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Eon lost HALF A MILLION customers in 2019 as households continue to switch away from the Big Six energy suppliers

Eon lost 500,000 customers in Britain last year with its profits also taking a bashing thanks to the energy price cap, its results revealed today.

The Big Six supplier, which is German-owned, is likely to have lost customers as a result of more households switching providers than ever before – with many moving away from the largest suppliers. 

The price cap will also have had an effect as suppliers are only allowed to charge a maximum of £1,162 for standard variable tariff customers.

Despite losing customers, Eon said its total earnings before tax and interest increased to £2.9billion in 2019, and it expects earnings to increase again in 2020.

However, it admitted it hadn’t factored in the current downturn in the economy amid coronavirus fears, adding that it has seen customers across Europe consuming less energy as a result of the pandemic. 

Johannes Teyssen, Eon chief executive, said: ‘Industrial and commercial customers are consuming noticeably less energy. 

‘This will have a temporary impact on our network and sales businesses. There may be delays in our ability to deliver energy infrastructure projects.

He added: ‘Energy utilities have a special significance for critical infrastructure in this crisis and thus a special responsibility. 

‘We will do everything in our power to ensure supply security, even in this situation.’

It said the energy sector ‘won’t be as hard hit by other industries’ but will still feel an impact from the pandemic. 

During the coronavirus outbreak, Eon confirmed that it will not disconnect financially vulnerable customers from its network to ensure continued supply. 

It added that its core business saw operating arms post ‘solid earnings’ last year, although customer solutions saw earnings slip by £90.9million due to price caps and the fall in UK accounts. 

Victoria Arrington at Energy Helpline said: ‘The Big Six has been losing customers for some time – so Eon’s loss of 500,000 UK accounts in 2019 is no big surprise. 

‘Established suppliers are facing intense battles in an ever-changing industry for customer loyalty.

‘The marketplace is becoming more and more competitive. Customers are switching at record rates – and it’s unsurprising, since there are so many bargain tariffs appearing all the time. 

‘That said, Eon clearly recognises that customers crave savings, with their best tariff deal is £318 cheaper than their default tariff.

‘With so many cheap tariffs available, it’s clear that complacency can be costly. 

‘Customers who switch supplier could save up to £378 a year on energy, with the average customer saving £280 annually – so it pays to shop around.

‘Eon has made some intriguing moves recently – from putting all of their customers on to renewable energy, to taking on the customer base of npower. 

‘It will continue to be interesting to see what new developments they bring to the industry.’ 

During the coronavirus outbreak, the Government and energy suppliers have teamed up to put emergency measures in place.

This includes ensuring that prepayment and pay as you go customers who cannot leave home can speak to their provider about staying supplied, steps that should benefit over four million households. 

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Millions of households set for energy bill break due to coronavirus crisis

But commuters who usually travel to work using rail season tickets could find themselves out of pocket because of ‘completely unfair’ rules

Millions of households could be given a break from energy bills as a growing number of companies have sent employees home amid the coronavirus crisis, The Telegraph can reveal.

EDF Energy, which has five million customers and is one of the biggest utility firms in the country, said it would consider offering delayed payments to anyone who is affected by the outbreak.

The news comes after the Government warned that as many as a fifth of employees could be off work at the same time, disrupting regular travel plans and increasing power use.

Consumer experts hit out at rail firms for only offering partial refunds to those who are told to work from home as offices across the country sit empty.

High street banks have already offered mortgage repayment holidays to affected customers as the financial toll of the crisis worsens.

The Telegraph understands that energy bosses are in regular communication with the Government and regulators to determine how best to support customers who may run into financial difficulty.

A spokesman for EDF said: “We recognise that over the coming weeks Covid-19 may have an impact on our customers, and we are prepared to offer these customers additional support and flexibility.

“Each case would be looked at on an individual basis, but additional support we could offer may include repayments made over a longer period of time, delay payment for a short period or offer alternative payment arrangements.”

