After months of criticism of the Big Six energy companies for putting bills up, a study in the North East has said they are, in fact, too low.
The claim was made by academics at Newcastle University and has caused a stir among those concerned about growing fuel poverty which has hit families particularly hard in this region.
In the university’s findings, the Government’s market-based approach was criticised, while they said it should establish an authority to oversee the £100bn it says is needed to overhaul the country’s ageing energy infrastructure.
Prof Phil Taylor, who leads its Institute for Research on Sustainability, said that energy for much of the population is too cheap which is leading to waste.
He explained: “The current pricing model does not accurately reflect the high economic and environmental cost of generating, storing and distributing energy. In fact, because of the way energy is sold today, it becomes cheaper the more we use. This is unsustainable.
“Although we must make sure people can afford to heat their homes, for the majority of us energy is actually too cheap – this is why we leave lights on, keep appliances running and use machines at peak times when energy costs more.”
The university’s research paper described the energy system as fragmented and wants a new body which can oversee planning and development.
Maria Wardrobe, of Newcastle-based National Energy Action, a national charity which aims to eradicate fuel poverty, said: “While we would agree that security of supply is a major concern, the report needs to look at it alongside the other major issue, that of fuel poverty.
“For around 150,000 households in the North East energy prices are not affordable. Until the Government invests in a major retrofit programme to ensure we have a minimum energy efficiency standard for the homes of low-income households we need to do everything possible to ensure energy price increases are kept to a minimum.
“Those living in fuel poverty are not profligate with their energy, they don’t leave lights on and keep appliances running, they often self- disconnect from their energy supply and go cold rather than get into debt.
“We need to look at both problems in the round. Investing in energy efficiency can tackle both, reducing our reliance on our ageing energy infrastructure and alleviating fuel poverty.”
Earlier this week, British Gas, one of the Big Six, said households will pay £4.2bn too much for their energy bills over the next eight years.
It claims that energy network companies, who are responsible for the electricity cables and gas pipelines that feed homes from the national grid, are charging too much for their services and this is adding to consumer bills.
Network costs, which are set by energy regulator Ofgem, already account for £288 of the average energy bill — more than a fifth — but will rise further, in line with inflation, over the next eight years.
In a submission to the energy select committee, which is investigating network costs, British Gas said the amount consumers would pay to electricity network firms was likely to be “overly generous”.
It warns that new charges, being finalised by Ofgem, will see consumers pay around £4.2 billion too much over the next eight years - equivalent to £10.41 a year per household.
It claims targets set by Ofgem are too easy for the network companies and the rewards they are paid for their investments are too high.
British Gas has now called for the National Audit Office to review the way the companies are regulated.