Gas-fired plant

New gas power stations could be built

Dozens of new gas power stations could be built across the UK to help slash long-term energy prices.

Energy Secretary Ed Davey told the Times he will propose a loophole to get around costly climate change targets to stem the ever-soaring price of electricity.

Millions of families face a major jump in household bills as British Gas, the UK's largest energy supplier, is today expected to announce a hike of tariffs for electricity and gas.

The average British Gas annual dual-fuel bill for gas and electricity currently stands at £1,260 – meaning a 5 per cent increase would add £63, while an 8 per cent rise would put on £100.

Under Mr Davey's proposals, energy companies would be allowed to dodge new emissions targets because of concerns about the cost of building wind farms and nuclear reactors.

His plans would allow energy companies to sidestep having to cut their own carbon footprints – a key goal of environmental groups – if other sectors can instead cut emissions and go green cheaper through advances in technology.

Mr Davey told the Times: "Let's imagine that in 2022, a new technology comes along which makes it quicker and cheaper to decarbonise in the transport sector than it would in the energy sector.

"We want to make sure that policies we put in place are flexible, so that the transport sector would take up more of the slack."

He said the UK will be forced to still rely on gas in the coming decades, saying: "I think people need to be rather calmer about this debate. Gas in the next few decades is going to play a critical role in our energy and climate change strategy. It's not gas versus renewables versus nuclear. We are going to need them all."

The idea of the loophole was criticised by environmental campaigners, who said it could be exploited. Nick Molho, head of energy policy at WWF-UK, told the newspaper: "The moment that private sector investors get the perception that the target can be easily amended, that undermines the whole investment certainty that a target is expected to create."

The expected rise in household energy bills will throw households' already stretched budgets into "turmoil", consumer groups warned.

"Many British Gas customers will find the possibility of a price rise really frightening," said Citizens Advice chief executive Gillian Guy. "Bill increases throw already stretched budgets into turmoil, with people forced to find more ways to scrimp and save. But there are things that people can do to save money on their fuel bills."

Citizens Advice is running a Big Energy Saving Week from 22-27 October, when it will help consumers find ways to cut their fuel bills.

Commenting on speculation that bills were set to increase again, Caroline Flint, Labour's shadow energy and climate change secretary, said people will "not understand why British Gas are putting prices up".

"Unless ministers get to grips with spiralling energy bills, people will rightly think that this government is completely out of touch with families and pensioners struggling to make ends meet," she added.

Other big suppliers – including EDF, Scottish Power and nPower – are not expected to follow suit and announce higher prices. E.ON is the only supplier to guarantee a price freeze this year.

A British Gas spokesman said: "We do not comment on future pricing movements. We do not comment on speculation about future pricing movements."

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