Pricing scheme

Higher gas bills threat as ministers plan eco levy

gas, Ofgem, price caps

Gas bills will rise to remove price distortions

Consumers are facing higher gas bills to fund low-carbon heating despite current alarm over soaring prices.

The UK government will publish its plans for a carbon pricing scheme that could push gas bills significantly higher, according to The Times.

The strategy comes just weeks before before the COP26 climate summit in Glasgow next month and aims to rebalance the energy market.

It will remove green levies from electricity bills over the next decade and impose higher charges on gas.

The Government will release a series of consultations before going ahead with the plan, which is likely to start in 2023 and could add £170 a year to gas bills, the paper reported.

The strategy will reportedly include measures to boost the sale of heat pumps, which according to the GMB union costs £8,750 on average before VAT – the equivalent to almost a third (31%) of the average household’s entire annual income.

A spokesman for the Department for Business, Energy and Industrial Strategy said: “We’ll set out our upcoming heat and buildings strategy shortly. No decisions have been made.”

The move comes amid warnings that the average annual energy bills could reach £2,000 next year if wholesale prices continue to rise.

Markets were shaken last week when the wholesale gas price shot up 40% before Russia’s president Vladimir Putin ordered an increase in supplies to Europe.

Andrew Large, director-general at the Confederation of Paper Industries, and Gareth Stace from UK Steel yesterday joined other energy industry representatives at a meeting with the Business Secretary Kwais Kwartenbg to discuss the wholesale gas crisis.

Afterwards, Mr Large said: “When we talked with the Secretary of State this afternoon, it was very, very clear across all of the sectors that there are serious risks of effectively factory stoppages as a result of the costs of gas being too high to bear, and in those circumstances there will be a gradual knock-on effect through supply chains, right the way across manufacturing, consumer retail and other products. And so the risks are very, very real.”

Mr Stace, speaking to Channel Four news, insisted the worst-case scenario would see steel plants closing for good.

He explained: “The nightmare scenario would be that we produce less steel in the UK, that we see all of that steel that we do consume in the UK, and that’s increasing, be met by imports and once you take away a steel plant, you don’t really bring them back.

“That’s it for good. Once it’s done, it’s done.”

Analysts have predicted UK customers could see their energy bills rise by 30% next year.

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