The majority (83%) of the increase in energy bills is from wholesale and supplier costs, with less than a fifth (19%) due to low-carbon policies.
A new report (pdf) today from the Committee on Climate Change on energy prices and bills of the impacts of meeting carbon budgets reveals the majority (83%) of the increase in energy bills is from wholesale and supplier costs, with less than a fifth (19%) due to low-carbon policies, including 11% from energy efficiency measures “without which bills could have increased further over this period”.
See Fig. 2.3:
The overall picture is therefore similar to last year (Figure 2.3). Annual energy bills increased from £610 per household in 2004 to £970 in 2011.
Of this £360 increase (60%, compared to general inflation of 22% over the same period), the majority is unrelated to low-carbon policy:
• Around £290 was due to a combination of wholesale and supplier costs (£300), increasing transmission and distribution costs (£80), the Warm Home Discount (£10) and VAT (£20), offset by reduced energy consumption (-£120);
• Around £70 was due to low-carbon policy costs. Within this it is important to distinguish between the £30 cost increase towards decarbonising the energy mix through support for investments in low-carbon power generation including renewables, and the £40 cost increase for funding of energy efficiency measures, without which bills could have increased further over this period.
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• Graph: UK energy consumption by sector – November 29th, 2012