Government advice is that anyone with persistent coronavirus symptoms should remain isolated for seven days.

Those who usually travel to work using a rail season ticket could find themselves out of pocket because of rules blasted as “completely unfair” by a consumer group.

Martyn James, from consumer complaints service Resolver, said the rules could mean many commuters lose out simply for following their company’s advice.

Customers can ask for money back, but they will not receive the full unused value of their and will have to pay an administration fee.

Those who have used the majority of their ticket would not be entitled to a refund.

Mr James said the period used to calculate the refund is arbitrary and may not reflect price variations over the year.

A weekly ticket from Brighton to London costs around £105 while a day return ticket can cost £44.

That means someone returning their ticket after four days of use would receive nothing back.

Customers are also charged an administration fee of up to £10.

Commuters can temporarily “suspend” their season ticket if they are ill. They will be refunded for the time for which they were unable to use it.

To receive their money back customers must supply a medical certificate.

Transport for London, which runs the London Underground, said it is waiving its £5 administration fee for those who need to self-isolate.

A spokesperson for the Rail Delivery Group, a trade body, said rail firms understand these are “exceptional times” and that travellers should check their entitlement with National Rail Enquiries.

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Decrease to SSE Airtricity Gas Supply’s tariff welcomed by Utility Regulator

The Utility Regulator has welcomed SSE Airtricity Gas Supply’s announcement that it will be reducing its regulated gas tariff in the Greater Belfast area by 18.7% from the 1 April 2020.

Jenny Pyper, Chief Executive of the Utility Regulator said:

“I am delighted to welcome SSE Airtricity Gas Supply’s reduction of 18.7%, which is great news for their domestic and small business customers[i] in the Greater Belfast area. The key driver for this tariff change is the significant decrease in wholesale gas costs. There is also an over recovery from the current tariff period that is being returned to customers in this new tariff.

“We started this tariff review process in February 2020, which included a thorough analysis of all SSE Airtricity Gas Supply cost elements. Their customers can therefore be confident, that due to our regulation, their bills reflect the actual costs of supplying gas to their homes and businesses.

“This reduction brings SSE Airtricity’s prices to below where they were in 2017 and will result in a saving of around £108 a year for their customers. This new tariff will continue to be the lowest in the UK and RoI. The new tariff will be 12% lower that the GB price cap average and 36% cheaper than the Bord Gais standard tariff in RoI.

“As always, we will continue to look ahead and monitor SSE Airtricity Gas Supply’s cost elements and should any movements require a tariff change, we will act as soon as possible to ensure this is reflected in customer bills.

“In relation to electricity, we have begun a review with Power NI regarding their domestic regulated tariffs and expect an announcement in the coming months. Whilst we can’t pre-empt the outcome, given the falls being seen in wholesale prices, I would be hopeful of a positive outcome for electricity consumers before the summer.”

The tariff decrease will come into effect from 1 April 2020. Today’s announcement follows the ongoing tariff review process that is carried out by SSE Airtricity Gas Supply and the Utility Regulator, in consultation with the Department for the Economy and the Consumer Council for Northern Ireland.

briefing paper is also available.

ENDS

Notes to editor

  • For further information, please contact Adele Boyle on 028 9031 6664 or 07787 279584.
  • The Utility Regulator is the independent non-ministerial government department responsible for regulating the electricity and gas industries and water and sewerage services in Northern Ireland.
  • This tariff review commenced in February 2020 and covers around 166,000 customers in the Greater Belfast area. The review also covers customers in the Gas to the West area where a number of customers are connected.  
  • The average domestic customer will see their bills decrease by around £108 per year and the average bill will fall to around £468 per year.
  • The SSE Airtricity Gas Supply standard tariff is 12% lower than the average of the GB price cap.  Both have VAT rates of 5%.
  • The SSE Airtricity Gas Supply standard tariff is 36% lower than the Bord Gais standard gas tariff in the RoI. This includes VAT at 13.5% in RoI and 5% in NI.
  • The Greater Belfast area covers: South, West, East and North Belfast; Carrickfergus; Newtownabbey; Duncrue and Harbour; Lisburn; Carryduff; Castlereagh; Ballygowan; Newtownards; Larne; and North Down.

