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Are energy companies going to make £2bn from green levy cuts?

New research suggests the cuts will save the big six up to £23 per customer every year, on top of the savings which have been passed on to households

Are energy companies set for a £2bn windfall due to miscalculations?

Are energy companies set for a £2bn windfall due to miscalculations?

According to the Telegraph, a government miscalculation could see green levy cuts, originally implemented to reduce bills for consumers, provide a £2bn windfall for large energy providers over the next three years.

Research carried out on behalf of the Insulated Render and Cladding Association (INCA) has found that households could be overpaying by £23 on their annual energy bill. This will continue to be the case unless energy suppliers invest this figure into consumer initiatives or simply cut energy bills.

uSwitch news recently reported that the big six could stand to make £75m from the green levy cuts, however, the latest research suggests a much higher figure.

‘Actual savings to the big six go far beyond’ customer savings

In an open letter to Prime Minister David Cameron, penned with a number of other energy efficiency focussed organisations, INCA wrote:  “[We] fully understand the economic and political pressures that necessitated a cut in ‘green levies’.

“However, the response […] to your consultation presents very strong evidence that actual savings to the ‘big six’ go far beyond the £35 you have persuaded them to give back to customers, representing a £1bn-2bn windfall to energy suppliers over the next three years.”

The letter asks Cameron to consider bringing the previously reduced targets of the ECO scheme in line with the actual savings achieved by energy companies.

Gross miscalculations?

The Government changed the ‘Energy Company Obligation’ (ECO) insulation scheme back in December 2013. The objective was to cut consumer energy bills by reducing the green charges, levied from consumer bills. It was calculated that the changes to ECO would save households about £35 per year.

A spokesman for Energy UK, which represents the energy industry, commented: “The cost of delivering ECO will vary from company to company but the industry welcomes further transparency to make ECO more open and easy to understand.”

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