BEIS poised to shift policy costs onto gas bills

There are reports this morning of a major policy shift by the government, which is said to be poised to announce that green levies will be moved from electricity to gas bills.

The Financial Times has reported that the plans will be announced next month as part of the delayed Heat & Buildings Strategy. The paper claims it will take the form of an “energy affordability and fairness review”, which will explore how to allocate energy costs to “incentivise cost-effective decarbonisation”.

Among the levies to be introduced to gas bills would be a charge to fund the development of a hydrogen industry.

Ministers will insist that the policy will be phased in over a period of up to a decade and that the combined cost of gas and electricity bills will stay the same, the paper says.

A spokesperson for the Department of Business, Energy & Industrial Strategy said: “We want to encourage people to take up technologies such as heat pumps and electric vehicles. Affordability for consumers and taxpayers will be at the heart of our approach.”

Moves to transfer green levies from electricity to gas have proved controversial, with supporters saying it would incentivise the shift to low-carbon heating alternatives  and detractors saying it would exacerbate fuel poverty.

Responding to the reports, Adrian Letts, Ovo’s retail chief executive, said: “Removing levies from low carbon electricity is necessary to help households make the switch from gas boilers to climate friendly electric heat pumps. We need to make clean heat the cheaper choice and show consumers that a zero carbon home is ultimately a more valuable home. The focus now must be on ensuring we effect this transition while protecting vulnerable consumers.”

A spokesperson for the Energy Networks Association said: “Ensuring a fair and equitable transition for all customers will be key to the successful decarbonisation of home heating. A one-size-fits all approach will not work across our diverse geographies and customer base, so they will need choice and access to a range of net cero compatible technologies including hydrogen boilers, district heating, hybrid heating systems, and heat pumps.

“This will require support from the private sector, taxpayers and billpayers and how that’s split is a decision for government but it’s essential that all net zero heating technologies are treated fairly. It is vital to ensure that customers are protected, so that no one ends up paying more and being inconvenienced by a product that may not work best for them”.

As part of Utility Week’s Energy Reset campaign we are asking for these costs to be moved out of energy bills entirely and into general taxation.