[i] Business customers using less than 73,200 kWh per year.

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Iberdrola “two decades ahead of energy transition” and making it pay

Scottish Power parent Iberdrola’s 13 per cent surge in group profits to £2.89 billion (€3.4 billion) last year reflects its two decades of steady renewables investment, according to CEO Ignacio Galán.

Galán said its push into clean generation puts Iberdrola “20 years ahead of the current energy transition.”

The group’s full 2019 results reveal a record 2.8GW of new green generation capacity, including East Anglia One’s first turbines commissioned last year. A further 9GW is under construction worldwide.

Iberdrola’s UK activities posted a net profit of £347 million, up 5 per cent on 2018. Higher wholesale prices pushed gross earnings at Scottish Power similarly up to £579 million. The subsidiary’s 2.5GW of installed capacity, predominantly onshore wind, is receiving continued investment, said the group.

But Scottish Power suffered in the retail market, with supply accounts falling to 2.8 million. A shrinkage of its customer base, plus a warmer winter, also saw volume sales of electricity drop 3 per cent compared to 2018.

UK performance was strongest in Scottish Power’s Energy Networks unit. Its gross margin rose 7 per cent to £1.12 billion.

The unit was hit though by persistent faults in its Western Link cable to north Wales, now the subject of an Ofgem investigation.   Output from onshore generation in the Highlands dropped 2.8 per cent on 2018, says Scottish Power’s parent.

Analysts Cornwall Insight this week estimated that prolonged outages from Scottish Power’s Western HVDC triggered £ 31 million in curtailment payments in January alone.

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Ofgem approves UKPN to access smart meter data

UK Power Networks has become the second Distribution Network Operator to secure Ofgem approval to access smart meter data for households and small businesses in its patch, after the regulator approved its data security plan.

The DNO will now be able to access the devices’ aggregated half-hourly data via Smart DCC, the Capita-owned business that has the licence to operate the smart meter system, giving it a clearer view of loads on the low voltage networks.

Western Power Distribution was also approved by Ofgem to access smart meter data, in July 2018.  

The DNO submitted its data privacy plan to Ofgem in December 2019, which included “assurances that Consumption Data will not be used for marketing purposes or sold to third parties for commercial or marketing purposes”.

Ofgem granted its approval on 11 February.

Having this understanding will help the company effectively adapt to new demands on the network and subsequently support Great Britain’s transition to a low carbon society

Spokeperson, UK Power Networks

Insight into this data is becoming more important as for DNOs as networks adapt to household solar generation, electric vehicle charging, and battery storage.

In an email to Network, the DNO said that the consumption data would offer better visibility of usage patterns on its low voltage network, helping it to plan reinforcement and to understand how load patterns would be affected by electric vehicles and other low carbon technologies.

A spokesperson said: “Having this understanding will help the company effectively adapt to new demands on the network and subsequently support Great Britain’s transition to a low carbon society.”

The data can improve visibility of the demands on substations, feeders and sections of feeders, according to the data security plan submitted to Ofgem.

Each household smart meter transmits consumption data to servers controlled and operated by Smart DCC. UK Power Networks will be able to access the data via the latter’s infrastructure, which interfaces with the DNO’s own secure IT systems.

Smart DCC, a wholly owned subsidiary of Capita, operates under a licence granted by the Department for Business, Energy and Industrial Strategy, which is also regulated by Ofgem.

According to the data privacy plan submitted to Ofgem, UK Power Networks will develop a process through Smart DCC to collect the information on a monthly basis.

