‘Too cheap’ electricity must surge in price to meet greenhouse gas targets

Electricity is “too cheap” and prices will have to rise if Britain is to meet tough targets for reducing greenhouse gas emissions, Scottish and Southern Energy has warned.

Brian Smith, the utility group’s head of projects, said the price of electricity gave consumers little incentive to cut down their usage, for example by switching off lights.
“Energy is too cheap to be efficient. The way to reduce demand is to increase prices because people would use less,” he said

Smith urged the UK Government to abandon its policy of regulating electricity prices to keep them low.

“Affordable energy is not consistent with climate change and saving energy,” he said.

Smith’s comments are likely to worry some consumers who have seen rising energy costs eat into household budgets at a time when mortgage payments and food prices are also rising. Gas has doubled in price over the past three years and electricity is 50% more expensive than it was. Smith told the Scottish Parliament’s economy, energy and tourism committee that the need for a secure supply and pressure to help the environment would lead to upward pressure on prices. He said: “There is this eternal triangle between prices, security of supply and the environment.”

Scotland on Sunday