Focusing on energy efficiency rather than introducing a 20-month energy price freeze would be a better way to save households and businesses money
Improving Energy Efficiency is key
There are two ways to save money on energy bills:
1. Ed’s suggestion
2. Improve energy efficiency
The second would be better as this not only helps struggling households and businesses save money, it also cuts carbon emissions and creates jobs.
The UK has been mandating energy suppliers to make specified efficiency improvements since market liberalisation in 1994, and while there have been a succession of such policies the basic principle has remained the same.
The current policy is the Energy Companies Obligation along with its poorly-performing market-based sister policy, the Green Deal.
While these policies have many weaknesses, the principle of improving energy efficiency through basic measures such as wall, loft and floor insulation, double glazing, LED lighting and new boilers is correct.
The wrong kind of radical
Better than freezing prices would be finding a more imaginative way of improving energy efficiency, for example strengthening Ofgem so the Big Six suppliers are forced to use profits (not bill increases) to offer much more financially attractive energy efficiency packages.
This in turn could be backed up by legislation mandating homeowners, landlords and businesses to meet certain energy efficiency levels (e.g. EPC levels) within a given time frame so they would indeed save money on energy.
Such an idea is somewhat radical, but it’s not as radical as Ed Miliband’s suggestion, which wouldn’t incidentally help create jobs among the potentially massive energy efficiency industry, for example insulation installers.
The Labour leader’s policy also involves the risk that the energy companies would simply find a legal loophole to dramatically increase prices just before and after the price freeze.
Yes politicians need to tackle rising energy prices, yes the Big Six need to be dealt with, but there are more effective and sensible ways of doing so.