Recent domestic energy bill increases were primarily due to the cost of gas, not the result of environmental policies, and major investment in low-carbon generation will not drive dramatic bill increases over the next decade, according to a report from the independent Committee on Climate Change.
Its findings debunk repeated claims that government measures to reduce carbon emissions have cost consumers dear and that its environmental and energy agenda will result in household bills as high as £3,000 by 2020.
Low-carbon measures were responsible for only 16 per cent of the £455 increase in domestic energy bills between 2004 and 2010, the committee said.
The report said bills were projected to rise by around £110 over the next decade to fund more low-carbon power capacity (£100) and energy efficiency in homes (£10). The committee acknowledged that further increases would be needed to support grid investment (£15).
The analysis focused on dual-fuel energy bills and assumed that by 2020 there would be 12GW of offshore wind on the system and all four demonstration carbon capture and storage schemes in operation, as well as a small amount of new nuclear.
The committee projected an electricity price of 17.8p per kilowatt-hour by 2020, a 40 per cent rise on 2010, with most of that price made up of wholesale, transmission and distribution costs.
Because the cost of low-carbon measures would affect retail electricity prices more than gas prices, the committee warned that electrically heated households could see total energy bills rising more significantly than dual-fuel households
by Roger Milne
This article first appeared in Utility Week’s print edition of 16 December 2011.
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