A charity has called for more of the charges to be moved from electricity bills and into general taxation
A million households are spending more on green energy levies than on fresh vegetables, a report has found.
With the energy price cap due to rise tomorrow, a charity has called for more of the charges to be moved from electricity bills and into general taxation.
Some policy costs were transferred from bills in last autumn’s budget, reducing the price by £150.
But, with the price cap set to rise by 13 per cent to £1,862 a year for a typical household, the MCS Foundation says more needs to be done.
Its research showed, in the lowest income groups, some households spend £2.43 a week on the levies, which now add nine per cent to bills.
This was compared to the £2.30 a week spent on fresh vegetables.
The charity warned, as a proportion of income, some low-income households were spending three times as much on the charges as wealthier ones.
Moving all the levies into general taxation would see the average household bill fall by £120 a year, it says.
Those reliant on electric heating could save up to £190 a year, and homes with a heat pump, up to £280 a year.
Dr Garry Felgate, CEO of The MCS Foundation, said, “Costs are rising for millions of households – but the Government can take action immediately by moving levies off electricity bills into general taxation. These levies fund vital renewable energy infrastructure and programmes to tackle fuel poverty, but the way they are collected is fundamentally unfair. The current levy structure penalises both low-income households and those seeking to switch away from fossil fuels and install cleaner heating such as heat pumps. Levy reform would deliver savings for millions of households, would benefit the most vulnerable, and would make clean energy more affordable. By incentivising the transition to heat pumps and other renewable heating systems, it would help ensure that British households are protected from devastating fossil fuel price shocks.”
Sue Davies, Which? Head of Consumer Protection Policy, said: “We strongly support the call from The MCS Foundation to remove all environmental and social levies from electricity bills and fund them instead through general taxation, to better support households through the cost of living crisis. Removing these levies would offer support to all, while delivering the greatest benefit to electrically heated households, who are twice as likely to experience fuel poverty. It would also support the transition to more sustainable technologies, such as heat pumps and electric vehicles, by reducing electricity costs.”
Speaking ahead of the price cap rise, Minister for Energy Consumers Martin McCluskey sought to reassure households.
Mr McCluskey said: “We know families are deeply concerned about rising energy bills because of a war we did not choose, and we are determined to fight their corner to tackle energy affordability. The action we took at the Budget, which has taken an average £150 of costs off energy bills, is now factored into bills for the years to come. We have also expanded the Warm Home Discount scheme, which benefitted around six million households last winter and will remain in place for the rest of the decade. We will continue to monitor the situation ahead of the winter and plan for all contingencies, while doubling down on our mission for clean power to bring down bills for good.”
The news comes as renewable power generation reached a new record in the first three months of the year, accounting for 53 per cent of generation.
The new record was hailed by ministers as showing British renewables were going from “strength to strength” as they insisted clean power would help deliver energy security.