Gas boiler cost to rise up to £120 to offset heat pump rollout: 'Appalling!'
A so-called 'boiler tax' is being slapped onto the bill for many new traditional boilers in retaliation to Government-imposed targets for more eco-friendly heat pumps.
Manufacturers have been accused of “price gouging” customers, punishing them for their own failings.
Companies that don't hit heat pump sales targets will be fined by the Government under the Clean Heat Market Mechanism (CHMM) - in effect from April 2024.
But manufacturers say they don't "have the scale" to ramp up ground source and air source heat pump sales.
Worcester Bosch and Baxi both said they will increase gas boiler prices by £120 from 2024, and Vaillant will raise prices by £95 from January 1.
A Baxi spokesperson said: “This levy is not a price increase, but a direct impact of the CHMM on our business, which we will use as payment to the Government for the penalty they award us for not meeting its 4pc target.”
Worcester Bosch said the targets were "clearly unachievable".
A Vaillant spokesperson added: “Given the changing market dynamics and push for heat pump installations generated by CHMM, we in the current circumstances are left with no option but to act.”
Under the rules, 4% of annual sales must be heat pumps. Manufacturers who don't hit the target can either buy 'credits' from overperforming companies, or pay a £3,000 fine for each missed sale. The quotas will rise every year.
‘Appalling behaviour’ from boiler manufacturers
Critics argue that the 'boiler tax' has been calculated assuming these manufacturers won't sell any heat pumps and so will be liable for fines.
Charles Wood, deputy director of Energy UK, accused boiler firms of "price gouging", adding it was "appalling behaviour".
Richard Lowes, a research fellow at Exeter University and policy analyst for the Regulatory Assistance Project, told the Times: “It is disingenuous for boiler firms to be claiming they need to raise their prices this year to pay for potential fines because it is a totally implausible scenario which would require the heat pump market to shrink to nothing."
An official complaint has been made to the Competition Market Authority (CMA), while energy secretary Claire Coutinho is also investigating, the Times reported.
A Department for Energy Security and Net Zero spokesman said: “We have not required any increase to the price of gas boilers.
“Targets are realistic and fully achievable, providing industry with flexible options to support our ambition to make heat pumps easy and affordable to install.
“This is alongside making it easier to get a heat pump by increasing the Boiler Upgrade Scheme by 50pc to £7,500 – tripling applications in the week after it was rolled out.”
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