Rt Hon Lord Lilley

    Mr Lilley: To ask the Secretary of State for Energy and Climate Change in his Department’s November 2011 paper entitled Estimated impacts of energy and climate change policies on energy prices and bills 2012, what value of costs of climate change policies in 2011 and 2020 will be attributed to (a) household energy bills, (b) business energy bills and (c) general taxpayers.

    Gregory Barker: DECC’s latest assessment of the impact of energy and climate change policies on energy prices and bills was published on 27 March 2013 and is available online at:


    This shows that the net impact of policies is to help households on average save money on their energy bills, compared to what they would be paying in the absence of these policies. The total monetary savings from policies which help households save energy are expected to more than offset the cost of investing in new capacity and efficiency.

    The impacts of policies on energy prices are presented in tables E1-E3 of Annex E of the report. A number of government policies place the obligation of financing the policies onto energy companies, which is then passed onto the consumer. It is up to individual energy companies to decide how to share the costs among their customers. The simplifying assumption used for DECC’s analysis is that costs are spread evenly over each unit of energy consumption that creates a liability for these costs for energy suppliers.

    The analysis assumes that the total support costs of the renewables obligation, small-scale feed-in tariffs and electricity market reform, and the total costs of the EU ETS and carbon price floor are paid around one-third by households and two-thirds by non-domestic consumers—reflecting their respective shares of total electricity consumption. The support costs of the energy company obligation and warm home discount and the supplier costs of smart meters and better billing are assumed to only be paid by household energy consumes—reflecting that these policies are focused on helping households improve their energy efficiency. The costs of the climate change levy and the CRC energy efficiency scheme are only paid by the relevant non-domestic consumers captured by the eligibility criteria for these policies.

    In addition there are a number of policies funded through general taxation, most notably the renewable heat incentive and up to £1 billion capital funding available for the UK CCS commercialisation competition.