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Low carbon policies should add 1% to energy bills in 2014

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Green policies will only add 1% to energy bills next year

These claims do not support recent hikes in energy prices by SSE, British Gas and Npower, with rises ranging from 8% to 11%.

In addition, figures from British Gas indicated that the Energy Company Obligation scheme would result in some £40 being added to household bills next year.

Energy bill increases ‘not caused by policy’

In a blog post on the Committee on Climate Change’s (CCC) website, the committee commented that “very significant energy bill increases in recent years have been mainly due to increases in the price of gas in international markets, with only a small part of the increase due to low-carbon policies.”

It added that there is little evidence to suggest that green policies are the main driver of recent energy bill hikes.

“A mixture of the RO/FITs, carbon price underpin and ECO would increase the bill for the typical household by around 1%,” it said.

The organisation underlined that while the typical yearly dual fuel bill has soared from £610 to £1,130 between 2004 and 2012, just £30 of this increase was down to the government’s support for clean energy technology. Meanwhile, just £45 of this sum could be attributed to energy efficiency schemes.

Green policy should add far less to bills

According to the CCC, the Renewables Obligation (RO) and feed-in tariff (FIT) incentive schemes will add between £3 and £4 extra onto bills as new projects debut online. Meanwhile, another 80p will be charged per household due to an index-linked increase in support for historical renewable energy projects.

On top of this, the increase in the carbon floor price will add around £4.50 to a typical bill, while the ECO energy efficiency scheme will see another charge of £1.50 put on top of this. However, the CCC did admit that if ECO costs were to escalate in real terms then this cost would increase further.

Experts have warned that as the ECO scheme got off to a slow start at the beginning of the year, costs could spiral next year as companies strive to meet the scheme’s targets. Businesses are required to improve the energy efficiency of thousands of fuel poor and hard to treat households.

The Department of Energy and Climate Change (DECC) dismissed these concerns, however, explaining that the scheme is currently in line with initial cost projections. It also encouraged the big six energy companies to publish more detailed information on how much it is costing to comply with ECO.

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