Energy Companies ‘To Reap £2bn Windfall’ From Green Levies Deal

  • Date: 28/04/14
  • Emily Gosden, The Daily Telegraph

New analysis suggests energy suppliers are in line to save up to £23 per household per year, in addition to savings they have passed on to consumers

Britain’s biggest energy suppliers could pocket a £2bn windfall over the next three years after the government miscalculated a deal to cut green levies, new research claims.

Households face overpaying by up to £23 a year for an energy efficiency scheme, unless suppliers cut bills or are made to use the money to install more insulation, analysis for the Insulated Render and Cladding Association (Inca) suggests.

The Prime Minister approved an overhaul of the ‘Energy Company Obligation’ (ECO) home insulation scheme in December, watering down targets as part of a deal to cut £50 from bills by reducing green levies. The ECO changes were estimated to save companies up to £35 per household.

In a joint open letter to the Prime Minister, Inca, the trade association for the solid wall insulation industry, and other energy efficiency groups, say: “The actual savings to the ‘Big Six’ go far beyond the £35 you have persuaded them to give back to customers, representing a £1bn-£2bn windfall to energy suppliers over the next three years.”

This equates to an extra £15-£23 per household per year.

Earlier this month The Telegraph disclosed research by the Association for the Conservation of Energy (ACE) claiming companies would save more than expected, leading to a £245m windfall.

But the new analysis for Inca finds the windfall will be much greater because companies will benefit not only from having to install fewer measures – as highlighted by ACE – but also from substantially lower costs for the measures that they do have to carry out. Market prices for some of measures are less than half those assumed by the government.

The research was conducted by AgilityEco, a consultancy run by two former British Gas executives with extensive experience implementing energy efficiency schemes.

Labour’s Julie Elliott MP, shadow energy minister, called on companies to pass on any savings. “It is clear that the Government has underestimated the amount that would be saved by reducing support under the ECO scheme,” she said.

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