Are green taxes to blame for high energy bills?

The cost of heating our homes is so great that the National Grid warned the cost could double to over £2,000 a year by 2020

Electric meterBritain may be standing on the threshold of a glorious summer but I'm already thinking about the winter and praying that this it's is as mild as last year because if it's anything like the bitterly cold December and January of 2012 my energy bill is going to go through the roof.

The cost of gas and electricity has risen 20% since 2009 and it's not going to stop there. The cost of heating our homes is so great that the National Grid warned the cost could double to over £2,000 a year by 2020.
So what's the reason for this huge increase? The National Grid, which is tasked with keeping Britain's lights on blames plans to close coal-fired power stations and the cost of subsidising wind farms.

Ah, the wind farms! Whenever an argument about energy costs crops up it inevitably leads to renewable energy and a heated argument about global warming and whether it actually exists.

So ignoring that well-worn argument I'd like to look at the figures to see whether green taxes on energy companies are really translating into eye-watering electricity bills.

A report by the Department of Energy and Climate change last year included a helpful breakdown of the cost of your energy bill. Of the average £1,267 annual bill a total of £112 (or 9%) was green tax.

Put like that it's not that big a cost, although it's not insignificant either. So if that's the cost of subsidising renewable energy, which don't forget has a long-term benefit for the country, our energy supply and ultimately your pocket, your hard earned money must be going elsewhere.

I think I've found it. Don't worry the energy companies are taking care of all that extra money you give them, it's safely tucked away on their balance sheet under the heading 'profits'. Energy companies have seen their profits drop a little last year thanks to that warm winter; British Gas's residential business made a profit of £571 million, down from £606 million the year before.

Scottish Power didn't so quite so well, its underlying earnings fell to £265 million in 2013. E.On fared a bit better as profits jumped 26% to £296 million.

These profits will no doubt be put to good use, paid out to shareholders and lining the pockets of chief executives that are running business under investigation for competition breaches and being consistently fined by the energy regulator for hoodwinking customers.

In answer to the question of whether green taxes are to blame for your high bills, it's a resounding no – corporate greed and bad business models is.
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