UK government policies ‘to add £105 to energy bills by 2020’

Householders could be paying nearly £105 more for their gas and electricity every year by 2020 as a result of government policies aimed at keeping the lights on and supporting […]

Register now!

By Priyanka Shrestha

Householders could be paying nearly £105 more for their gas and electricity every year by 2020 as a result of government policies aimed at keeping the lights on and supporting green energy projects.

New research claims energy bills could increase by 124% in the next four years due to the cost of the Capacity Market, Renewables Obligation (RO), Contracts for Difference (CfD) and Feed-in Tariff schemes.

Cornwall Energy adds the first few projects under the CfD scheme will come online as the last green projects become operational with subsidies from the RO initiative.

Customers will also start paying for the Capacity Market – which is meant to avoid blackouts – from 2017/18 following the decision to bring the scheme forward by a year to ease concerns over Britain’s tightening power margins.

The research estimates the three renewable energy subsidies, excluding the Capacity Market will cost £7.7 billion by 2020.

That’s £100 million more than the spending limit of the Levy Control Framework (LCF).

It also claims the government is likely to exceed its LCF budget every year from 2016/17 by as much as £600 million in 2017/18.

Jo Butlin, Managing Director at Cornwall Energy said: “While the future path of wholesale prices remains uncertain, policy costs are moving only in one direction. Our research shows a confluence of factors serving to push these costs up notably in the next couple of years though important drivers that could yet change the outlook remain beyond anyone’s control.”

DECC insists it is making sure energy bills are coming down by reducing the projected cost of green policies on bills, “delivering savings of around £30-£35 per year from 2014 and continuing out to 2020”.

A spokesperson adds: “Our top priority is ensuring that families and businesses have a secure, affordable, clean, energy supply which they can rely on now and into the future.

“Through the halting of subsidies for onshore wind in the Energy Act to added competition driving down costs in Contract for Difference auctions and the Capacity Market, our actions have shown that we will be tough on subsidies in order to keep bills down for our families and businesses and ensure value for money.”

Last week new research found housesholders supplied by the Big Six energy companies are overspending by £4 billion a year.