DECC to help with energy bills and extend ECO

The Rt. Hon. Edward Davey MP, Minister for the Department of Energy and Climate Change (DECC) has published the Government’s proposals to help householders with their rising energy bills.  The result is that British households should have their energy bills reduced by an average of £50, compared with what they would have been without these proposals.  Ed Davey MP is proposing that he intends to achieve this by reducing the cost of green levies or removing them completely from household energy bills.

ECO (Energy Company Obligation) extended

The proposals, on which the Government will consult, include: –

• Removing the cost of the Warm Home Discount from energy bills and paying for it out of general taxation receipts.  The Warm Home Discount of £135 is available to vulnerable households and establishing the rebate should save £12 from the average energy bill, which equates to a total of £600 million of savings for householders over the next two years.
• Extending the Energy Company Obligation (ECO) – Spreading the cost of the Energy Company Obligation (ECO) which includes the Affordable Warmth scheme, over two extra years so that it runs to March 2017 rather than ending in March 2015.  This proposal should reduce the average energy bill by between £30 and £35 per year for most households.  The Energy Company Obligation (ECO) includes the Affordable Warmth scheme provides funding to those suffering from fuel poverty, to replace inefficient gas central heating boilers and to install insulation.
• Allowing district heating schemes to be included as a primary measure under the Carbon Obligation part of Energy Company Obligation (ECO), which will allow communities to benefit from a reduction in heating costs.
• Reducing the Carbon Emissions Reduction Obligation part of Energy Company Obligation (ECO) by 33% in the period up to March 2015 and keeping it at that revised level up to March 2017.
• Maintaining the current level of support from Energy Company Obligation (ECO) for low income households and extending this to March 2017.  This should help approximately 230,000 private householders per year who receive certain State Benefits and have either an inefficient gas central heating boiler or inadequate wall and loft insulation.
• Allowing energy suppliers to offer cavity wall insulation and loft insulation as part of their Energy Company Obligation carbon reduction targets, whilst still providing help for at least 100,000 homes with solid walls.

Additionally, electricity distribution network companies will reduce distribution costs which should cut approximately £5 from domestic electricity bills.  All of the major energy suppliers have said that they will pass on these reductions to householders and though the average saving should be around £50 per year, the actual saving will differ according to which energy supplier you use.

The Government is also proposing to increase the amount of money available to local authorities by £20 million to £80 million, to help ‘hard-to-treat’ homes on a ‘street-by-street’ basis under the Green Deal Communities scheme.

Green Deal to be simplified

The Green Deal will also be strengthened, streamlined and simplified to make it easier for households to take advantage of Green Deal loans to improve the energy efficiency of their homes.

The £50 average annual saving on energy bills and the changes to ECO (Energy Company Obligation) applies to England, Wales & Scotland.  Different arrangements will apply to Northern Ireland.