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Eon calls for removal of green energy taxes to ease pressure on UK bills

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UK ministers are expected to take urgent action to ease the strain on household finances from soaring energy prices by removing costly green taxes from consumers’ electricity bills, one of the largest providers said British energy.

Michael Lewis, managing director of Eon UK, said the levies that fund renewable energy subsidy programs and represent a quarter of electricity bills, should rather be financed by general taxation.

Removing these additional costs, which also include social policies such as rebates for vulnerable households, was a “short-term imperative” to help consumers during what “was going to be a very difficult winter”, as prices Wholesale gas and electricity are skyrocketing to an unprecedented level. levels, Lewis said.

The energy industry veteran, whose company serves 5.6 million households and businesses, pointed out that the recent price hikes were entirely due to market dynamics, but argued that levies were increasing prices. bills “unnecessarily”, adding: “This is indeed a regressive tax and… would be better in the overall tax base.

British Gas owner Centrica has said he supports his rival’s call to “shift costs from policy to general taxation”.

Utilities are bracing for political and customer backlash when the energy bills of 15 million households rise by at least 12% in early October, after UK energy regulator Ofgem raised the level of the two price caps last month in response to rising wholesale gas prices.

Analysts expect further significant hikes early next year when the caps are next revised. Britain’s new fixed-price energy deals have already risen by hundreds of pounds to reflect wholesale market turmoil, making it difficult for households to find cheaper rates.

Soaring fuel prices have ramifications across Europe. The Spanish government earlier this week announced a tax cut on household bills and a raid on energy company profits in response to soaring prices.

Lewis argued that a similar move in the UK would only hurt the industry further, with soaring energy prices already hurting some suppliers. Five small energy companies have gone bankrupt since the start of August, hit by market turmoil, due to inadequate hedging strategies or weak balance sheets.

” Since [main] a price cap has been introduced [in 2019], most industry players have suffered losses, ”Lewis said. “I don’t think there is a pot of gold out there for the government to loot.”

Wholesale price increases are due to low gas stocks in Europe following the prolonged cold weather last winter. Declining supplies from Russia and stiff competition for liquefied natural gas (LNG) shipments from Asia limited restocking at storage facilities during the summer.

This has had a ripple effect on electricity prices, especially in markets like the UK which remain heavily dependent on gas for power generation. Low wind speeds and blackouts at some power plants and this week’s fire that damaged Britain’s main submarine power cable with France also pushed prices up.

Energy companies and environmentalists have long questioned why the costs of environmental and social policies are charged on electricity bills rather than gas bills, where the equivalent levy is only 2.5%.

They point out that the government is encouraging households to use more electricity in its drive to reduce emissions by adopting low-carbon technologies such as electric vehicles and heat pumps.

Lewis said in the longer term, ministers should introduce a carbon tax on gas. He also urged the government to tackle the energy efficiency of UK homes, which are among the tightest in Europe.

The UK government did not respond directly to Lewis’ call, but insisted the price caps “would protect millions of customers this winter from sudden increases in global gas prices”, given that they are only revised every six months. About 2.2 million low-income households would benefit from a rebate of £ 140 on their bills through a program known as the Warm Home Discount, he added.


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