Our energy bills are fossil-fuelled

New shadow energy minister Caroline Flint argued today that people face a "cold costly winter" because of rocketing fuel bills. In a country as rich as Britain, it is shameful that millions of people could be left shivering in the cold in their homes this winter. There is something desperately wrong with Britain's energy system.

There are two overwhelming reasons why our bills are so high. First, Britain's housing stock is of such poor quality. Huge quantities of heat pours out of leaky roofs and windows and doors. Second - and the prime reason British Gas, npower and the rest have put a rocket up our bills -  is because the Big Six, and the UK, are so reliant on fossil fuels, whose global prices have been spiralling.

Claims that it is climate change policies that have put energy bills up are scaremongering nonsense. In the last ten years to 2010, electricity bills have gone up 30 per cent, gas prices have gone up 78 per cent. Total energy bills are now over £1000. The overwhelming reason is fossil fuel rises - for example, the prices paid by power producers for coal and gas have gone up 71 per cent and 90 per cent in the same time.  

In contrast, all energy and climate change policies have put up bills by just £42. This is not nothing, but it is a tiny proportion of the total hike in bills. The Big Six's electricity and gas bill hikes in the last few months alone have added three times that to bills.

This situation is set to get worse - The Big Six energy companies all have plans to build even more gas-fired power stations, and DECC's new projections show the prices of fossil fuels continuing to rise.

This doesn't bother the Big Six much - they simply pass the prices on.

But it matters to the millions of people who already can't afford to heat their homes, who'll be hit with even bigger bills. It matters to the UK economy as we become ever-more reliant on imports as North Sea oil and gas run out. And it matters to all of us, as it makes it less likely the UK plays its part in stopping dangerous climate change.

The answer, as the Energy Minister has repeatedly argued, is to get the UK off its fossil fuel hook. We need huge investment in energy efficiency, and in renewables - offshore-wind, on-shore wind, solar, hydro, wave, tidal. Energy independence for the UK. Fuel Britannia.

The Big Six should have a critical role to play. They generate over two thirds of our electricity. But their future plans are far too fossil-fuel heavy. All of them plan to build even more gas-fired power stations.

There's rightly a lot of anger at the Big Six and the Government over energy bills right now, and their actions are under a spotlight. Focussing on the stupidly complex tariff system is right, as is investigating charges of profiteering.

But wider changes are needed. The energy market needs opening up, so that new generators and suppliers are able to compete fairly against the Big Six. And the Government must put in place a clear set of regulations and tax incentives on the generators so that we don't have a second dash-for-gas, but a rush-for-renewables instead.

Will this happen? The Big Six have lobbied successfully against stronger pollution controls on new power stations. And the Government's impending changes to energy policy - on feed-in-tariffs, renewables obligations, Electricity Market Reform - are all uncertain, and could all go either way: pro-renewables and energy saving, or pro-fossil fuel.

What happens in the next year is critical to the UK's energy future, and whether our bills will continue to rocket. Investors and corporations are waiting to see what happens before deciding what sort of new infrastructure to build. 

If the Government gets its energy policy right, the Big Six and others will invest in schemes like the colossal Dogger Bank offshore-wind project, in smart-grids, in small-scale power generation, in demand reduction products: creating thousands of jobs, boosting the UK economy, and helping get us off our fossil-fuel hook. Get it wrong, and we'll hobble along ever more burdened by increasingly expensive gas imports, with ever more ruinous energy bills.

In a recession, even more than usual, there will be massive political costs for denying people what is a basic human need - for affordable and clean heating and light. The Government needs to gear our energy market around delivering this. The Big Six need to change how they act, or get out of the way and let new companies and entrepreneurs do it instead.