Electricity suppliers hike prices to pay for environmental obligations

Government targets for UK energy companies to supply a proportion of their electricity from renewable sources are expected to trigger price rises this year, as utility companies pass on the costs to customers.

London Electricity and Scottish & Southern Energy are increasing their prices by up to 4.4 per cent, and according to industry insiders more rises will follow.

The Government has set up Renewables Obligations, which started on April 1, in an effort to create a UK-wide green energy market. The proportion of energy sourced from “green” generation will have to increase year by year until 2011, when suppliers will have to source ten per cent of their electricity from environmentally friendly sources.

London Electricity has raised electricity prices by about 4.4 per cent for 94,000 of its 3 million retail customers. Scottish & Southern Energy increased electricity prices by 2.2 per cent for its 4 million customers.

A spokeswoman for Scottish & Southern Energy says: “The reason for the increase is that we are required to produce more green energy for our customers, and also have to spend money to encourage people to use less electricity as part of the Energy Efficiency scheme.”

A Social Action Plan has also been created to help “fuel-poor” households. The plan aims to ensure that subsidies are extended to these households and that they are also given energy efficiency advice by suppliers.

Consumer watchdog Energywatch has criticised the two suppliers for the price rises.

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