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DECC Got It Wrong On Green Taxes, Companies Warn

James Kirkup, The Daily Telegraph

A new government “green” charge will add significantly to household energy bills, power firms claim. The energy industry has accused ministers of underestimating the impact on households of its Energy Company Obligation (ECO) rules.

They will force companies to provide energy efficiency technology and home improvements to low-income households and others considered to be at risk of fuel poverty.

The scheme, due to start next year, will oblige firms to fund expensive modifications including cavity wall insulation.

Energy firms say ministers have understated the costs of the work, which will be recouped from other customers.

Energy UK, which represents the industry, is expected to publish a report by independent economic consultants suggesting the scheme will add as much as £50 to the average household bill.

That contradicts assurances from the Department for Energy and Climate Change, which is insisting that the changes will not mean additional costs for consumers.

Angela Knight, chief executive of Energy UK, said the change will have an “impact” on household bills.

“Companies are committed to delivering these energy efficiency programmes, but the costs are high and we are concerned they may exceed the Government’s estimates. Energy efficiency is important in helping to keep people’s homes warm, but we believe it’s important to understand the impact of these programmes on people’s bills,” she said.

The Energy Department insisted that next year’s changes will not hurt households. A spokesman said: “ECO replaces other energy-efficiency schemes almost pound for pound, so there will be no additional costs on bills.

“The net impact of our energy and climate policies will be to leave the average home energy bill lower than it would be otherwise.”

The ECO will take over from the power companies’ existing obligations, the Carbon Emissions Reduction Target and the Community Energy Saving Programme.

These obligations are due to end next month and the ECO will take over in addressing energy efficiency in the domestic sector.

The Energy Saving Trust says it is likely that this form of support will be heavily linked to the Green Deal and will particularly support those householders and those types of property which cannot achieve financial savings “without an additional or different measure of support”.

The row over ECO comes amid a Coalition row over the new Energy Bill and new targets for reducing Britain’s carbon emissions.

The dispute between Conservatives and Liberal Democrats has delayed the publication of the new legislation, which had been expected as early as this week.

The Daily Telegraph, 19 November 2012