Labour’s net zero levies will become the main driver of household energy bills next year, overtaking gas prices for the first time, analysts have warned. [emphasis, links added]
Green taxes, upgrades to the electricity grid, and other government-backed charges will account for 60pc of energy bills from April 2026, Cornwall Insight said – far outweighing the actual cost of energy.
The shift undermines claims by Ed Miliband, the Energy Secretary, that gas prices are the primary cause of high bills. He has previously said that bills were high “because of our dependence on fossil fuels”.
Craig Lowrey, from Cornwall Insight, said:
“Wholesale prices are no longer the main story. The real pressure is coming from rising non-energy costs, with levies and policy decisions associated with that investment in renewables driving up bills.”
Household energy bills will surge to more than £1,800 next spring, Cornwall Insight predicted, partly because of the cost of upgrading the UK’s pylons, power cables, and substations.
Average household power and gas bills, currently standing at £1,755, will dip by £22 in January only to surge back to £1,808 from April, it warned.
“This [increase] is largely due to rising charges associated with the operation and maintenance of the country’s energy networks, specifically electricity transmission and gas distribution charges,” said Cornwall Insight.
“This is likely to be an enduring trend with wholesale energy prices, once the dominant driver of bills, forecast to drop to less than 40pc of the cap and remain below that threshold for the rest of the decade.”
Cornwall Insight’s forecast includes a new levy averaging £10 per household per year to subsidise the construction of the Sizewell C nuclear power station in Suffolk.
The total predicted price rises add to the pre-budget pressure on Rachel Reeves, the Chancellor, to tackle the surging costs of Mr Miliband’s net zero crusade.
For Labour, there is also growing concern that the Energy Secretary’s net zero price rises will hit energy bills just weeks before May’s elections, covering the Scottish and Welsh governments and many English local authorities.
The Conservatives and Reform have both pledged to make energy costs the heart of their campaigns.
Claire Coutinho, the shadow energy secretary, said:
“Ed Miliband promised to cut bills by £300, but struggling households are set to face yet another bill rise next year. It’s now patently clear: Labour’s energy policies can’t cut bills.”
The run-up to the Budget has included suggestions that Ms Reeves would slash energy bills by £200, including removing the 5% VAT added to power and gas bills.
[C]osts are now being kept high mainly by the 11 or so levies and other policy costs used to fund the expansion of renewables.
The UK has had some of the world’s highest energy costs ever since the sharp rise caused by the 2022 energy crisis. Average bills rose from £1,179 in the autumn of 2019 to £1,755 today.
While the initial surge was driven by a spike in gas prices, costs are now being kept high mainly by the 11 or so levies and other policy costs used to fund the expansion of renewables.
Household energy debts have already surged from £2bn three years ago to £4.4bn this summer, with energy consultancy Baringa warning they will approach £6bn in 2026.
Baringa, which has access to the debt books of major suppliers, suggests a quarter of UK households will struggle to pay their gas and electricity bills this coming winter.
Read rest at The Telegraph
