Energy

Energy and Climate Change written question – answered on 9th September 2013.

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Photo of Chris Heaton-Harris Chris Heaton-Harris Conservative, Daventry

To ask the Secretary of State for Energy and Climate Change what the total cost to the consumer has been of energy and environment policies funded by levies on energy companies in each year since 2002; and what the costs have been of each such policy. [R]

Photo of Michael Fallon Michael Fallon The Minister of State, Department for Business, Innovation and Skills , Minister of State, Department of Energy and Climate Change

The following table sets out the total estimated costs of energy and climate change policies funded by levies on energy companies since 2002. For some policies this is not available on an annual basis and costs are shown over the entire lifetime of the policy. Costs are shown for calendar years or financial years depending on the policy. Policy costs are passed on through energy bills and it remains up to the energy supplier if and how to recover these costs.

Estimated costs of energy and climate change policies since 2002
Policy Time period considered Estimated cost to date (£ billion, real 2012 prices)
Energy Efficiency Commitment (EEC) I April 2002 to March 2005 (1)0.5
Energy Efficiency Commitment (EEC) II April 2005 to March 2008 1.1
Carbon Emissions Reduction Target (CERT) April 2008 to March 2011 (2)3.4
Carbon Emissions Reduction Target (CERT) Extension April 2011 to December 2012 2.0
Community Energy Saving Programme (CESP) October 2009 to December 2012 0.3
Energy Company Obligation* 2013
Feed in Tariffs(3) (FiTs)* 2010-11 0.01
  2011-12 0.15
  2012-13 0.50
Renewables Obligation(4)* (RO) 2002-03 0.38
  2003-04 0.56
  2004-05 0.64
  2005-06 0.73
  2006-07 0.88
  2007-08 1.04
  2008-09 1.18
  2009-10 1.23
  2010-11 1.42
  2011-12 1.53
  2012-13 1.99
Warm Home Discount(5)* 2011-12 0.24
* Active policies (1) Calculations of EEC I, EEC 11, are based on an evaluation of costs by Eoin Lees Energy, available at: http://eoinleesenergy.com/ (2) Calculations of CERT, CERT Extension and CESP are based on impact assessments published by DECC (3) Costs represent FITs Levelisation Fund, and include generation payments, deemed export payments claimed by generators, qualifying (administration) costs claimed by FIT licensees, minus the value of deemed export to licensed electricity suppliers. Figures for 2010-11 and 2011-12 are taken from the Ofgem Annual FITs Report for those years, available at: https://www.ofgem.gov.uk/environmental-programmes/feed-tariff-fit-scheme/feed-tariff-reports/annual-reports Figures for 2012-13 are taken from Ofgem FITs Quarterly Update reports, available at: https://www.ofgem.gov.uk/environmental-programmes/feed-tariff-fit-scheme/feed-tariff-reports/fit-update-reports These figures should be treated as provisional Final figures for 2012-13 will be published in the 2012-13 FITs Annual Report (to be published December 2013). (4) Spending under the Renewables Obligation is calculated as the overall obligation multiplied by the buy-out price. These figures can be found in Ofgem’s RO annual reports for 2002-03 to 2011-12, available at: https://www.ofgem.gov.uk/environmental-programmes/renewables-obligation-ro For 2012-13, the obligation level and buy-out price can be found at: https://www.ofgem.gov.uk/publications-and-updates/renewables-obligation-total-obligation-levels-2012-13 (5 )Ofgem (2012) “Warm Home Discount Scheme Annual Report—Scheme Year 1”: https://www.ofgem.gov.uk/ofgem-publications/58950/whdar08oct2012.pdf (6) https://www.gov.uk/government/publications/estimated-impacts-of-energy-and-climate-change-policies-on-energy-prices-and-bills

The above figures do not account for the direct benefits to energy consumers from these policies and the impact they have in helping to offset costs. For example, the Government’s latest estimate of the total impacts of energy and climate change policies (i.e. not just those levied on energy suppliers) on energy prices and bills(6) finds that in 2013 households are estimated on average to save around 5% (or £65) on their energy bills compared to what they would have paid in the absence of policies. This is because the total monetary savings from policies which help households save energy more than offset the necessary cost of investing in new capacity and efficiency. By 2020 it is estimated that households will save on average 11% (£166) on their energy bills compared to what they would have paid in the absence of policies.

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