Government claims to have reduced the average household fuel bill by £90

Published:  11 November, 2014

Household energy bills this year are an average £90 lower than they would otherwise have been, due to the impact of government energy policies, according to the Department for Energy & Climate Change.

An average household dual fuel bill in 2014 costs £1369, compared to an estimated £1459 if policies to support cleaner energy, keep the lights on, support vulnerable households, and promote energy efficiency had not been present, the department said.

Government policies aimed at supporting cleaner energy and keeping the lights on account for

Government policies aimed at supporting cleaner energy and keeping the lights on account for

By 2020, household bills are estimated to be £50 cheaper in real terms than today’s bills, dropping to £1319. This is due to a combination of government energy efficiency policies and current expectations of future wholesale gas and electricity prices. Without government policies, the average bill in 2020 would be £1411.

Energy

“We’re making homes warmer and cheaper to run, giving particular help to the most vulnerable people and avoiding the predicted energy crunch, meaning we can drive down bills and support investment in the economy with more secure energy supplies and more stable bills.

The move to an energy secure, low-carbon future requires significant investment which carries costs to gas and electricity customers. Great Britain needs up to £100 billion investment in new electricity infrastructure by the end of the decade, with £45 billion having already been invested by the private sector since 2010.

But people also need help to cut their energy use and their bills permanently, through better insulated homes and appliances and other household products that use less electricity, the department added.

If there was no investment in clean energy, efficiency, or infrastructure, then homes would be paying more. This is because homes would leak more heat, meaning people have to use more energy to keep warm. This increased demand, coupled with the fact that there would be less low-carbon electricity generation (which has lower running costs than gas and coal) means the wholesale price of energy would be higher, pushing bills up further.

By 2020, the impact of policies is estimated to reduce bills by £92 or 7%. Energy and climate change policies will account for an estimated £188 for supporting vulnerable households and energy efficiency and 10% for keeping the lights on.

Key energy saving policies, such as the Energy Company Obligation (ECO) and regulations on more efficient household appliances, have directly contributed to this saving.

The calculations also reflect the package of measures announced in December 2013, that are designed to take an average £50 off household bills this year; this includes £30-35 off bills through changes to the ECO scheme a £12 rebate paid to all household electricity customers and a one-off £5 deferral in electricity distribution costs.

For energy-intensive industries, policies account for 12% of their energy costs. However, in order to ensure businesses in the UK are able to remain competitive during the shift to a low carbon economy, government has introduced a number of measures to help mitigate the impact of its policies – by up to 80% in 2020. This includes £34 million worth of compensation for the indirect costs of the EU Emissions Trading Scheme.

The move to a low-carbon power sector is bringing thousands of jobs and investment to every corner of the country today. Since 2010 £45 billion has been invested in the UK’s energy infrastructure, and by 2020 we expect to see up to 250,000 jobs supported by the low carbon electricity sector.