UK households’ gas bills could be hit by a £1,000 increase if further proposals to transfer eco-taxes from electricity bills to gas bills are implemented.
Claire Coutinho, the Energy Secretary, has received suggestions that all or part of eco-taxes should be transferred from electricity bills to gas bills or included in general taxation, as reported by the Telegraph.
Proposal to Shift Green Levies Could Raise Gas Bills by £1,000
The Department of Energy Security and Net Zero (DESNZ) proposed the changes because of concerns that existing green levies on electricity bills could hamper the country’s progress towards achieving net-zero emissions.
‘Green levies’ are additional charges on energy bills intended to fund various environmental and social projects.
These initiatives support the transition to renewable energy sources, encourage energy efficiency and provide assistance to vulnerable consumers. However, these levies also increase household energy costs.
Possible Repercussions for Low-Income Households
Shifting these levies onto gas bills could lead to a significant increase in gas costs, particularly for low-income households, who tend to rely more heavily on gas.
A study by gas distribution company Cadent suggests that transferring eco-taxes from electricity bills to gas bills could lead to an annual increase of £1,045 in energy costs for millions of gas-dependent families by 2035.
Households on low incomes, which make up almost half (47%) of gas-dependent households, would be disproportionately affected by this change.
The report also states that by 2035, the annual running costs of gas users would be between £879 and £924 higher than those of heat pump users.
By shifting taxes onto gas bills, the costs would be spread across fewer households, which could exacerbate fuel poverty, the experts warn.
Mrs Coutinho has yet to make a decision on the matter, and would be prepared to reject any proposal that would harm families financially.
Sources close to Mrs Coutinho have indicated that she is not satisfied with the advice she has received so far, which explains the lack of a decision.
The Telegraph notes that people close to the Energy Secretary stress that her main aim is to reduce household energy bills, and that she will assess all options with this objective in mind.