The chief executive of E.ON UK has urged the government to move the cost of energy policy away from business electricity bills and into general taxation, warning that high power prices are discouraging investment and threatening Britain’s industrial competitiveness.
Chris Norbury, head of the UK energy supplier, said companies across the economy were increasingly concerned about rising electricity and commodity costs, with policy charges adding further pressure at a time when businesses were being asked to invest heavily in decarbonisation.
Shifting levies into general taxation, or financing them through a dedicated energy transition fund, could give businesses greater certainty and encourage investment in low-carbon technologies, Mr Norbury said.
“There is concern about rising energy costs, some of the rising commodity costs and therefore businesses don’t want to see an impact from higher policy costs,” he told the Press Association.
The intervention comes as the government attempts to accelerate electrification while confronting one of the central contradictions of its energy strategy: the technologies needed to reduce Britain’s dependence on fossil fuels can initially increase the cost of electricity for businesses expected to finance the transition.
E.ON estimates that UK manufacturers could save more than £2bn by 2035 by replacing gas with electricity and expanding their use of clean-energy technologies. Its ReIndustrial Revolution analysis argues that electrification could ultimately improve industrial efficiency and reduce exposure to volatile fossil fuel prices.
But the upfront economics remain a barrier.
Mr Norbury said businesses needed supportive energy policies and a stable regulatory environment before committing capital to projects that can take years to pay back.
He welcomed the recent decision by Andy Burnham’s government to remove VAT from consumer electricity bills, describing it as evidence that ministers were beginning to recognise the benefits of electrification.
“We hope it shows there is an overall direction of travel within government about the positives that electrification can bring,” he said.
Mr Norbury said he had already discussed the issue with Energy Secretary Miatta Fahnbulleh, describing E.ON’s relationship with ministers as “positive and constructive”.
The company is pressing for policy costs including renewable obligation payments and feed-in tariffs to be removed from electricity bills and funded instead through general taxation or a dedicated mechanism for financing the energy transition.
The proposal reflects a broader debate over Britain’s electricity pricing model. The government wants households and companies to switch from gas and other fossil fuels towards electricity, but levies placed directly on power bills can make that switch less attractive, particularly for energy-intensive manufacturers.
For industry, the stakes are considerable. Britain is attempting to attract investment in clean manufacturing while competing against economies where electricity costs are already heavily subsidised or where industrial users receive preferential treatment.
E.ON is simultaneously expanding its position in the UK retail market. It has agreed to acquire rival Ovo, a deal that would create Britain’s largest energy supplier with about 9.6mn customers, subject to regulatory approval.
The proposed takeover would give E.ON a larger stake in the same policy debate that Mr Norbury is now pressing ministers to address: whether Britain can make electricity cheaper and cleaner quickly enough to persuade businesses to invest in electrification before the costs of the transition become a brake on growth.