Q&A: How is the energy green levy shake-up going to affect your bills?

 

 

Households should see an average saving of around £50 a year on their energy bills following changes made to social and green levies by the Government.

:: What is happening?

The Government is proposing a raft of measures that it claims will lower energy bills without sacrificing green commitments or reducing help to vulnerable households. This will mainly be through diluting and extending the Energy Companies Obligation (ECO) by two years to March 2017, and funding the Warm Homes Discount out of tax rather than a levy on energy bills.

:: What are these schemes?

The Warm Homes Discount offers eligible pensioners £135 off their energy bills every year. The ECO programme was introduced last January to force energy companies to give low income households free insulation and is worth about £1.3 billion every year. It also contains obligations to ensure suppliers upgrade more hard-to-reach low-income households in rural areas.

:: So how will the ECO be diluted?

Energy firms will not be required to install so much expensive solid wall insulation in homes that are hard to reach. Instead they will be allowed to insulate more easy-to-treat cavity walls and lofts to meet their obligations. They also have an extra two years to meet ECO requirements under the plans.

:: How will this impact the average household?

As energy firms pass on their savings, the Government expects the ECO changes to cut £30-£35 off bills for the average customer next year. Its Treasury-backed rebate on the Warm Homes Discount will account for £12.

Along with an extra £5 reduction to come from electricity distribution firms reducing their network costs in 2014/15, the Government believes households will see an average saving of £50 a year.

:: What have the energy companies said in response?

The majority of the Big Six energy firms increased prices over the autumn, so today's measures should help reduce some of that impact. British Gas has already confirmed an average £53 reduction in New Year, while Scottish Power said it agreed with Government estimates which suggest total savings for households of around £50 for a typical dual fuel customer. However the outlook for bills in 2014 will still depend on whether there are increases in wholesale energy prices or other costs outside the control of energy suppliers.

:: What else is the Government doing?

As well as adjusting existing schemes, the Government is proposing new green measures to ensure its overall approach is carbon neutral. Its incentive programmes will target home-movers, landlords and public sector buildings and are worth £540 million over three years.

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Why the cost of parenting has become so expensive

Why the cost of parenting has become so expensive

Today's pre-school child costs £35,000, according to Aviva. And that's but the tip of an iceberg, says DJ Taylor
Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US