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Osborne’s New Green Deal To Cut Energy Bills

Danny Fortson , The Sunday Times

[Britain’s Chancellor of the Exchequer] George Osborne is finalising a plan to cut household energy bills by up to £75 a year by removing charges to support green power projects and home insulation schemes.

Senior industry sources said the changes were likely to be announced in the chancellor’s autumn statement on December 4. Subsidies for green schemes would in future be paid for out of taxes, they said. The coalition hopes the move will calm the political furore over energy prices, which have risen rapidly in the past year. The average annual household energy bill is now £1,415.

Ed Miliband, the Labour leader, recently promised a 20-month price freeze if he were elected. David Cameron has vowed to “roll back” green subsidies paid for by energy users.

A switch would be welcomed by the “Big Six” energy utilities, which were pilloried last week by a House of Commons select committee.

Small rivals have accused the six, which provide 98% of Britain’s energy, of “acting like a cartel” because they regularly raise rates within days of each other. Only two of the big suppliers, Eon and EDF, have yet to increase prices, though they are expected to do so soon.

Energy bosses claimed that the majority of the recent rises were not due to wholesale gas prices but were the result of government taxes and programmes.

It is understood that the Treasury has zeroed in on Eco, a costly scheme that offers free insulation to draughty homes. The utility Npower estimates that it alone accounts for £69 of the average annual bill.

Another scheme that could be removed is the feed-in tariff, which repays homeowners who install solar panels. This accounts for £6 per household.

The chancellor’s plan is designed to take the sting out of the recent rises, which averaged about £120. The Treasury and the Department of Energy & Climate Change declined to comment.

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