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Green Madness: UK Electricity Prices Are Now Highest In Europe

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Kate Palmer, The Daily Telegraph

Failing competition and expensive Government projects mean our pre-tax electricity costs oustrip every EU country, for the first time. Expensive policies designed to slash our reliance on fossil fuels are disproportionately driving up bills compared to other countries, experts say.

Domestic electricity prices are now the highest in the Europe and 52pc more than median prices in the Continent, surpassing both Ireland and Spain for the first time, according to official figures.

Experts blame ineffective competition between suppliers and warn that expensive energy projects, including the proposed “Hinkley C” nuclear reactor, could further drive up energy costs at home.

The typical British household pays 14.8p for every unit of electricity or “kilowatt hour” (kWh) they use, before taxes are taken into account, according to analysis by the Department for Energy & Climate Change (Decc).

By contrast, the pre-tax price in Denmark is just 9.35p/kWh and 5.75p/kWh in Bulgaria, according to the data collected from Eurostat, the statistician.

These are the prices charged by energy companies before tax is added, which in Britain is set at a reduced VAT rate of just 5pc – below the usual 20pc charge and among the lowest in Europe.

The pre-tax price includes the wholesale price of electricity, transmission costs and other charges, for example the costs of funding green energy projects and subsidising low-income households.

Once tax is added on top, Danish households pay the highest final price in Europe despite having access to cheap electricity due to its North Sea oil and gas resources. More than half (57pc) of the final electricity price is made up of VAT, taxes and levies.

Germany also imposes one of the highest taxes on electricity in Europe, where 52pc of the bill is made up of tax.

But according to Eurostat, Britain has seen the largest price increase out of any EU member state in the past two years, as overall bills increased 12pc, behind an EU average of 3pc.

Back in 2011, pre-tax electricity prices in Britain were cheaper than Austria, Belgium, Germany, Ireland and Spain but costs have quickly increased to outstrip all other European countries.

Over the course of a year, the average dual fuel household in Britain will spend £481 on electricity. Based on the same consumption levels a household in France, for example, would spend just £378.

The energy regulator, Ofgem, recently set this “medium” usage at 3,100 kWh of electricity and 12,500 kWh of gas, equivalent to a 3-bedroom family home.

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