Don't blame 'green' energy charges

Government climate change advisers predict that energy bills will rise by £190 a year by 2020. This estimate from the Committee on Climate Change is significantly lower than some estimates have been previously bandied around.

Crucially, 50% of this £190 rise will include renewable energy costs, though this cost would be slashed to just £25 if more homes had better energy protection. Good news overall?

Consumption to fall?

Let's look at the gas picture. Without any change in consumption i.e. if consumption remained at 2010 levels, the typical annual British household gas bill will increase from £630 in 2010 to £805 in 2020 says the report, "driven almost wholly by the increase in the gas price and VAT charged."

But the Committee on Climate Change - an independent quango - says it expects consumption to fall in 2020 compared to 2010 - see graph below - without further efficiency measures. "This is due to the fact that 2010 was an uncharacteristically cold year; adjusting to historic average temperature would reduce consumption by around 15%," it says.


In addition, there will be replacement of old inefficient boilers over the next decade as these reach the end of their lives, replacing these with newer, more efficient models which will reduce consumption by a further 6% - so the committee claims.

"Together these factors could reduce gas consumption in 2020 by around 20% compared to 2010 levels therefore leading to a gas heating bill that is broadly the same in 2020 as in 2010 [£640]."

These numbers sound optimistic, though, especially when you look at the recent past: the average dual-fuel bill has soared by 75% from around £600 in 2004 to £1,060 in 2010. But their overall message is clear: rising household energy bills is about rising wholesale costs, not green policies.

You can read their full report here.
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