Eco costs set to be moved into general taxation

Funding for the Energy Company Obligation (Eco) is expected to be moved into general taxation in the Chancellor’s Autumn Statement on 5 December, Utility Week understands.

Sources close to ministers have said that the Liberal Democrats prefer moving the costs of Eco into general taxation, whilst the Conservatives favour extending the Eco deadline.

George Osborne is likely to announce a combination of these reforms, whilst the types energy efficiency measures eligible under Eco is set to be increased as the government attempts to “reduce the burden” on consumers.

However, the Department of Energy and Climate Change (Decc) would only confirm that the government is “looking closely” at the impact of green levies on consumer bills and that the details of the review will “provide clarity for long term decision making” for the industry.

The former energy minister Chris Huhne has defended the support for renewables ahead of the government’s review and said it would be a “folly” for this to be cut.

He said that support for renewable generation only makes up four per cent of an average household bill, “nowhere near a significant enough percentage to be the root cause of the sharp price rises of electricity and gas”.

Huhne added that the levies on energy bills used to support renewables should remain because they “are the best way to insulate ourselves against the long run trend of rising gas prices”.