Collecting at monthly intervals will means that IT systems at the DNO and at Smart DCC are not overloaded, as the data requests can be data intensive.

The decision was made to collect data monthly as a longer or shorter period would provide no additional benefits to UK Power Network’s team, for instance system design and planning engineers using the data for network reinforcement analysis or new connections.

UK Power Networks will be able to access aggregated monthly half-hourly consumption load profiles for each substation, feeder and section of feeder.

Under the requirements of its licence, UK Power Networks will need to ensure that, so far as is reasonably practicable, the data ceases to be “capable of being associated with a domestic customer at relevant premises”.

As well as using the data for its own analysis, UK Power Networks has said that it might make aggregated and anonymised consumption data available to independent connection providers and independent DNOs (IDNO)s where there is a framework agreement.

It might also share aggregated and anonymised data with consultants and universities working on its behalf, for example to support a research project.

BP boss plans to ‘reinvent’ oil giant for green era

New BP boss Bernard Looney has said he wants the company to sharply cut net carbon emissions by 2050 or sooner.

Mr Looney said the 111-year-old company needed to “reinvent” itself, a strategy that will eventually include more investment in alternative energy.

BP will have to fundamentally reorganise itself to help make those changes, said Mr Looney, who took over as chief executive last week.

It follows similar moves by rivals, including Royal Dutch Shell and Total.

Mr Looney said: “The world’s carbon budget is finite and running out fast; we need a rapid transition to net zero.

“Trillions of dollars will need to be invested in re-plumbing and rewiring the world’s energy system.”

“This will certainly be a challenge, but also a tremendous opportunity. It is clear to me, and to our stakeholders, that for BP to play our part and serve our purpose, we have to change. And we want to change – this is the right thing for the world and for BP.”

He outlined his plans in a keynote speech on Wednesday.

“Providing the world with clean, reliable affordable energy will require nothing less than reimagining energy, and today that becomes BP’s new purpose,” he said. “Reimagining energy for people and our planet.”

“We’ll still be an energy company, but a very different kind of energy company: leaner, faster moving, lower carbon, and more valuable.”

BP’s announcement that it intends to become a zero carbon emissions company by 2050 was not short of fanfare. It’s new boss, 49-year-old Irishman Bernard Looney, delivered what the company described as a landmark speech in front of hundreds of journalists and investors.

But while he was clear what he wanted and why, he was less clear on how and when. There was a commitment to reduce the company’s investments in oil and gas exploration, and increase investment in zero and low-carbon energy over time.

But there were no commitments to specific targets in the intervening 30 years. Indeed he said that BP would still be in the oil and gas business three decades from now but in a sustainable way.

Ultimately, it will fall to his successors to make good on promises made today. But Mr Looney said in order to start a journey you need a destination. His critics would say you need a more detailed map on how to get there.

Presentational grey line

On Instagram, which Mr Looney recently signed up to, he said: “Rest assured – a lot of time – and listening – has gone into this.”

“All of the anxiety and frustration of the world at the pace of change is a big deal. I want you to know we are listening. Both as a company – and myself as an individual.”In the longer term, BP’s plans will involve less investment in oil and gas, and more investment in low carbon businesses.

The company said it wanted to be “net zero” by 2050 – that is, it wants the greenhouse gas emissions from its operations, and from the oil and gas it produces, to make no addition to the amount of greenhouse gases in the world’s atmosphere by that date.

It also wants to halve the amount of carbon in its products by 2050.

Mr Looney did not set out in detail how it intended to reach its “net zero” target, something that drew criticism from environmental campaign organisation Greenpeace.

Charlie Kronick, oil advisor from Greenpeace UK, said there were many unanswered questions. “How will they reach net zero? Will it be through offsetting? When will they stop wasting billions on drilling for new oil and gas we can’t burn?

“What is the scale and schedule for the renewables investment they barely mention? And what are they going to do this decade, when the battle to protect our climate will be won or lost?”

