Rishi Sunak and Jeremy Hunt accused of 'tricky' Passing Energy Costs Back on Consumers Credit: KIN CHEUNG/AFP
In the coming days, households will pay £170 a year environmental levy on their energy bills, with Rishi Sunak and Jeremy Hunt accused of 'sly' cost-shifting on consumers.
The Telegraph has learned that the two-year suspension of green fees announced last fall is due to end in early July, just nine months away.
The cost of the fees was shifted from consumer accounts to government funding following a year-long campaign by energy companies and MPs amid skyrocketing gas, electricity and food prices last year.
It will again be imposed on consumers, although there has been no official announcement. Sir Jacob Rees-Mogg, who was Minister for Business and Energy when costs were charged to consumers last year, said: “Green levies are part of the problem behind particularly high electricity prices in the UK. They should be abolished, but until then they should be subject to general taxation. The pursuit of net zero should not make us cold and poor.
“Any new or repeated accusation must first be announced in Parliament, and not secretly omitted.”
The decision to fund environmental fees through general taxation rather than consumer bill payments was announced by Kwasi Kwarteng, then chancellor, when he unveiled the energy bailout the government has been using to subsidize consumer bills since its inception in October.
Wind turbines off the coast of Sussex. Photo: Julia Claxton/Alamy Stock Photo/Alamy
The government said at the time: “Schemes previously funded by environmental levies will also continue to be funded by the government during this biennium to ensure continued UK investment in homegrown, safe renewable technologies.”
But the Ministry The Treasury will stop funding the costs, which have risen from £150 last year to £170 now, from July, meaning they will again be borne by consumers.
A Treasury source insisted that the move was not “an active decision by this administration”.
Because of the way the Energy Price Guarantee (EPG), a state aid, was designed, it covered green bill fees, the source said. From July, when EPG subsidies will end for most bill payers, financing of green fees from the Treasury will cease.
The revelation raised eyebrows among senior Tories, especially after Grant Shapps, Net Zero secretary, told The Telegraph on Saturday: “We know we need to fund this transition, but we don't want to do it with house fees… I don't I want to see people lose their household bills because of this.”
Mr Shapps said he wanted to drop plans for a new £120 a year levy to fund the hydrogen industry. Days after his speech, however, consumers will once again be saddled with the £170 a year taxes that fund other green schemes ranging from installing home insulation to historic contracts with wind farm developers.
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Conservative parliamentarians and government officials consulted by The Telegraph said they expected the Treasury Department to bear the costs for at least a two-year period announced in September. Critics of the fees expected a public debate about whether to then charge consumers again, partially or completely, or abolish completely.
A government spokesman said: “The government has pledged to provide £150 to cover environmental charges included in electricity bills for two years under the Energy Price Guarantee. By the end of June, this Guarantee will save the typical UK household around £1,100, including the £150 we have pledged.
“However, the EPG will no longer be in effect from July 2023 as Ofgem's price cap will be set below the EPG rebate level, meaning that customers will pay full electricity tariffs, including environmental fees.
“Fees”. more than pay for itself by leveraging investments in renewables and other generation technologies, and have generally saved consumers money on their energy bills over the past 10 years.”
Energy companies have started calling for spending to be funded from general taxation in September 2021, when Michael Lewis, chief executive of Eon UK, called the levy a “regressive tax” that “would be better in the overall tax base”. Centrica, the owner of British Gas, has backed its competitor's call. Robert Halfon, now Secretary of Education, was a prominent proponent of the move.
Andrew Montford, director of the Net Zero Watch campaign group, said: “Shifting costs from consumers to taxpayers and back to consumers is a waste of everyone's time and money . Green fees should be cut to ease the overall UK economy.”
Ofgem, the energy regulator, did not respond to requests for comment.
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