A government report today shows that by 2020 annual energy bills will be an average of £166 lower than they would have been without green policies despite increases in the short term.
The report shows that households energy bills will have to go up to contribute to green policies designed to save householders money in the long run through energy efficiency measures.
The report comes at a time when the average household energy bill has hit an all-time high of £1,353 a year. British Gas warned last October that a further £60 could be added onto household bills this year, at least in part due to the cost of government policies to ensure a clean and energy-efficient Britain.
Energy bills up after cold winter
All of this comes at a time when much of Britain is still freezing under a layer of snow and after a long and cold winter, meaning high bills for most.
Which? executive director Richard Lloyd said: ‘The government must ensure that the savings to consumers they have estimated will flow from their energy policies become a reality. That will require more transparency and scrutiny of their plans and more practical help for people to make their homes energy efficient.
‘Effective competition in both the wholesale and retail energy markets will also help keep prices in check but the government’s plans for reform don’t yet go far enough to give people confidence that the price they are paying for their energy is a fair one.’
Wholesale energy cost
Nearly half – or £598 – of the average household dual fuel energy bill is made up of the wholesale cost.
The second largest cost is attributed to network costs or transport and distribution of energy at 20% or £257.
Government policies on energy and climate change account for 9% – or £112 – of the bill with £30 of this spent on renewable energy policies, including £9 on on-shore and £9 on off-shore wind.
The report showed that 85% of the rise in household bills between 2010 and 2012 was from wholesale energy costs and network costs and 15% as a result of government policies.
The report says that households will save in the long term as a result of these green policies thanks to insulation measures, more efficient appliances, the Green Deal, more efficient boilers and smart meters.
- Get the cheapest energy deal with Which? Switch by comparing gas and electricity prices
- Find out why Which? is campaigning for simpler energy tariffs
- Use our energy cost calculator to see how much you could save with energy-efficient appliances