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Energy Companies Must Cut Prices After Reaping Windfall

Big Six suppliers will save more money than expected from changes to an insulation scheme, ministers admit, urging them to pass on reductions to consumers

Energy companies should cut their prices after saving more money than expected from a deal to cut "green levies" on household bills, ministers have admitted.

Under a December deal, the Big Six suppliers agreed to cut prices by £50 in return for a series of changes to levies on bills.

The biggest cut, an estimated £30-£35, came from watering down a scheme, the Energy Company Obligation (ECO), which required suppliers to insulate homes.

suppliers could reap a windfall of as much as £2bn over three years because their savings from the changes would be greater than the Governmnent had estimated.

Customers could be owed a further £23-a-year reduction in their energy bills, according to one analysis.

Government admitted that the companies were "likely now to be in a position to make greater savings than they had originally projected in December".

It said they should "ensure that consumers benefit from this further reduction in delivery costs in a concrete way" and invited them to "set out publicly how they propose to do this".

But ministers immediately faced criticism for failing to ensure that companies actually cut bills. The admission that the companies were in line for a windfall was mentioned only on page 50 of a Government consultation response document.

Andrew Warren, director of the Association for the Conservation of Energy  said: "The upshot is that, even though they concede that the Big Six are receiving a further windfall this year directly as a result of the over-generous proposals, DECC has no intention of trying to claw back any of these windfall profits handed out to the Big Six.

"Instead they are simply 'inviting' them to make philanthropic gestures. Yet again, the end score is: Big energy companies, 6: rest of the world, nil."


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