Mr Looney addressed this criticism after his speech, saying: “We want a rapid transition. A transition that is delayed, and then suddenly is a right-angle change that disrupts the world, would be destructive to our company.”

“We’re starting with a destination. The details will come,” he said.

When asked whether that meant it’s oil and gas business would cease to grow, Mr Looney said: “BP is going to be in the oil and gas business for a very long time. That’s a fact. We pay an $8bn in dividends [to shareholders] every year. Not paying that is one way to make sure that we’re not around to enable the transition that we want.”

However, he said the existing oil and gas business would shrink over time. Any remaining carbon produced by the use of BP products would have to be captured or offset, he said.

Investor pressure

Climate Action 100+, a group of large investors that is trying to put pressure on major greenhouse gas emitters to clean up their act, said the BP announcement was “welcome”.

“We need to see a wholesale shift to a net zero economy by 2050,” said Stephanie Pfeifer, a member of the action group’s steering committee.

“This must include oil and gas companies if we are to have any chance of successfully tackling the climate crisis,” said Ms Pfeifer, who is also chief executive of the Institutional Investors Group on Climate Change.

She said that Climate Action 100+ investors, which have already been putting pressure on BP, will continue to look for progress from the company in addressing climate change.

“This includes how it will invest more in non-oil and gas businesses, and ensuring its lobbying activity supports delivery of the Paris Agreement,” she said.

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Electric shock: Could Brexit scar Britain’s energy landscape?

Britain’s exit from the EU, which will finally happen on Friday (31 January), has sparked fears of disruption to its electricity market, from higher bills to supply issues and stalled de-carbonisation efforts.

Britain depends on the European Union for much of its electricity supply.

Its own generation fell in 2018 by 1.6%, according to the latest available statistics.

This reduction stems from the gradual shutdown of coal-fired power plants, which is yet to be fully compensated by a rise in wind power.

Imports of electricity and gas have increased in response, predominantly from France, the Netherlands and Ireland, which now account for almost 40% of Britain’s energy consumption.

Britain’s imminent departure from the 28-member EU and its single electricity market therefore represents a risk for an already fragile network, which suffered a big blackout in August.

It will continue to benefit from existing arrangements during a post-Brexit transition phase, while it seeks a new agreement on everything from energy to security cooperation with Brussels.

But it is not clear if these talks will entirely resolve the issue.

British industry regulator Ofgem has said “alternative trading arrangements will need to be developed”, without giving further details.

It insists that whatever deal is struck, it does not “expect Brexit to interrupt the flows of electricity and gas”.

But at times of peak demand, Britain may find itself at the back of the line for electricity.

“EU countries could get preference,” Weijie Mak, of research company Aurora, told AFP.

As with other areas such as finance, agreeing so-called equivalence on things like CO2 emission rules – so countries who produce cleaner and more expensive electricity are not disadvantaged – will be key.

Price rise?

Uncertainty over equivalence and the possible return of tariffs or quotas if trade negotiations falter has left some sceptical that nothing will change post-Brexit.

“The electricity trade will become more expensive,” said Joseph Dutton, policy advisor at climate change think tank E3G. “It could mean higher bills for consumers.”

Trading in electricity across the Channel is currently based on an auction system, which could be upset by Britain’s EU departure.

Eurelectric, the association representing the industry at the European level, sees it as a “lose-lose situation” because of “less efficient gas and power trading”.

The hazy picture has seen the French government put on hold several interconnector projects aimed at better linking the electric power grids of Britain and the continent.

But they are seen as crucial for energy security on the English side of the Channel.

“(They) supply less than 10% (of electricity consumed) but allow you to balance supply and demand,” said Dutton.

“Interconnectors give you flexibility to build more renewables (wind mills in particular) because you can buy electricity when the wind is not blowing and sell it when you have more than you need.”

