Energy companies will launch a fightback in the row over soaring household bills with a new report that claims government-imposed “green” charges are driving up prices. British Gas, the country’s biggest utility, said green charges accounted for £150 of the overall bill.
Politicians pilloried the “big six” utilities for a flurry of recent rate rises that have pushed up the average annual household bill to £1,330 — twice what it was five years ago. The companies claim that aside from the wholesale gas price, the biggest factor in rising tariffs is the raft of subsidies for wind farms and other low-carbon technologies.
British Gas, the country’s biggest utility, said green charges accounted for £150 of the overall bill — a 50% increase from 2007, when they accounted for £94.
Energy UK, the industry body, will publish a report within days that is expected to say that a new scheme designed to slash household energy use will add as much as another £50. That would be twice the level five years ago and represents 15% of the current tariff.
The report from Nera, the consultancy, focuses on the energy company obligation scheme, or ECO. From next year the scheme will replace the £1.3bn-a-year CERT programme, which offers subsidised loft insulation and boiler replacement.
ECO is targeted at more difficult, and expensive, measures such as solid wall insulation, which can cost several thousand pounds as opposed to a few hundred for cavity walls.
Angela Knight, the newly appointed head of Energy UK, said: “We are strongly of the view that the costs associated with ECO are significantly more than it [Department of Energy and Climate Change] is currently estimating.”
The Hills Fuel Poverty Review, which was commissioned by the energy department, reported that ECO could push more people into fuel poverty than those it lifts out because of the increase it will create for all customers.