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Bills would increase further
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The Public Will Pay for Windfall Tax, Warn Energy Firms.
Hazel Cottrell
hazel.cottrell@consumerchoices.co.uk
Energy suppliers have warned imposing windfall tax would result in higher bills for consumers.
While the government remains divided over the issue of a windfall tax, energy companies have spoken out about the risk that such a levy on their profits would pose to the consumer.
The industry claims that the introduction of a windfall tax would leave companies struggling to find money to invest in ageing power stations and energy networks. With energy sources dwindling, energy chiefs claim that their profits are needed urgently to invest in new technologies and improve infrastructure.
If a windfall tax were to be imposed on these profits, they claim that the costs would have to be passed on to the consumer, resulting in further inflation-busting increases.
David Porter, chief executive of the Association of Electricity Producers, says: “If you take money out of the companies and they have to find it somewhere else, then customers will have to bear the brunt of that. There is a serious risk that bills would go up.”
Energy suppliers have also claimed that such a tax would deter foreign investors.
The big six energy retailers - British Gas (www.britishgas.co.uk), Scottish Power (www.scottishpower.co.uk), EDF, E.ON (www.eonenergy.com), Scottish and Southern and npower (www.npower.com) - are now trying to put off the threat of a windfall tax by offering to increase their spending on schemes to combat fuel poverty.
Earlier this year they agreed to spend an additional £225 million over three years to tackle fuel poverty, targeting households that spend more than 10% of their income on gas and electricity. New talks are taking place before the winter and are becoming more urgent as the recent price hikes have pushed the number of households living in fuel poverty above the five million mark for the first time in more than a decade.
Garry Felgate, chief executive of the Energy Retail Association, which is leading the discussions, said: “We are currently working with government on solutions to help them reach their 2010 targets on fuel poverty.”
Chris Eagle, Commercial Manager at Energy Choices says: “Passing on the costs of a windfall tax to the customer would appear scandalous, but it’s clear that investment is needed to develop new energy technologies. The main issue here is the necessity to aid those in fuel poverty. Whether this is funded through a windfall tax or directly by the energy companies, the government needs to act fast to ensure that more help is available for those in need.”
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