That could lead the government to postpone the closure of gas-fired power stations and delay Britain’s transition to entirely green energy sources, which it has vowed to do by 2050.

It could also mean easing a carbon tax currently levied on electricity prices to finance the transition if bills have spiked.

“If they (interconnectors) are not working, it has real consequences for the net zero targets,” concluded Dutton.

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Who pays for the EU’s €1tn green deal?

Under its president, Ursula von der Leyen, the European commission has big plans to address climate change. With a €1tn ($1.1tn) investment package, it hopes to transform Europe into a carbon-neutral economy by 2050.

But much of that €1tn for the commission’s proposed green deal would be generated through financial-leverage effects. In 2020, the EU will formally allocate for such purposes only around €40bn, most of which is already included in the budget from previous years; arguably, only €7.5bn of additional funding under the plan would actually be new.

As with the previous commission’s 2015 Juncker plan, the trick, once again, will be to muster the lion’s share of the quoted sum through a shadow budget administered by the European Investment Bank (EIB). The commission, after all, is not allowed to incur debt; but the EU’s intergovernmental rescue and investment funds are.

Jeffrey Frankel Read more

In essence, the EU is doing what the major banks did before the 2008 financial crisis, when they circumvented regulation by shifting part of their business to off-balance-sheet conduits and special-purpose vehicles. In the case of the EU, the guarantees offered by the commission and individual EU member states are sufficient for a high credit rating, and thus for the issuance of European debenture bonds. The funds generated will be used for public and private purposes, and sometimes even for public-private partnerships. But should the guarantees be called in one day, eurozone taxpayers will be the ones to foot the bill.Advertisement

These planned shadow budgets are problematic, not only because they would allow the commission to circumvent a prohibition against borrowing, but also because they implicate the European Central Bank. To be sure, the ECB president, Christine Lagarde, has already announced that she wants the bank to play a more active role in climate-friendly activities within the eurozone. And the ECB is now considering whether to pursue targeted purchases of bonds issued by institutions that have received the commission’s climate seal of approval.

In practice, of course, this most likely means that the ECB would buy up the “green” bonds now being devised by the EIB. Those purchases will then reduce the interest rates at which the EIB can take on debt, ultimately leading to activation of the printing press to provide the money for spending on climate policy.

It is laudable to want to do something about climate change. But under the current plan, the ECB would be pushed into a legal grey area. The institution is not democratically controlled, but rather managed by technocrats on the executive board. Every member state, big or small, appoints its own representative, who then has equal voting rights, personal immunity, and the autonomy to operate free from any parliamentary accountability.

Moreover, under the Maastricht treaty, the ECB board is primarily obligated to maintain price stability, and may support separate economic-policy measures only if doing so does not endanger its ability to fulfil this mandate. In the case of the green deal, the dangers are obvious. If the additional demand created by an expansion of green projects is funded by printing money instead of collecting taxes, it will not withdraw demand from other sectors of the European economy and would therefore be potentially inflationary.

Situations like this serve as a reminder of why article 123 of the treaty on the functioning of the European Union strictly prohibits the ECB from taking part in the financing “of Union institutions, bodies, offices or agencies, central governments, regional, local, or other public authorities, other bodies governed by public law, or public undertakings of member states”. But, of course, the ECB has already circumvented this rule by purchasing around €2tn in public debt from the market, thereby stretching the limits of its mandate to a legally dubious degree.

The latest plans to circumvent the Maastricht treaty will not improve matters. Before the financial crisis, the ECB was concerned only with monetary policy. During the crisis, it turned into a public bailout authority rescuing near-bankrupt banks and governments. Now, it is becoming an economic government that can print its budget as it sees fit.

The impending violation of the spirit of the Maastricht treaty will be twofold: the EU will be assuming debt covertly, and it will be doing so through the printing press. As such, the commission’s plans will further undermine the credibility of the very institution on which Europe relies for its financial and macroeconomic stability and its long-term growth prospects – and this at a time when the world is becoming even more uncertain, competitive and aggressive.

