difficult at a time of deep fiscal consolidation and that economic uncertainty poses too many challenges, I say periods of economic reinvention force us to do things differently. I say that lean times can be green times too,” Mr Clegg said.
“Whether it’s waste of energy, waste of money, waste of our potential, we are focused on conserving our precious resources... And that creates a unique opportunity to put environmental thrift into the mainstream.”
The Deputy PM also called on the nation to stop treating the environment like an “afterthought.”
He continued: “We must show that, in so many ways, consumer interests, business interests and green interests are the same. We have to give people the practical help to make more sustainable choices. We must do everything we can to ensure that the benefits and opportunities created by going green are clear.”
Mr Clegg also announced that at least £540million a year under the Green Deal’s Energy Company Obligation (ECO) – which places one or more obligations on energy companies during the roll-out of the government's energy efficiency scheme – will target the fuel poor.
This will include £350m a year to deliver heating and insulation measures to around 270,000 low income and vulnerable households by 2015, helping them to heat their homes to a healthy level.
A further £190m a year will be available from the energy companies to upgrade the lowest income homes and flats, including social housing, with loft and cavity wall insulation, as well as other insulation measures.
The Deputy PM said: “We will be requiring the energy companies to provide an estimated £1.3bn a year of support for energy efficiency in our homes with at least £540m to fund energy saving improvements in the worst off homes.
“It is shameful that the UK still has so many families unable to heat their homes. By delivering lasting improvements, each year this money will help 180,000 of the poorest households make their homes cheaper to heat for good.”
The Department of Energy and Climate Change (DECC) also confirmed that while a large proportion of the ECO will still be targeted at solid wall insulation, support will now be extended to include hard to treat cavity walls.
Other measures which reduce heat loss from a property, such as glazing and draught proofing, may also be included alongside both types of insulation.
Click here to read the speech in full.
Reacting to the speech, Andrew Raingold, Executive Director of the Aldersgate Group - an alliance of leaders from business, politics and society that drives action for a sustainable economy - said:
“Nick Clegg is absolutely right to outline the economic opportunities of the transition to a green economy and the cost savings that can be made through using less resources. This vision needs to be shared by his Cabinet colleagues to ensure consistency across government and effective delivery.”
Also reacting to the announcement, Ian Marchant, Chief Executive of Big Six energy supplier SSE, said:
“The package of measures announced today gives us a substantive but realistic set of targets which we believe are achievable. The commitments we have implemented so far are setting the pace for the rest of the industry, going right to the heart of the issues that concern customers. They will improve both communication and simplicity for customers.
“Suppliers, Government and Ofgem need to work together to improve the quality of information provided to customers and help ensure energy customers get the best possible deal,” he added.
Juliet Davenport, CEO and founder of Good Energy, the UK's only 100% renewable electricity supplier said:
"Unlike the Big Six energy companies, independent suppliers like Good Energy don't need the government to tell us to take a more straightforward approach with our customers, because we're already doing it. Today's announcement is welcome, but the government should be looking to these suppliers and asking how others can learn from their best practice.
“Nick Clegg is right in one other sense – investing in green today is necessary for us to meet the challenges of tomorrow. It’s the government’s responsibility to ensure that the UK is in the best possible place to do that by investing in renewables, to deliver us the secure, stable and sustainable energy that is the essential for economic growth.”
Katja Hall, Chief Policy Director at the Confederation of British Industry (CBI), said:
“This pledge by energy companies is a positive step, which together with the Green Deal, will make a real difference to the energy bills of consumers and businesses in difficult times.
“It’s increasingly important to argue the case for our green economy in helping to deliver much-needed growth. Energy efficiency and a shift towards a low carbon economy will not only bring benefits in cost savings, but also provide opportunities for growth and investment.
“With the right policies in place, the Government can give investors the confidence they need to inject billions of pounds into our energy infrastructure and create thousands of jobs. The key is investor certainty and a new long-term industrial policy will be crucial to achieving this.”
David Nussbaum, CEO at WWF-UK, commented:
"It is reassuring to hear the Deputy Prime Minister state that the government believes that going green has never made so much sense. There are jobs and growth up for grabs in a green economy and the UK is ideally placed to capitalise on these opportunities."
"Improving energy efficiency will bring enormous benefits for householders and for our economy, so it's good to hear some focus on this. However, if the Green Deal is to be a roaring success, the government must play a proactive role - providing incentives and empowering the Green Investment Bank."
Paul Steedman, Energy Campaigner at Friends of the Earth, said:
“The Big Six’s addiction to fossil fuels saw bills rise by up to 18 per cent last autumn - but despite this the government wants to fuel their habit by building yet more gas-fired power stations.
“Rather than papering over the cracks of our broken energy system we need Ministers to make our homes more efficient and to switch to clean British energy from the wind, sun and waves we have in abundance.”
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