Following recent above inflation price rises introduced by British Gas, Scottish Power and npower, the Prime Minister David Cameron has announced that he plans to halve the green levies on electricity and gas bills to help consumers. He is also considering a windfall tax on energy companies following comments by his predecessor Sir John Major who said that millions of people would have to choose between eating and heating this winter.
There are seven different green levies applied to domestic energy bills and they, together with the amount they cost the average household, are:
- Energy Company Obligation – This includes the ECO Affordable Warmth scheme, designed to fund replacement boilers and insulate the homes of those on State Benefits. Cost, £59.
- Renewable Obligation – Subsidising wind farms and solar energy parks. Cost, £33.
- Feed-in Tariff – Subsidies for small scale renewable energy sources such as domestic solar panels. Cost, £8.
- Carbon Price Floor – A carbon tax on coal and gas fired energy production plants. Cost, £5.
- Smart Meters – Installing smart gas and electricity meters in domestic properties so that householders can monitor their energy usage. Cost, £4.
- Warm Home Discount – An annual rebate on energy bills to help those in fuel poverty. Cost, £11.
- EU Emissions Trading Scheme – Licences required by energy companies due to the pollution they emit. Cost, £8.
Whilst some in Government are suggesting abolishing green taxes accounting for at least half of their total cost, Nick Clegg, the Deputy Prime Minister suggested that the Warm Home Discount levy could be removed from energy bills and be funded out of general taxation.
The most expensive green levy, the Energy Company Obligation, is currently planned to run until March 2015 but could be amended to reduce the cost to energy companies. How it is to be amended should become clearer when the Autumn Statement is announced on 4th December.