Friday, 23 November 2012

Energy deal means bills will rise to pay for green power


Energy firms will be allowed to triple the amount of money they add to customers' bills to pay for renewable power, nuclear and other environmental measures, under plans to be announced by the government next week.

The deal over a new energy bill, struck after weeks of sometimes bitter negotiations between the coalition partners, will mean the total amount energy suppliers can add to domestic and business bills will rise from £2.35bn this year to nearly £10bn at the end of this decade. Adjusting for inflation that would be worth £7.6bn in today's prices, an increase of nearly three times.

Based on government estimates that green measures make up £20 of the average domestic gas and electricity bill of £1,249 a year, the cost of increasing the cash set aside to pay for renewable investment would rise to about £80, or £60 adjusted for inflation. However, officials argue that by the end of the decade the benefits of energy-saving measures and less reliance on expensive fossil fuel power will mean bills are actually lower than they would be without the green policies.

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