Good Energy’s chief executive Nigel Pocklington has slammed Liz Truss’ proposal to impose a moratorium on green levies, dismissing the policy as “nonsensical.”
The Tory leadership contender and Foreign Secretary has called for green levies to be temporarily halted to help drive down energy bills, with the consumer price cap expected to climb over £3,300 per year this coming winter, during the coldest months of the year when demand is at its peak.
However, Pocklington accused Truss of “tinkering around the edges,” given the scale of the current crisis, which he argued has been chiefly driven by soaring natural gas prices.
He told City A.M.: “Frankly, I find Liz Truss’ policy pronouncement on this nonsensical – it will increase bills and it’s not properly engaging with the detail of it.”
Wholesale costs spiked to record levels earlier this year amid geopolitical tensions and volatility following Russia’s invasion of Ukraine and rebounding post-pandemic demand.
They remain historically elevated and are closing in on March’s peak following Russia’s decision to cut gas flows via the Nord Stream 1 pipeline.
He argued that if it wasn’t for high levels of renewable electricity now within the grid, bills “would be even more expensive” because renewables were now the cheapest way of generating power.
This follows the price of offshore wind power falling to a record low of £37.35 per megawatt hour earlier this month, after a record auction round for renewable investment – attracting £17.8bn of funding for 11GW of projects.
Commenting on green levies, Pocklington noted they did more than help fund plans to decarbonise the country’s energy supply to reach net zero targets.
Green levies also included contracts for difference payments for renewable generators – which has helped drive renewable generation prices to record lows- alongside social programmes such Warm Home Discount, that provide one-off payments to ease bills for vulnerable energy users.
He said: “So, what are you going to do? You’re going to renege on contracts that have been made by the British government, which seems like a very silly thing to do. Or you are going turn away energy that is cheap to produce in favour of energy that is more expensive to produce – that’s just going to put the bills up.”
Insulation offers more hope for households
Green levies typically refers to a batch of policies attached to energy bills designed to improve the environmental sustainability of energy consumption.
Alongside the Warm Home Discount and contracts for difference, it includes plans to replace gas with biogas and insulation schemes,
Earlier this year, Ofgem calculated that green levies currently make up 9-12 per cent of household energy bills – totalling around £200 per year in the current price cap.
By contrast, wholesale costs represent £1,077 in this year’s record consumer price cap – which is set at £1,971 per year.
Ofgem told City A.M. environmental only policies cost the consumer £92.70 in the latest price cap update.
Instead of halting green levies, Pocklington called for a ramp up in energy efficiency across the country’s housing stock and further support for households.
He approved calls from Westminster MPs for further funding to boost insulation and reduce energy usage across the UK – as outlined in the BEIS Committee’s report into energy pricing
Pocklington said: “It’s a well-documented fact that UK housing stock is the least energy efficient in Europe. Large swathes of the country were built in an era of energy abundance, and we don’t have that anymore. So, fixing that would strike me as being a very sensible precaution, frankly, for both extreme heat of last week and for using less energy.”
Good Energy is a renewables-only supplier, home to around 250,000 customers.
A spokesperson for Liz Truss said: “The one year temporary moratorium on energy levies is a necessary and immediate step to ease the financial burden on families struggling with soaring energy bills. At the same time, a Truss Government will review Britain’s energy sector to make sure we shore up domestic supply and prevent families from being stung by high prices again in high prices again in the future.”