(qlmbusinessnews.com via bbc.co.uk – – Fri, 7th Jan 2022) London, Uk – –
The bosses of two energy firms are calling for green levies on bills to be scrapped to help customers facing higher prices.
The founder of Ecotricity described the levies on energy bills as a “stealth tax” of hundreds of pounds a year.
Centrica's boss is also urging government to fund green programmes through general taxation instead.
Thousands of households have seen their energy bills rise in recent months.
Spiralling wholesale gas prices, increased demand for energy in Asia and a summer with little wind have all contributed to soaring costs faced by suppliers and consumers.
Dale Vince, the chief executive of green energy firm Ecotricity, told the BBC's Wake up to Money programme: “The government talk about high energy prices and bemoan them… but what they don't talk about is the fact they take £9bn a year from our energy bills in a combination of VAT and about five social and environmental policies.”
Currently, about 12% of an energy bill set at the level of the Energy Price Cap of £1,277 goes towards funding green energy programmes, such as support for low-carbon electricity generation.
The price cap, which sets the maximum a supplier can charge annually on a dual fuel tariff in England, Scotland and Wales, will go up again in April after a review by the regulator Ofgem.
Mr Vince suggested that prices could jump because of green levies applied to bills.
“That's about half of the rise that's coming through the price cap. [The government] could take that away in a flash,” he said.
Writing in the Sun on Friday, Centrica's chief executive Chris O'Shea suggested one way forward would be to strip the environmental and social levies out of energy bills and “fund ‘green' programmes through general taxation instead”.
Mr O'Shea argued the move would reduce annual bills by £170 and spread the cost more fairly.
He also called on the government to consider suspending VAT on energy bills to help struggling households.
Torsten Bell, chief executive of the Resolution Foundation think tank, suggested suspending VAT would make a “small dent” to higher costs, but that it might not be as effective as it would benefit higher-earners as well.
“The important thing is that we have a much larger intervention aimed at lower-income households,” he said.
Ecotricity boss Mr Vince also suggested that North Sea gas suppliers should face a windfall tax as some have seen profits increase as wholesale prices have surged.
According to experts at energy consultancy Wood MacKenzie, UK North Sea oil and gas companies are set to report near-record cashflows of nearly £14.9bn for the current financial year.
“The North Sea operators have been making a killing this winter,” Mr Vince told the BBC.
“A windfall tax would be a fair thing to do, the North Sea operators don't need that money, weren't planning to have that money and it's a hole we've got in the economy somewhere else.”
Last month, other energy bosses, such as Ovo Energy's chief executive Stephen Fitzpatrick, predicted that the rise in wholesale gas prices and its impact on people would be “an enormous crisis for 2022”.
Energy UK, the industry's trade body, has warned bills could soar by another 50% unless the government intervenes.
The idea of targeted financial support for fuel bills – along the lines of the current Warm Home Discount scheme – is emerging as a frontrunner in the race to tackle rising costs, although a number of options are being considered by government officials.
The current scheme offers those receiving certain state benefits the option to apply for a one-off £140 payment every winter.
This could be increased and the number of people eligible could be expanded more broadly.
Small Business Minister Paul Scully told the BBC's Today programme: “We'll always look at what we can do, especially for targeted approaches, to support the lowest-paid because there is a wider cost-of-living issue.”
A spokesperson for the Department for Business said that the current energy price cap was “insulating millions of consumers from high global gas prices”.
“We'll continue to listen to consumers and businesses on how to manage the costs of energy.”
The department also pointed to schemes currently in place to help those facing high bills, such as the Warm Home Discount scheme, as well as the £500m Household Support Fund, which sees local councils distribute grants to struggling households in England.