Business can't afford new green measures

London – Many businesses will struggle to afford a three-fold increase in charges to pay for the government’s environmental reforms, according to the Energy Advice Line (EAL) – an electricity price comparison and switching service.

Many firms would be pushed to the financial brink by the new measures, believes Julian Morgan, EAL’s managing director, noting that the government is to allow energy firms to triple the amount they add to customers’ energy bills to pay for renewable power, nuclear and other green measures.

This, he said, means the total amount energy suppliers will be able to add to domestic and business electricity bills will rise from £2.35 billion this year to nearly £10 billion by 2020.

“The business community is extremely worried by these measures,” Morgan said. “The government hasn’t specified yet exactly how these increases will apply to the non-domestic sector but there is little doubt they will push up prices considerably, on top of price hikes in the actual cost of power.

“The government needs to make sure that the most vulnerable firms are protected, those in the most energy-intensive industries, for example, and they need reassurance now to end the uncertainty and worry.”

The measures are included in the government’s Energy Reform Bill, which has just been agreed by the Coalition partners and will be presented to Parliament next week. The legislation is designed to pave the way for much needed investment in the energy sector and enable the UK to meet tough new environmental standards.

The government’s efforts to meet environmental targets should not be at the expense of small and medium-sized firms, continued Morgan.

“What businesses really want this bill to do is open up competition in the retail energy market to end the effective oligopoly of the Big Six,” he concluded. “This will enable other players to enter the market, leader to greater transparency about prices and billing, and hopefully lead to lower energy prices.”