As we enter the New Year, the British public faces a perfect storm of cost of living pressures: rising inflation and property prices and — perhaps most serious of all — rocketing energy costs.
According to Ofgem, households are paying an average of £1,277 for their gas and electricity — a figure sure to rise sharply over the coming months as increases in wholesale gas and electricity prices feed through into domestic bills and the Government’s price cap is raised.
Of this, green stealth taxes represent a significant factor. A fat 15.3 per cent — £195 a year — goes on ‘environmental and social costs’. On electricity bills alone, it’s a huge 25.5 per cent.
This covers a bewildering and ever-growing number of green schemes — some of which are anything but.
Renewables Obligation
This was the original, underhand scheme which forced consumers to subsidise renewable energy at a cost of £6.3 billion a year, paid by both domestic consumers and business users of electricity.
Energy suppliers are obliged to buy a certain number of Renewable Obligation Certificates (ROCs) for every megawatt hour (MWh) of electricity they sell to consumers.
The scheme, introduced in 2002, was closed to new generating plants in 2017, but consumers are still paying to fund contracts issued in the past.
Generators were awarded 20-year contracts, meaning that consumers will still be paying for the scheme until 2037.
The result of the policy is that wind and solar farms generate so much electricity on windy and sunny days that in 2020 they had to be paid £282 million in ‘constraint payments’ to turn off their turbines.
Contracts for Difference
This is a new scheme which replaced the Renewables Obligation in 2017. Operators of qualifying renewable energy plants (nuclear power stations are eligible) are guaranteed a ‘strike price’ for every MWh of electricity they generate.
If the wholesale market rate for electricity falls below the strike price, a public body called the Low Carbon Contracts Company makes up the difference.
In the most recent auction in September, the Government offered £265 million of subsidies. Needless to say, the bill ultimately falls on consumers.

SAS Volunteer

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