Green Energy Moves Help Push Up Fuel Bills

By Poppy Trowbridge, Business and Economics Correspondent

Energy prices will continue to rise for households across the UK, according to a new Government report.

The average household bill could rise to £1,516 from the current £1,319 by 2030, the Department for Energy and Climate Change (DECC) said.

Certain Government programmes, such as fuel rebates, may reduce that figure by around £40 per household.

But environmental policies to develop greener and more diverse sources of energy are also contributing to rising bills.

The cost of such projects already make up 9% of an average duel-fuel household bill - equal to £112.

Energy Secretary Ed Davey said: "Global gas price hikes are squeezing households. They are beyond any Government's control and, by all serious predictions, are likely to continue rising."

He told Sky News: "A small part of the rises are coming from our government costs, but they are needed, to make sure we are more secure.

The freezing weather has raised concerns about gas supplies

"We need clean energy so that we tackle climate change and have greater security, and we are not so dependent on imports."

The UK relies heavily on imported shipments of gas from continental Europe and Gulf states like Qatar.

The recent cold spell has put extra strain on supplies, leaving Britain vulnerable to price spikes on the international market.

The report showed 85% of the rise in household bills between 2010 and 2012 was from wholesale energy costs and network costs.

It also claimed that Government policies on home insulation and more efficient boilers have already helped bring down bills.

They are an average of 5% or £64 lower now and will be 11% or £166 lower by 2020, according to the research.

Nearly half of the average dual fuel bill - £598 - goes on fossil fuels, and the second largest proportion is network costs, transport and distribution.

The report also highlights that household energy consumption has been on a downward trend since 2005, due in part to the efficiency measures already adopted.

James Lloyd, director of the Strategic Society Centre, said: "It would really have been much better if the Government had been making some of these tough choices back when the economy was doing much better, and households and businesses had more money in their pockets."

Steve Radley, policy director at EEF, the manufacturers' organisation, said: "This is a wake-up call. Policies are already adding 30% to business electricity prices, and this will rise to 50% by 2020 and 70% by 2030.

"Measures to shield the most energy-intensive industries from a portion of the costs will make a difference but, unless we get a grip on spiralling policy costs, steeply rising electricity prices for the rest of the sector risk making the UK an increasingly unattractive location for industrial investment and undermining efforts to rebalance the economy."

Caroline Flint, shadow energy and climate change secretary, said: "The Government's underhand attempt to mask the real impact of its policies on families' energy bills is shameful.

"At a time when hard-pressed families and pensioners are seeing their incomes squeezed, only this out-of-touch Government could expect people to fork out thousands of pounds on new TVs, fridge freezers and washing machines.

"Instead of cooking the books to trick people into thinking their energy bills will be lower, ministers should get behind Labour's plans to overhaul the energy market and deliver fair prices for the public."

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