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.

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