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The green taxes that add £112 to your energy bill

10 October 2013

11:05 AM

10 October 2013

11:05 AM

At PMQs yesterday David Cameron said Ed Miliband was suffering ‘complete amnesia’ over his time as energy secretary. Ed might have forgotten some of his climate change policies that put money on your energy bills – but it doesn’t matter – they might not be around for long. As James Forsyth said at the weekend, George Osborne wants to get rid of some of them in his autumn statement.

The Department of Energy and Climate Change says there are seven green taxes that put £112 on the average energy bill in 2013, making up just under a tenth of the total. What are they, and which of them is cost-of-living warrior Ed Miliband responsible for?

1. Home improvements for the fuel poor – adds £47 to the average bill. Miliband policy? No, but it replaces one

This Energy Companies Obligation was introduced in January 2013, replacing Ed Miliband’s Carbon Emissions Reduction Target. Energy companies have to pay for about £1.3 billion of energy efficiency improvements every year for people living in fuel poverty. Fuel poor households are those which, if they spent what the government thinks is reasonable on fuel, would be below the official poverty line.

2. Compulsory ‘green’ energy – adds £30 to the average bill. Miliband policy: No

The Renewables Obligation has, since 2002, required electricity suppliers to ensure a percentage of their energy is from renewable sources. You pay.

3. Permits to pollute – add £8 to the average bill. Miliband policy: Yes

Energy companies don’t just pay for what they use to generate electricity – they pay for the pollution they cause as well. The EU Emissions Trading System means companies have to buy permits to pollute, and the cost is passed on to you.

4. Carbon Price Floor – adds £5 to the average bill. Miliband policy: No

Paying to pollute can provide an incentive to invest in power generation that doesn’t. The problem is that the price of carbon started out at £16 a tonne, but fell as low as £4. In order to keep an incentive to invest the government will prop up the price. But there’s a problem with interfering: if the trading scheme is successful, there will be less demand for permits, and the price will fall.

5. Warm Home Discount – adds £11 to the average bill. Miliband policy: No

The Warm Home Discount gives rebates on energy bills to two million people in fuel poverty. This year it’s worth £135 to them.

6. Feed-in Tariffs – add £7 to the average bill. Miliband policy: Yes

‘Feed in tariffs are a great way of making money from renewable and low-energy sources such as solar panels and wind turbines’, the Energy Savings Trust boasts. Why are they so great? Because they take money off everyone’s bill, and pay more than the market rate to people who can afford to put a couple of solar panels – that otherwise wouldn’t be cost effective – on the roof.

7. Smart Meters and Better Billing – adds £3 to the average bill. Miliband policy: Yes

These new gas and electricity meters mean that no-one will have to come and read the meter, and you’ll be able to see exactly how much energy you’re using at any time. Better Billing means energy companies show you on each bill how the energy you’ve used compares to the same last year ago.

The cost of Ed: £78 a year

But it doesn’t end there – Ed previously proposed policies that would add another £125 to bills by 2020.


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