Its proposals, which are now out to consultation, include:
- A rebate of £12 on domestic electricity bills to be passed directly to customers, funded by the Government, for two years
- A range of changes to ECO, including reducing the Carbon Emissions Reduction Obligation element of ECO by 33 per cent for the period to 2015, and setting a target for the period to 2017 reflecting this same level of activity
- Maintaining the level of ECO activity currently directed at low income and vulnerable households and extending the same activity out to 2017
- Including district heating schemes as a primary measure under the Carbon Obligation element of ECO
- Allowing energy suppliers to insulate easy-to-treat cavity walls and lofts as part of their ECO carbon targets
- Requiring energy companies to be more transparent about how much they spend on social and environmental measures, either through voluntary agreements or through legislation.
- Up to £1000 to spend on energy efficiency measures for people moving home, or £4000 for particularly expensive measures
- A scheme to help private landlords improve the energy efficiency of their buildings, which together with the above, will be worth £450m over three years
- £90m over three years to be spent on upgrading the energy efficiency of schools, hospitals and other public 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.
“Today’s package also ensures that energy companies are not off the hook. They will keep up their efforts to help people in fuel poverty cut their bills by making sure their homes leak less heat, and they will have to be more transparent about what they’re spending on social and environmental measures. Next year, our competition test will forensically examine what more we can do to get prices down through ferocious competition.”
“This won’t affect our commitment to tackling dangerous climate change through reducing Britain’s CO2 emissions, which will be backed by £540 million in new investment to make sure Britain’s homes and public sector buildings are more energy efficient, permanently reducing their bills.”
Npower, SSE and Centrica all immediately pledged to pass the savings on to customers, while EDF has said it will not raise prices again before 2015.
Managing director of Centrica-owned British Gas, Chris Weston, said: “British Gas is pleased to be cutting energy bills by an average of £53 from 1 January. 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.”
Npower chief executive Paul Massara said: “We welcome today’s announcement as an important step in cutting energy costs for our domestic customers. As a result of this announcement we will reduce our bills. We are currently calculating how large this reduction will be, and can assure our customers that it will fully reflect the reduction in the costs to our business.
“In addition, in order to give our customers greater certainty with their household budgets, we don’t plan to increase energy prices before Spring 2015, unless there are increases in wholesale energy costs or network charges.”
SSE managing director of retail, William Morris said: “”We promised our customers that they would benefit from any cost savings and although there is some detail still to be worked out, we are able to commit to lowering our prices. If the proposals set out today are implemented, it will mean energy costs for a typical dual fuel customer can be cut by around 4%.
“We continue to believe that policy costs should be paid through general taxation, not energy bills. The Warm Homes Discount changes are therefore a step in the right direction.”