Will Wholesale Gas Prices Or Green Measures Increase Energy Bills?
Energy bills are set to increase by the end of the decade but it’s wholesale gas prices which will push up prices and not green measures according to the Committee on Climate Change (CCC).
According to the CCC, annual fuel bills have risen from an average of £604 in 2004 to £1060 in 2010. However, the majority of this price increase has been put down to an increase in wholesale gas prices. In comparison just 7% of that increase has been put down to renewable energy subsidies.
All of the Big Six energy suppliers have increased both their domestic and business gas prices and electricity tariffs this year. Utility Exchange has reported that prices have been increased by between 11-18% and suppliers have blamed these price hikes on the rising cost of wholesale energy prices.
Climate change advisers for the Government suggest that household energy bills will increase by £190 by the end of the decade. However, they reject some claims that clean energy will result in “astronomical” price increases.
The CCC suggests that if insulation continues and appliances such as inefficient fridges and washing machines are replaced then the total rise in energy bills could be as little as £25. The CCC report suggests that if inefficient white goods are replaced with energy efficient devices when they need replacing then energy use could be cut by 19%.
The chief executive of the CCC, David Kennedy, said “There have been claims that there will be astronomical bill rises in the next decade due to low-carbon policies. Our analysis disproves this. We want to demystify this issue and have an honest debate based on facts not assertions”.
A Department of Energy & Climate Change spokesman said “The CCC is correct in their analysis that past bill increases are primarily due to increased wholesale gas costs. This underlines why it is so important that we reduce our reliance on imported fossil fuels and protect our homes and businesses from international fossil fuel price shocks”.
However, the CCC admitted that those who use a large amount of electricity will face much higher price rises. There are some homes and businesses which don’t have access to gas and use electricity to heat their premises. The move to green energy will have more of an impact on electricity prices than gas prices and therefore rising domestic and business electricity prices will have an impact on electricity dependent consumers.