'Social tariff' to insulate poor against cost of green power

• Bills may rise to fund switch to greener energy• Better off could pay more under new Miliband plan

Terry Macalister
guardian.co.uk, Sunday 12 July 2009 20.59 BST

The government will soften the blow to hard-up families worried about rising bills to pay for greener power generation with promises of a compulsory "social tariff" as part of an energy white paper to be published on Wednesday.
British Gas, npower and others have been told they will no longer be able to choose whether they keep price increases lower for worse-off customers and will instead have to act according to planned new legislation, industry sources say.
The government last night declined to comment directly on its plans, but Ed Miliband told the Commons last week that the social tariff system needed reform. "At present, the system tends to be piecemeal – who gets into it and who does not is often an arbitrary process. We shall have more to say about it in the future."
Ministers are to unveil the plan in a series of long-awaited initiatives to put Britain onto a low-carbon trajectory and tackle climate change and energy security.
The social tariff, long-demanded by fuel poverty campaigners, is controversial as power companies say it will have to be funded by more affluent families paying more. The Treasury is worried about this being interpreted as another "stealth tax". The Department of Energy and Climate Change declined to comment.
Ed Miliband, the energy secretary, today denied that the cost of moving to a deeper reliance on wind and nuclear power will cost households an extra £230 per annum. But he admitted bills will rise. "I think there are upward pressures on energy prices whichever route we go down. We can go down the high-carbon routes, stick with where we are, and for us that means the North Sea oil and gas is declining, we'll import more and more, and we'll be very exposed to swings in oil prices and also importing … from some pretty dangerous places, or – and I think this is the right way to go – we can plan for the low-carbon future and that does mean some costs to transition," he told the BBC's Andrew Marr show.
"Now my job is to counter those effects as much as I possibly can, helping people with energy efficiency and having tough regulation," he added.
The government's Renewables Advisory Board has also warned that £100bn of new infrastructure is needed to allow all wind farms and other alternative power systems to feed into the national grid.
Some experts predicted domestic bills would rise by £200-£230 a year while the CBI says in a paper tomorrowthat wholesale energy prices must rise by 30% by 2020.
The CBI report is more controversial because it says government plans to produce 32% of Britain's electricity from renewable sources by 2020 are unrealistic. The CBI wants to scale down these estimates to 25% while beefing up the nuclear contribution. Industry sources say civil servants have considered scaling back wind power targets, a claim denied by government sources: "Why would we do this when we're already committed to 15% of all our power coming from renewables by 2020 under European Union targets which can only be met by continuing with current wind targets?"
Some industry experts still think ministers perceive they can put less emphasis on wind in favour of boosting renewable heat systems and energy efficiency.
The white paper, a renewable energy strategy and a low-carbon industrial strategy will all put greater emphasis on decentralised energy systems such as low-carbon community projects. The government used to be lukewarm on feed-in tariffs, in which homeowners with their own wind turbines or solar panels get guaranteed above-market price payments for power they put into the grid, despite the enormous success of this in Germany.
On Wednesday, Miliband will trumpet "clean energy cashback schemes" as a key way forward. G8 countries last week pledged to cut carbon emissions by 80% by 2050.