A new study from the UK Energy Research Centre (UKERC) suggests 70% of households would be better off if energy policy costs were moved from gas and electricity bills to general taxation and applied according to household income.
It adds levies to recover the costs of energy policy – that supports wind farms and solar panels – added 13% to the average bill in 2016 – that’s £132 annually.
The research found the poorest households spend 10% of their income on heat and power in their homes while the richest households spend only 3%, arguing that “disproportionately penalises those that are most vulnerable to rising energy prices”.
It adds the richest 10% of households each consumed an average 12.7 tonnes of oil equivalent compared to 3.3 tonnes used by the poorest 10%.
The researchers suggest shifting the costs to general taxation would save the poorest households around £102 a year – a “significant difference for them” – while an additional cost of less than £8 a week for those with the highest income is a “relatively small difference”.
Anne Owen, UKERC Researcher said: “Our work shows that once you consider the hidden energy in the manufacture of all the goods and services we buy, it is only fair that richer homes contribute more to energy policy costs. Low income households, who experience fuel poverty, could be exempt from these additional charges if we rethink how low carbon energy schemes are funded.”
An alternative approach, the researchers suggest, would be to place policy costs on businesses.