Household energy bills will continue to rise due to green taxes and soaring world gas prices, Energy Secretary Chris Huhne has warned. But he claimed that government policies could “soften the blow” for consumers.
By James Hall, Consumer Affairs Editor
6:45AM GMT 24 Nov 2011
The minister admitted that the Government is powerless to protect home owners from rising gas and electricity prices, which will be continue to be “pushed up” by fuel prices on the world market.
He also said that the range of green initiatives that the Government has committed to support – such as solar, wind and nuclear energy – will add £280 a year to utility bills within the next decade. These costs include putting so-called smart meters in homes, making consumers pay to support the reform of the electricity market, and charging a tariff to support the development of renewable energy.
Energy bills have already risen by a fifth this year, heaping pressure on household budgets. The average annual dual fuel energy bill now stands at over £1,200, according to Uswitch.com, the online comparison site.
Mr Huhne used the Department of Energy and Climate Change’s (DECC) annual Energy Statement to Parliament to outline how the Government plans to help consumers mitigate the impact of rising bills.
He said that DECC’s so-called Green Deal, under which home owners will be offered lower energy bills in return for making their houses more energy efficient, will reduce the severity of rising prices.
While bills will rise annually by hundreds of pounds, Mr Huhne said that people who sign up for the Green Deal will be able to offset the rises.
The minister said that people who insulate their homes and use a raft of energy-saving measures will save £94 on their annual energy bill by 2020. He said that the average energy bill in 2020 will be £1,285 for home owners that take part in the Green Deal and £1,379 for those that do not.
However consumer groups warned that the Government is making a “big assumption” that the Green Deal, which will require home owners to proactively make their homes more environmentally friendly, will appeal to a large enough group of people.
Richard Lloyd, executive director at consumer group Which?, said that if fewer homes than expected buy into the Green Deal then energy bills could be pushed up even further.
Thomas Lyon, an energy expert at Uswitch.com, said that the cost to a homeowner of implementing the Green Deal is unknown.
“The biggest question mark to me about today’s statement is that the costs are more certain than the benefits There is a real sense of 'jam tomorrow’ in Chris Huhne’s announcement today. The fact is that the UK is on the brink of an affordability crisis when it comes to household energy,” he said.
DECC’s own research into the Green Deal shows that consumers have voiced concern about the cost of the program, as well as the fact that they would have to take out loans to take part in the initiative.
DECC also said that consumers felt that the cost savings associated with the deal were not high enough.
Friday, 25 November 2011
Treasury injects £200m cash into home insulation 'green deal'
New funding intended to ensure uptake of energy efficiency scheme and give confidence to business
Damian Carrington
guardian.co.uk, Thursday 24 November 2011 12.57 GMT
The government's ambitious plan to refurbish 14m the UK's draughty homes is to be kickstarted with £200m of incentives, the Treasury announced on Thursday.
Danny Alexander, chief secretary to the Treasury, committed the cash with the aim of encouraging early adopters to take up the energy efficiency scheme and to give confidence to business.
The green deal plan was revealed in detail by energy and climate change secretary Chris Huhne on Wednesday for consultation. From October 2012, it will enable homeowners to take a loan to install insulation or other energy-saving measures. Under the so-called "golden rule", the energy bill savings from the measures will be larger than the loan repayments.
But concerns have been raised as to whether consumers will take up the scheme in large numbers, given that previous free energy efficiency schemes have had limited impact.
The green deal proposals allow for up to £150 to given as a cashback offer to homeowners, but that is added to the loan.
The £200m is new cash funding from the Treasury and could be worth hundreds of pounds to people who to take up the deal in its first year. How the incentive is delivered is yet to be decided, but it could be in the form of cashback offers, discounts on council tax or cuts to stamp duty when a home is sold. It could also follow the highly successful model of the now-closed boiler scrappage scheme.
"The scheme will involve time-limited offers to help the early uptake, and give confidence to industry that the government is fully behind the green deal scheme," a Decc official told the Guardian.
Energy and climate change secretary, Chris Huhne, said: "We want the green deal to be a game changer for British consumers who've been buffeted by global energy prices. The earlier you green deal your home, the quicker you'll benefit from a warmer and cosier property as well as protect yourself from rocketing prices."
Consumer group Which? said the most important thing was getting the detail of the green deal right for homeowners. Richard Lloyd, executive director at Which?, said: "It's crucial that the Government gets the fundamentals of the Green Deal right. If it's not good value for consumers overall, short term incentives will not be enough to guarantee that this scheme will be a success."
The green deal is a cornerstone of the government's drive to deliver a secure energy system for the UK, while also cutting the carbon emissions that drive climate change. The UK has some of the least energy-efficient homes in Europe and the deal aims to enable people to keep their homes warm with less energy.
It is also a key part of Huhne's pledge to keep energy bills lower than they would be if the UK relied on fossil fuels.
But other concerns have been raised that might affect the take-up of the scheme, including the interest rate at which the loans are charged. If those rate are at commercial levels, observers say, only limited measures will be able to be funded while keeping to the golden rule. A Green Deal finance company has been proposed to pool loans and cut the interest rate, but it has no funding in place at present.
Damian Carrington
guardian.co.uk, Thursday 24 November 2011 12.57 GMT
The government's ambitious plan to refurbish 14m the UK's draughty homes is to be kickstarted with £200m of incentives, the Treasury announced on Thursday.
Danny Alexander, chief secretary to the Treasury, committed the cash with the aim of encouraging early adopters to take up the energy efficiency scheme and to give confidence to business.
The green deal plan was revealed in detail by energy and climate change secretary Chris Huhne on Wednesday for consultation. From October 2012, it will enable homeowners to take a loan to install insulation or other energy-saving measures. Under the so-called "golden rule", the energy bill savings from the measures will be larger than the loan repayments.
But concerns have been raised as to whether consumers will take up the scheme in large numbers, given that previous free energy efficiency schemes have had limited impact.
The green deal proposals allow for up to £150 to given as a cashback offer to homeowners, but that is added to the loan.
The £200m is new cash funding from the Treasury and could be worth hundreds of pounds to people who to take up the deal in its first year. How the incentive is delivered is yet to be decided, but it could be in the form of cashback offers, discounts on council tax or cuts to stamp duty when a home is sold. It could also follow the highly successful model of the now-closed boiler scrappage scheme.
"The scheme will involve time-limited offers to help the early uptake, and give confidence to industry that the government is fully behind the green deal scheme," a Decc official told the Guardian.
Energy and climate change secretary, Chris Huhne, said: "We want the green deal to be a game changer for British consumers who've been buffeted by global energy prices. The earlier you green deal your home, the quicker you'll benefit from a warmer and cosier property as well as protect yourself from rocketing prices."
Consumer group Which? said the most important thing was getting the detail of the green deal right for homeowners. Richard Lloyd, executive director at Which?, said: "It's crucial that the Government gets the fundamentals of the Green Deal right. If it's not good value for consumers overall, short term incentives will not be enough to guarantee that this scheme will be a success."
The green deal is a cornerstone of the government's drive to deliver a secure energy system for the UK, while also cutting the carbon emissions that drive climate change. The UK has some of the least energy-efficient homes in Europe and the deal aims to enable people to keep their homes warm with less energy.
It is also a key part of Huhne's pledge to keep energy bills lower than they would be if the UK relied on fossil fuels.
But other concerns have been raised that might affect the take-up of the scheme, including the interest rate at which the loans are charged. If those rate are at commercial levels, observers say, only limited measures will be able to be funded while keeping to the golden rule. A Green Deal finance company has been proposed to pool loans and cut the interest rate, but it has no funding in place at present.
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