Oct. 30 (Bloomberg) -- The U.K. government is studying whether to fund the cost of green levies through general taxation instead of consumer power bills as a way to rein in the cost of energy.
Energy Minister Michael Fallon said moving the charges that fund social and environmental programs away from consumer bills is one of the options being considered. Britain is examining each of the taxes that make up 9 percent of the typical bill covering electricity and natural gas, he said.
Prime Minister David Cameron’s government is working to identify measures it could take to reduce costs after four of six largest utilities raised prices. Consumer energy bills have risen 30 percent in real terms since 2007, outpacing inflation.
“It’s only right that we look at the total fuel bills being paid by our constituents,” Fallon told the Environmental Audit Committee in London today. “We’re looking at these bills across the board to ensure there’s sufficient competition, that network costs aren’t higher than they need to be, and additional levies are as fair and as reasonable as possible.”
The utilities blamed gains on rising wholesale gas costs and levies to pay for clean energy programs. Cameron announced a competition review to probe profit levels and the cost of green regulations after the Labour opposition pledged to freeze bills through 2017.
Ed Davey, the Cabinet-level minister supervising energy, will make an annual statement to Parliament tomorrow about the work of his department. The government hasn’t set a target for what it would like to shave off gas and power bills, Fallon said.
Energy and Climate change policies account for about 9 percent, or 112 pounds ($180), of the current fuel bill, and are likely to rise, the minister said.
“This is now a sizeable element of the bills,” he said. “It wouldn’t be right to exempt these green levies, to say you can’t possibly look at these.”
--Editors: Reed Landberg, Randall Hackley