Green subsidies set to add £110 to household bills in 2020
Households have today been warned by the National Audit Office (NAO) that energy bills will rise by more than planned in future due to the impact of green subsidies.
It says consumers should expect to pay £110 more in 2020 - £17 more per year than planned - than they do today for a typical dual-fuel energy bill.
This is because the government has “missed opportunities to exploit the full potential of the Levy Control Framework”, and so has not secured value for money, according to the NAO.
The Levy Control Framework is a scheme set up in 2011 that applies a cap on the forecast costs of government policies on renewable energy that are funded through levies on energy suppliers and ultimately paid for by consumers.
The Department for Business, Energy & Industrial Strategy (formally the Department of Energy & Climate Change) is expected to take action if forecasts exceed 20% over this cap - and it currently stands at 19.7%, which represents over £1 billion.
The NAO says reasons for the government exceeding forecasts include a slump in fossil fuel prices and infrequent market intelligence updates. Particularly damning is the revelation that the measure of how much power comes from new offshore wind turbines wasn’t updated for 18 months. The NAO’s report also cites that information wasn’t shared between officials frequently enough, and that lessons from previous poor forecasting were not taken on board.
The good news is that back in November 2014, the average household energy bill for 2020 was forecast at £1,259, but this was revised to £991 in July 2016. So while falling fossil fuel prices have got the government into all kinds of bother, for the consumer, things are looking up.
However, you can save about £300 more by switching. Use our energy comparison tool to see if you can switch and save.
Amyas Morse, head of the NAO, says: “The Levy Control Framework has helped make some of the impacts of renewable energy policies on consumers clearer. But government’s forecasting, allocation of the budget and approach to dealing with uncertainty has been poor, and so has not supported value for money.”
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