Last week it was announced that British Gas is to raise bills by up to 8 per cent. They are the first to break the news out of the Big 6, where the inevitable has finally arrived. The reason for this price increase is the non-commodity cost of energy, mainly the Energy Company Obligation. Below we have outlined these costs/taxes: Warm Home Discount – Support for households who are living in or are at risk of fuel poverty.
ECO (Energy Company Obligation) covers:
Affordable Warmth Obligation – To provide heating and insulation improvements for low-income and vulnerable households (but social housing tenants are not eligible for affordable warmth)
Carbon Saving Obligation – to provide funding to insulate solid-walled properties (internal and external wall insulation) and those with ‘hard-to-treat’ cavity walls
Carbon Saving Communities Obligation – to provide insulation measures to people living in the bottom 15% of the UK’s most deprived areas. It is expected that this element of ECO will particularly benefit the social housing sector
Smart Meters – The smart meter installation programme beginning in 2014 could cost upwards of £11 billion
FiT & FiT CfDs – Feed in Tariff Contract for Difference Renewable Obligation – The amount of renewable energy bought by the suppliers is managed through the issue of Renewables Obligations Certificates – ROCs Non-energy costs are making up an increasing proportion of total costs and now account for as much as 40% of a typical energy bill. This represents a 50% increase since 2008 and another 15% increase in the next financial year due to the introduction of the carbon floor price.