Energy companies: We'll pass on cost of Brown's scheme

Gordon Brown this afternoon unveiled a £910 million scheme to provide free or half-price insulation for homes.

But the Association of Electricity Producers said customers would end up paying at least some of the cost.

"It remains to be seen just how much of it ends up on the customer's bill in the longer run," said chief executive David Porter.

It was an extraordinary act of defiance just minutes after the PM insisted that he would not allow families to pay higher bills as a result of the measures. He said the industry would pay.

All homes will qualify for half-price lagging and cavity wall insulation - with the poor and pensioners getting it free. There will be a price freeze for half a million poor families on social tariffs this winter and an extra £16.50 a week for the elderly and young if temperatures fall below zero for seven consecutive days or more.

Mr Brown said at a No 10 press conference: "We want to keep energy bills as low as possible and I do not expect the £910 million that we raise to be passed on to the consumer by the energy companies."

But Mr Porter replied: "I think that's a little bit too sweeping. They will try to contain this because they have to, but it remains to be seen just how much of it ends up on the customers' bills in the longer run."

Mr Porter's organisation represents electricity producers including E.On, Centrica, EDF, Scottish and Southern Energy and RWE Npower. He told the BBC that when costs were imposed on an industry "the bill to some extent always ends up with the customer".

Mr Brown hailed his measures as a "better alternative" to a windfall tax on the private sector. He said it amounted to nearly £1 billion of new money being pumped in from private firms to fund long-term help.

But he faces a Commons revolt as the package was criticised for not going far enough. Rebel Labour MPs said they would try to force a vote when the package goes before Parliament.

Labour MP Lindsay Hoyle said: "These measures should go alongside a windfall tax on the immoral earnings from excessive profits by the fatcat energy companies."

"I thought the idea was that we needed to do something quickly. These measures are more long-term rather than suitable to help people this winter."

The Government wants every home lagged fully by 2010. The £910 million is spread over three years. Some £ 560million will be raised from firms for loft and cavity wall insulation, helping up to two million households. The other £350 million would fund house calls offering help in deprived areas.