Energy Bills too high? Don’t worry, the Government will add £280 ‘tax’ to your bill by 2020
It’s almost December, it’s cold, many people may be looking forward to a sparse Chrsitmas this year. What better time for Energy and Climate Change Secretary Chris Huhne to announce that the Government’s Green Deal initiative will be loading a massive £280 on to the average bill by 2020.
At present, the average household pays £89 a year on their bills to support the government's green energy campaign, but this amount is set to rise every year until it hits £280 in 2020. The money will be used to provide around £8 billion a year towards the £200 billion cost of new wind farms, nuclear power stations, a new pylon network and fitting more solar panels. But it’s not all bad news. The Government defended the rises saying they will be counteracted by other government policies to help people reduce the amount of energy they use. The Department of Energy and Climate Change has confirmed the cost of the various Governmental Green Deal policies in this handy diagram.
The diagram shows that average householders who undertake all of the changes to behaviour assumed, including installing smart meters and loft insulation, will actually save money on their energy bills, and these savings, by 2020, will amount to £373. Note that this is not a discount from energy bills, but is a hypothetical saving on energy costs. That the Government can then add their ‘green tax’ to so that bills are up to £94 a year cheaper.
Chris Huhne said, yesterday "We will secure our energy at the lowest cost: in the short term by promoting competition; in the medium term by insulating our homes and in the long term by steering us away from excessive reliance on fossil fuels and on to clean, green and secure energy."
However, with people already struggling with rising energy bills most households are unlikely to be happy about paying more today in order to prevent possible rises in the future. And what about people who are unable to adopt all the green measures? Homeowners without attics to insulate or cavity walls will definitely see increased bills owing to Government levies.
Thomas Lyon, energy expert at uSwitch.com said “The big question is over whether the costs are more certain than the benefits, as the success of many of these policies will rely on consumers changing their behaviour or taking up the new options that will be made available to them ... The fact is that the UK is on the brink of an affordability crisis when it comes to household energy and it will be difficult for consumers if they have to carry the cost of these policies before seeing the benefit."
The energy secretary also announced 14 million homes could be fitted with insulation and other energy-saving measures, and householders will be able to take out loans of up to £10,000 over a 25-year term.
However, our consumer friends Which! ares warning consumers that this not an energy efficiency grant- the money comes in the form of a loan and anyone taking up the Green Deal will be expected to pay interest.
“It’s difficult to see how hard-pressed homeowners will have confidence in how the Green Deal might work for them if the suggested savings are initially based on averages rather than on their personal energy use,” said Richard Lloyd, executive director at Which!
While it is unlikely Governmental levies will be separately disclosed on energy bills, at least one Energy company is trying to simplify matters. British Gas announced today that all of its tariffs will be scrapped to be replaced with just two options – fixed and variable. Changes will be implemented today for new customers and variable customers but existing fixed customers will run to the end of their current term, and then move onto the new tariff.
British Gas MD Phil Bentley admitted that some bills would go up, as in the past British Gas had offered cheap deals that were unsustainable and were loss making for the company, who made a profit of £270m in 2011. British Gas increased gas prices by 18pc and electricity prices by 16pc over the summer, costing customers an extra £200 a year.
Mr Bentley said that the company had been forced to charge "honest customers" more to fund the cheaper offers. So now everyone pays the higher price. Good job BG.