Energy bills are poised to rise by up to £178 a year under a deal struck between George Osborne and the Liberal Democrats to pay for a series of wind farms and nuclear power stations.
Under the biggest reforms to the energy market in decades, households and businesses will have to pay £7.6billion a year towards the cost of building “greener” power stations by 2020.
This is three times the current level of £2.35 billion per year, as bill-payers are forced to remunerate companies for several new nuclear plants, thousands of wind turbines and potentially “green” fossil fuel stations.
Energy bills have more than doubled since 2004 to more than £1,300 a year per household, largely due to rising gas prices.
Bills will go up over the next two decades by an estimated £178 a year under all the Government’s green and fuel poverty policies, with the contribution to nuclear and renewables making up £95 by 2020.
Green policies have also added to the increasing costs of gas and electricity.
Energy companies warned on Wednesday that a scheme to insulate the homes of poorer households could cost up to £125 per household, rather than the £50 claimed by the Government.
The energy companies, including British Gas, npower, E.ON, Scottish Power, SSE and EDF, are likely to be big beneficiaries from yesterday’s deal because they will be paid to build the power stations and wind farms.
The agreement brings an end to months of wrangling between the Chancellor and Ed Davey, the Liberal Democrat Energy Secretary.
Ministers plan to include the reforms in next week’s Energy Bill, which was delayed while Mr Osborne and Mr Davey argued over the green agenda.
Lib Dem sources said that the party was “extremely pleased” to have won support for the reforms that would mean more wind farms and nuclear power stations were built.
Conservative sources were claiming the compromise deal was a victory for Mr Osborne, after he secured concessions limiting the level of taxpayer cash spent on green energy in the long term.
He threw out Lib Dem demands for a target that would have forced Britain to get all its power from green sources by 2030.
Green groups were last night furious that the “decarbonisation” target has been scrapped.