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£250m Big 6 Windfall Rocks Government

big 6 energyIn an ‘unfortunate’ piece of political timing, government figures have revealed that the Big 6 energy suppliers will benefit far more greatly from changes in the Energy Companies Obligation (ECO) than originally expected.

The cuts to the scheme, announced in December 2013, focussed on reducing the burden of administering the £1.4bn per annum ECO scheme so as to reduce the cost of adherence to the scheme’s objectives.

Whilst the overall stated government objective was to reduce the green ‘burden’ on energy bills by £50, the ‘unwitting’ impact has been that the energy companies themselves will be the big winners with operational and commercial savings of an estimated £250m.

The ECO is an insulation scheme for UK energy customers, executed by the suppliers but funded from customer bills.

However because suppliers met the targets of the (reduced scope) scheme earlier than expected the Big 6 energy companies are forecast to pocket around £250m in unspent monies collected from energy bills.

Whilst having no remit to insist, DECC have called on the Big 6 to pass on this benefit to their customers.

The Big 6 however has been unsurprisingly silent on the matter.

This comes at a troubling time for both the companies themselves and the government.

Having seen the hyperbole grow around energy costs and the cry of shame for alleged failures to pass through falls in the wholesale energy market and with the CMA investigation into the energy market underway, this finding is less that politically ideal.

Derek Lickorish, the chairman of the Fuel Poverty Advisory Group, which advises the government, said:

“This is a golden opportunity for the industry to show its commitment to restoring trust and passing the gain back to customers who need it most”.

Whether the energy suppliers do pass on the windfall or continue to build their war chests ahead of any CMA conclusion remains to be seen.

For the government though, whatever the outcome, the sequences of events that have led us here leave a great deal to be desired.

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