Third party charges push up energy bills

19 February 2013

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19 February 2013 | Anna Reynolds

Businesses face a 5 per cent rise in electricity and a 2 per cent increase in gas bills when new energy regulations come into force in April, according to a report by consultancy ENER-G Procurement.

The study The energy marketplace found for many businesses increases in third party charges were to blame for rising energy bills in 2012. 

Higher costs to suppliers subsidising large-scale renewable electricity projects under the government’s Renewables Obligation have been passed on to customers and by the end of March 2013, energy suppliers must ensure that 15 per cent of supply is from eligible renewable sources. According to ENER-G the cost for 2013-14 will be £6.40/Megawatt hour (Mwh) - up from £4.80/Mwh in 2011-12 - adding approximately 5 per cent onto business bills.

Mark Alston, general manager of ENER-G Procurement, said: “2012 was an eventful year in the energy industry and 2013 is set to be no different. In contrast to previous years when the volatile wholesale energy market forced spiralling bills, it was developments at home - particularly in policy and regulation - that drove up costs. In 2013, wholesale prices look set to be more bullish, particularly towards the back end of the year - but it will be the third party costs that are the real stinger.”

The Energy Bill, announced by the government in November last year, will introduce Electricity Market Reform, with a tax on fossil fuels for electricity generation and a new subsidy mechanism called ‘contracts for difference’. The Carbon Reduction Commitment price, which businesses pay based on their carbon dioxide emissions, will cost £12/tonne in 2013-14 but is set to increase to £16/tonne in 2014-15. The report warned when new price controls take effect from 1 April, £2/Mwh could be added onto wholesale power costs.

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