… and never more dangerous than now, as the crisis escalates across the world. The Guardian’s accurate, authoritative journalism has never been more critical – and we will not stay quiet. This is our pledge: we will continue to give global heating, wildlife extinction and pollution the urgent attention and prominence they demand. We recognise the climate emergency as the defining issue of our lifetimes. This month we made an important decision – to renounce fossil fuel advertising, becoming the first major global news organisation to institute an outright ban on taking money from companies that extract fossil fuels.

You’ve read 30 articles in the last four months. We chose a different approach: to keep Guardian journalism open for all. We don’t have a paywall because we believe everyone deserves access to factual information, regardless of where they live or what they can afford to pay.

Our editorial independence means we are free to investigate and challenge inaction by those in power. We will inform our readers about threats to the environment based on scientific facts, not driven by commercial or political interests. And we have made several important changes to our style guide to ensure the language we use accurately reflects the environmental emergency.

The Guardian believes that the problems we face on the climate crisis are systemic and that fundamental societal change is needed. We will keep reporting on the efforts of individuals and communities around the world who are fearlessly taking a stand for future generations and the preservation of human life on earth. We want their stories to inspire hope. We will also report back on our own progress as an organisation, as we take important steps to address our impact on the environment.

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Who pays for the EU’s €1tn green deal?

Under its president, Ursula von der Leyen, the European commission has big plans to address climate change. With a €1tn ($1.1tn) investment package, it hopes to transform Europe into a carbon-neutral economy by 2050.

But much of that €1tn for the commission’s proposed green deal would be generated through financial-leverage effects. In 2020, the EU will formally allocate for such purposes only around €40bn, most of which is already included in the budget from previous years; arguably, only €7.5bn of additional funding under the plan would actually be new.

As with the previous commission’s 2015 Juncker plan, the trick, once again, will be to muster the lion’s share of the quoted sum through a shadow budget administered by the European Investment Bank (EIB). The commission, after all, is not allowed to incur debt; but the EU’s intergovernmental rescue and investment funds are.

 The best way to help the climate is to increase the price of CO2 emissions

Jeffrey Frankel Read more

In essence, the EU is doing what the major banks did before the 2008 financial crisis, when they circumvented regulation by shifting part of their business to off-balance-sheet conduits and special-purpose vehicles. In the case of the EU, the guarantees offered by the commission and individual EU member states are sufficient for a high credit rating, and thus for the issuance of European debenture bonds. The funds generated will be used for public and private purposes, and sometimes even for public-private partnerships. But should the guarantees be called in one day, eurozone taxpayers will be the ones to foot the bill.

These planned shadow budgets are problematic, not only because they would allow the commission to circumvent a prohibition against borrowing, but also because they implicate the European Central Bank. To be sure, the ECB president, Christine Lagarde, has already announced that she wants the bank to play a more active role in climate-friendly activities within the eurozone. And the ECB is now considering whether to pursue targeted purchases of bonds issued by institutions that have received the commission’s climate seal of approval.

In practice, of course, this most likely means that the ECB would buy up the “green” bonds now being devised by the EIB. Those purchases will then reduce the interest rates at which the EIB can take on debt, ultimately leading to activation of the printing press to provide the money for spending on climate policy.

It is laudable to want to do something about climate change. But under the current plan, the ECB would be pushed into a legal grey area. The institution is not democratically controlled, but rather managed by technocrats on the executive board. Every member state, big or small, appoints its own representative, who then has equal voting rights, personal immunity, and the autonomy to operate free from any parliamentary accountability.

Moreover, under the Maastricht treaty, the ECB board is primarily obligated to maintain price stability, and may support separate economic-policy measures only if doing so does not endanger its ability to fulfil this mandate. In the case of the green deal, the dangers are obvious. If the additional demand created by an expansion of green projects is funded by printing money instead of collecting taxes, it will not withdraw demand from other sectors of the European economy and would therefore be potentially inflationary.

