Cameron to Cut Green Taxes in Battle over Rising Energy Prices

Rising energy prices has become a hot topic in the UK recently, and as the general elections approach in 2015, Labour has managed to steal a lead thanks to Ed Miliband’s promise a couple of weeks ago that if victorious in the elections he will freeze energy prices for 20 months.

Prime Minister David Cameron has now tried to win back the initiative by stating the he will work to increase competition in the energy sector, and look at cutting green taxes that have been partly blamed for the increasing prices. He says that he is not afraid of influencing the energy market to benefit the British people, but that Labour’s plan to freeze prices is unworkable.

Related article: The Declining State of the UK Energy Sector

The Liberal Democrats, Cameron’s coalition partners, have claimed that this announcement has been “made up on the hoof ... by a party getting cold feet on the environment.”

Cameron stated that “we need to roll back some of the green regulations and charges. We'll be having a proper competition test carried out over the next year to get to the bottom of whether this market can be more competitive.”

Even though the British economy is improving, inflation and prices have risen across the board faster than wages, and this has created troubles for many of the country’s poorer families. Labour has accused Cameron’s government of being out of touch.

The plan to reduce green taxes has worried some environmental and renewable energy groups, who fear that the government is backtracking on its initial plans to encourage alternative energy development. A spokesman for the Lib Dems assured that “the Conservatives have put no properly worked-up policies in front of us. We will not allow the Conservatives to undermine our commitment to the environment, hurt the fuel poor, or destroy our renewable energy industry.”

Related article: Rising Energy Prices Force UK to Turn to Renewable Energy

So far, SSE has increased its prices by 8.2%, Centrica increased its prices by 9.2%, and on Monday RWE npower announced that its prices would jump 10.4%. The energy companies put some of the blame for the price hikes on the government’s environmental and social programs, which Reuters claims contribute nearly 10% to domestic energy bills (which now average more than £1,200 ($1,900) a year.)

Paul Massara, the Chief Executive Officer of RWE npower, said that Cameron’s plan marks an “important step in cutting real energy costs.”

By. Joao Peixe of Oilprice.com