Energy News

Huhne’s “green energy deal” announcement fails to impress

Thursday 24 November, 2011

By Martin Fagan

Households will be hit with green taxes which government says will be offset by making homes more energy efficient.

Brits should brace themselves for higher green taxes on their energy bills every year until 2020, following a government announcement yesterday.

Speaking in parliament, energy secretary Chris Huhne said that although the government’s green policies will add £280 a year to household bills, they will also reduce energy bills by £373.

However, this £373 will not be deducted from energy bills. Rather, these are potential savings a household can make by adopting “green” measures such as smart metering.

The Department of Energy & Climate Change (DECC) says households will save £89 a year because of “previous energy efficiency policies” and save £158 a year from something it calls “products policy”.

The DECC has published a full breakdown of the tax elements and proposed green savings.

One of the key selling points of the Green Deal is the “golden rule”, which states that consumers will never pay back more per month in green taxes than they're saving on their energy bills from energy efficiency measures.

The energy secretary also announced 14 million homes could be fitted with insulation and other energy-saving measures, and householders will be able to take out loans of up to £10,000 over a 25-year term.

However, consumer watchdog Which? is warning consumers to be aware that the Green Deal is not an energy efficiency grant. The finance comes in the form of a loan and anyone taking up the Green Deal will be expected to pay interest.

Which? also said that, because the DECC’s calculations were based on an average rather than on a household’s particular pattern of energy usage, they were effectively “meaningless”.

“It’s difficult to see how hard-pressed homeowners will have confidence in how the Green Deal might work for them if the suggested savings are initially based on averages rather than on their personal energy use,” said Richard Lloyd, executive director at Which?.

The crux of the policy announcement is that the onus is on households to insulate their properties and consume less energy in order save enough money off their bills to compensate for the addition of “green” taxes.

Thomas Lyon, energy expert at independent switching service uSwitch.com, said: "The big question is over whether the costs are more certain than the benefits, as the success of many of these policies will rely on consumers changing their behaviour or taking up the new options that will be made available to them.”

Many industry experts say Chris Huhne’s policy to increase bills comes at a time of an energy “affordability crisis”, with many households being pushed into fuel poverty. The energy secretary faces accusations that his policy announcements are made chiefly to further his political career and endear him to the green lobby rather than help ordinary consumers to save energy.

Photo by Bryn Pinzgauer