Situations like this serve as a reminder of why article 123 of the treaty on the functioning of the European Union strictly prohibits the ECB from taking part in the financing “of Union institutions, bodies, offices or agencies, central governments, regional, local, or other public authorities, other bodies governed by public law, or public undertakings of member states”. But, of course, the ECB has already circumvented this rule by purchasing around €2tn in public debt from the market, thereby stretching the limits of its mandate to a legally dubious degree.

The latest plans to circumvent the Maastricht treaty will not improve matters. Before the financial crisis, the ECB was concerned only with monetary policy. During the crisis, it turned into a public bailout authority rescuing near-bankrupt banks and governments. Now, it is becoming an economic government that can print its budget as it sees fit.

The impending violation of the spirit of the Maastricht treaty will be twofold: the EU will be assuming debt covertly, and it will be doing so through the printing press. As such, the commission’s plans will further undermine the credibility of the very institution on which Europe relies for its financial and macroeconomic stability and its long-term growth prospects – and this at a time when the world is becoming even more uncertain, competitive and aggressive.

photovoltaic-491702_1280

Energy users save £1 billion on bills in 2019

11 million customers have saved as much as £1 billion on their energy bills in 2019, according to new data to mark the first anniversary of the government’s energy price cap

  • government’s energy price cap safeguards 11 million people, often the most vulnerable and elderly, from overpaying on their gas and electricity
  • combined saving of as much as £1 billion on energy bills in the first year of the price cap
  • new data also shows 4.4 million electricity and 3.6 million gas customers switched supplier in first 9 months of 2019, saving even more

11 million customers have saved as much as £1 billion on their energy bills in 2019, according to new data to mark the first anniversary of the government’s energy price cap.

Research has shown that the cap has saved families on default energy tariffs around £75 to £100 on dual fuel bills this year. This comes as the government pledges to build on the success of the price cap and do more to lower energy bills including by investing £9.2 billion in the energy efficiency of homes, schools and hospitals and giving the Competition and Markets Authority (CMA) enhanced powers to tackle consumer rip-offs and bad business practices.

However, with around 60 suppliers now competing in the retail energy market, consumers who switch can still make the biggest savings. Around 4.4 million electricity customers switched supplier in the 9 months to September 2019. Around 3.6 million gas customers switched. Typical households would have saved an average of around £290 on their bills if moving to one of the cheapest deals.

In order to shield those least likely to shop around – including the elderly and most vulnerable – from being charged extra on their dual fuel bills the government introduced the energy price cap on 1 January 2019.

Minister of State for Business, Energy and Clean Growth, Kwasi Kwarteng, said:

Our bold action to ensure all consumers pay a fair price for their energy is making a real difference to the budgets of up to 11 million households and driving increased competition and innovation in the market which will help keep bills down.

Record numbers of customers have also decided to switch suppliers this year saving themselves an average of around £290 on their bills.

Chief Executive of Ofgem Dermot Nolan said:

The price caps give consumers who are on default deals peace of mind that they pay a fair price for their energy. Ofgem set the cap at a level which required suppliers to cut energy bills by around £1 billion.

Consumers can save more money this winter by shopping around for a better deal. While the cap remains in place, Ofgem will continue to work with government and industry to put in place reforms to get the energy market working for more consumers.

Notes to editors

Research by the Competition and Markets Authority has shown that consumers had been overpaying the ‘Big Six’ energy companies some £1.4 billion a year.

The price cap, continuing through 2020, is set by energy watchdog Ofgem, which review it every 6 months to reflect changes in the cost of supplying energy. This ensures those who do not shop around, often elderly and low-income households, are protected from paying over the odds.

The latest ceiling was set by Ofgem at £1,179 per year for a typical dual fuel bill paid by direct debit.