Britain’s energy suppliers are urging the Government to suspend green taxes on energy bills over the winter to ease the financial pressure on households.
The taxes, most of which are added to electricity bills – increase bills by an average of £150 a year.
Intended to help fund the shift to lower-carbon heating in homes, they are now coinciding with huge rises in wholesale gas prices which could force up bills by as much as £800 a year.
Energy supplier Eon and renewable firms Octopus, Bulb and Ovo said a short-term solution to rocketing bills would be to suspend green taxes this winter.
The call came as Ministers pressed ahead with plans to shift some of the burden of the green taxes from electricity to gas bills.
The plans would cut the price of electricity over the next decade, while increasing gas bills by about £170 a year. Ministers want to move away from gas boilers and towards heat pumps, which suck in heat from the ground, water and air.
The shift would hit lower-income families the hardest because gas heating comprises a more significant proportion of their outgoings, although if enacted it will not feed through to domestic bills until 2023 at the earliest.
Cabinet tensions are starting to rise over the issue of green levies ahead of the COP26 climate summit in Glasgow next month, with No 10 noting that Chancellor Rishi Sunak failed to mention the Government’s target of decarbonising the economy by 2050 in last week’s party conference speech.
The Chancellor was horrified by calculations from the independent Office For Budget Responsibility (OBR) putting the cost of making buildings net zero at £400 billion.
The OBR also war
Emma Young, of Bulb Energy, said: ‘The focus right now must be to protect consumers from high wholesale gas prices over the winter.
‘We could accelerate the transition from gas boilers to heat pumps by shifting environmental and policy costs from electricity bills to general taxation. That would help keep costs down on electricity bills and ensure the green transition is fair and affordable.’
Eon’s UK chief executive Michael Lewis called the Government’s plan to shift electricity taxes to gas bills ‘too simplistic and potentially regressive’. He said: ‘What about the immediate impact on those least able to switch away from gas in their homes, and least able to afford a sudden and significant increase in their heating bills?
‘The quickest and most significant thing we can do to help reduce fuel bills over winter is remove these costs from electricity bills and instead fund them through government expenditure.’
Octopus Energy, which supplies 3.1 million UK households after taking on 580,000 customers from bust supplier Avro Energy, has supported the plan in principle.
ned that the Government would need to impose carbon taxes to make up for the loss of fuel duty and other taxes.