Personal Finance

Energy customers hit with £170 green levy within days

A row has broken out after it emerged a £170 green levy will be added to energy bills from July 1.

The charge was suspended for two years last September as part of support for households faced with spiralling energy bills announced by former chancellor Kwasi Kwarteng.

But Chanceller Jeremy Hunt has cut the help short, with the charge returning next month when the new energy price cap takes effect.

When the Government stepped in to reduce energy bills last year, it capped the amount suppliers could charge and used public money to meet the shortfall. It also absorbed the cost of the green levy, which goes towards funding renewable energy schemes and home insulation for pensioners and low-income households.

But now wholesale prices have come down and the energy price cap is below the Government's £2,500 Energy Price Guarantee, the EPG is coming to an end.

And with that, the subsidising of the green levy, which costs about £170 a year per household, will also be over.

Green levies make up about 8% of an energy bill, but households will still be paying about £426 less due to the drop in the energy price cap, which is £2,074 from July 1.

The announcement caused confusion as it came soon after Energy Secretary Grant Shapps said people shouldn't be "unnecessarily bashed" financially when funding the move to hydrogen power.

He said he wanted to scrap a looming £120 charge for the switch adding: “We know we need to fund this transition, but we don’t want to do it through household levies. I don’t want to see people’s household bills unnecessarily bashed by this.”

Former Cabinet minister Jacob Rees-Mogg told the Sunday Telegraph: "Green levies are part of the problem behind the UK's particularly high electricity prices.

"They ought to be abolished but should fall on general taxation until that can happen. The ambition for net zero must not make us cold and poor. Any new or re-imposed charge ought to be announced to Parliament first and not slipped through slyly."

Greg Smith, the MP for Buckingham, told the newspaper there is “no place” for the charge on utility bills, insisting it is “simply not fair to financially punish people in this way”.

He added: “Utility bills should be about what you use and no more."

A Government spokesperson said: "Levies more than pay for themselves by driving investment in renewables and other generation technology and have saved consumers money on their energy bills overall over the past 10 years."

The new energy price cap is £2,074 from July 1, down from the previous level of £3,280, and a reduction of the £2,500 Energy Price Cap.

Read more:

Helen Barnett

Helen is a journalist, editor and copywriter with 15 years' experience writing across print and digital publications. She previously edited the Daily Express website and has won awards as a reporter. Read more here.


NimbleFins Newsletter

Get energy alerts, deals, tips, news, and more!