Energy firms to cut bills after green levy shakeup

A shake-up to green levies has prompted the ‘Big Six’ energy suppliers to cut household energy bills by roughly £50 each.

The move follows the announcement by Chancellor George Osborne that this week’s Autumn Statement will include changes to environmental levies that will see the cost of the Energy Company Obligation scheme, a home insulation scheme delivered by major energy suppliers, halved by giving power firms two years longer to hit targets.

The Department of Energy and Climate Change also announced a rebate on the warm homes discount, which helps those in fuel poverty, which will save the average customer £12 on their bill for the next two years, although the subsidy will instead be met by the taxpayer.

In response British Gas said it will reduce gas and electricity prices by an average of 3.2 per cent, which when combined with the rebate will make a saving of £53, two weeks after it hiked electricity bills by 10.4 per cent and gas tariffs by 8.4 per cent, adding around £123 to the average annual bill.

Rival Scottish & Southern Energy said it expects a saving for the typical dual-fuel customer of around 4 per cent before the end of March, equivalent to a saving of around £50 for a typical dual-fuel customer, while Npower said it does not plan to increase energy prices before spring 2015 unless there are increases in wholesale energy costs or network charges.

British Gas managing director Chris Weston said today: “British Gas is pleased to be cutting energy bills by an average of £53 from January 1. We've been able to do this because the Government has committed to making changes to the environmental and social obligations that are paid for through energy bills. These changes will now allow us to help more people at a lower cost.”

Electricity companies will also take voluntary action to reduce network costs in 2014/15, funding a one-off reduction of around £5 on electricity bills

To ensure carbon emissions do not rise as a result of the deal, anyone buying a home will be eligible for the £1,000 grant for energy efficiency measures, or up to £4,000 for particularly expensive measures.

The Government will also introduce a scheme to support private landlords in improving the energy-efficiency of their properties, which will improve around 15,000 of the least energy-efficient rental properties each year for three years and a further £90m will be spent over three years improving the energy efficiency of schools, hospitals and other public sector buildings.

Energy and Climate Change Secretary Ed Davey said: "Energy bills are a big concern for many people, which is why we've been working to reform the energy market, increase competition and make it easier for people to shop around and switch supplier. Today's announcement confirms a serious, workable package which would save households around £50 on average."

Osborne has said further green policy charges will be funded from general taxation in future.

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