Leading consumer group Which? has warned that a new subsidy scheme will "encourage the construction of higher-cost energy projects".

The consumer group has written to Ed Davey, Secretary of State for Energy and Climate Change, saying that his proposed subsidy scheme "could result in expensive generation projects being prioritised over cheaper, more cost-effective options".

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The warning comes a day after energy regulator Ofgem said that the "big six" energy suppliers "were in danger of further undermining trust in the industry by failing to pass on wholesale price reductions to retail consumers."

Which? executive director Richard Lloyd wrote in the letter to Mr Davey: "It is vital that any measure that adds costs to consumers' bills is closely scrutinised at a time when energy prices are the top financial concern for consumers.

"Whilst there has been a lot of welcome attention given to tackling the immediate cost of energy bills, Which? believes that more attention needs to be done to address energy costs in the long term."

(MH/JP)