The impact of social and environmental programmes on energy bills will be reduced under the government’s plans to cut the cost of levies, which is expected to result in annual average savings of GBP50 per household.
Measures to cut the cost of energy include the establishment of a rebate, which will save the average customer GBP12 on their bill for the next two years and is worth a total of GBP600m. The Warm Homes Discount, designed to help vulnerable households, will continue, with those eligible receiving a GBP135 rebate off their energy bill. The cost of the Energy Company Obligation (ECO), an insulation scheme delivered by major energy suppliers, will also be reduced. This is expected to result in a decrease of GBP30-GBP35 from energy bills in 2014. Also, dedicated support in ECO for low income and vulnerable households will be maintained and extended from March 2015 until March 2017.
The DECC added that electricity distribution network companies have volunteered to take action to reduce network costs in 2014/15, which will allow a further one-off reduction of an average GBP5 on electricity bills.
Major UK energy suppliers have reportedly confirmed that the benefits of this package will be passed onto customers, however the reduction in individual household bills will depend on the energy supplier.
In addition, the government said it intends its overall approach to be carbon neutral and will bring in new measures to ensure that energy efficiency is boosted with the introduction of new schemes for home-movers, landlords and public sector buildings, worth GBP540m over three years. These schemes include a grant of up to GBP1000 for new home buyers to spend on important energy-saving measures, or up to GBP4000 to pay for especially expensive measures. This scheme will be available to all people moving house, including those who don’t pay stamp duty, over three years. A scheme will also be introduced to support private landlords in improving the energy efficiency of their properties, which is expected to improve around 15,000 of the least energy efficient rental properties each year for three years. The government will also spend GBP90m over three years to improve energy efficiency in schools, hospitals and other public sector buildings.
Funds available to local authorities through Green Deal Communities will also be increased GBP20m to GBP80m this year. The scheme helps support ‘street-by-street’ programmes for hard-to-treat homes in a cost-effective way.
There will be no change in levies that provide support for existing low carbon energy projects, such as the Renewables Obligation (RO), Contracts for Difference (CfDs) and feed in tariffs (FITs).