Government launches independent review of rising energy bills

An independent review into the cost of energy has been launched by the Government amid concerns about rising bills.

The study will look at how the Government can meet its climate change targets while keeping bills down for consumers.

Oxford University professor Dieter Helm will lead the work, which he said would "sort out the facts from the myths about the cost of energy".

The Government's ambition is for the UK to have the lowest energy costs in Europe for households and businesses.

But the review's launch came days after energy giant British Gas hiked electricity prices by 12.5% for 3.1 million customers.

The scope of Prof Helm's work will not look at whether a cap should be imposed on price rises - a flagship Tory election commitment which has been watered down since Theresa May lost her Commons majority.

The UK is legally obliged to reduce greenhouse gas emissions by at least 80% from 1990 levels by 2050 and the review will consider how to meet climate change targets while ensuring the security of energy supply in the most cost-effective way.

It will look for opportunities to reduce costs in each element and consider the implications of changing demand, including the shift to electric vehicles and new developments in energy storage, robotics and artificial intelligence.

The review will examine options for enhancing and extending the scope for auctions and other competitive mechanisms within the energy market, and for reducing complexity in the supply chain.

The investigation, which will report by the end of October, will consider the key factors affecting bills, including energy and carbon pricing, efficiency measures and regulation.

Prof Helm said: "My review will be independent and sort out the facts from the myths about the cost of energy, and make recommendations about how to more effectively achieve the overall objectives."

Officials insisted the Government is already taking action to cut bills and has asked energy regulator Ofgem to come forward with proposals to extend the price protection in place for some vulnerable consumers to more people on the poorest value tariffs.

But critics said the measures fall short of the cap on price rises for 17 million households promised by Mrs May before the election.

Business and Energy Secretary Greg Clark said: "The review will consider how we can take advantage of changes to our power system and new technologies to ensure clean, secure and affordable supplies over the coming decades. Professor Helm will bring invaluable expertise to the review, and I look forward to seeing his recommendations."

Alex Neill from consumer group Which? said: "It is right to look at how to keep costs down, but yet another review is going to be cold comfort to the millions overpaying on their energy bills right now.

"Consumers need to see urgent action from the Government and regulator to tackle the lack of competition in the market and to ensure they are getting a good deal."

Lawrence Slade, chief executive of trade body Energy UK, said: "We welcome greater transparency over the cost of energy as we transition to a smarter, more flexible, digital and decarbonised energy system which puts consumers and industry in greater control of their energy.

"We must ensure we deliver an industrial strategy based on a low carbon economy and where the billions of investment needed can be delivered competitively via a range of technologies at the lowest cost to consumers

"Using our energy as smartly as possible is critical so energy efficiency must be a national infrastructure priority."