Gas bills could rise by £1,000 to pay for wind power

Gas bills are projected to rise by around £1,000 to pay for wind power under official plans currently being considered by the Energy Secretary.

Claire Coutinho received a report earlier this year that suggested moving some or all green levies from household electricity bills to gas bills, or shifting them into general taxation.

Both proposals, presented by officials at the Department for Energy Security and Net Zero (DESNZ), have been put forward amid concerns that the weight of green levies on household costs is stifling progress on net zero.

But they could prove controversial because of the likely costs to households relying on gas, as well as it being seen as fairer to apply levies to electricity bills.

A new analysis by Cadent, a gas distribution company, found energy bills would rise by £1,045 a year for millions of homes reliant on gas by 2035 if Ms Coutinho opted to move all green tariffs from electricity bills to gas bills.

It calculated that low-income families would be hit the hardest by the move, which would account for almost half (47 per cent) of energy bills for households reliant on gas.

The report also found gas consumers would pay between £879 and £924 a year more in running costs than heat pump consumers by 2035.

Adding levies to gas bills would spread the costs among fewer households, while experts have also warned fuel poverty may be exacerbated.

Consultation on the proposals was ongoing prior to Rishi Sunak calling a snap general election on Wednesday, and any decision will have to be made either by Mr Sunak’s government or an incoming Labour administration after July 4.

The Prime Minister has taken what he describes as a more “pragmatic and proportionate” approach towards net zero and energy bills than his predecessors, and last year watered down a number of green objectives.

Sources close to Ms Coutinho said she continued to receive advice on the proposals, adding that her priority was always to aim to keep bills down for households and she would consider all factors through that lens.

Ms Coutinho last week confirmed the cost of energy bill levies on domestic bills would be lower in every year of the next Parliament than they were last year.

Dr Tony Ballance, chief strategy and regulation officer at Cadent, said it was critical to make “fair and equitable” decisions to maintain public confidence in net zero.

“Research we have undertaken shows one of the options it might be considering on policy costs would not achieve that, disproportionately impacting some of the most vulnerable people in society.”

Labour declined to comment on the proposals presented to Ms Coutinho or which options could be considered by Ed Miliband, the shadow energy secretary, if Sir Keir Starmer’s party won the election in July.

DESNZ was contacted for comment.