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Energy bills to rise after cost of green schemes ‘underestimated’  

Credit:  Sky News | Wednesday 08 February 2017 | news.sky.com ~~

Households will face higher energy bills because officials have “significantly underestimated” the cost of green energy schemes.

As a result, the typical household energy bill is likely to be around £110 higher in 2020 – £17 more than expected, according to the Commons Public Accounts Committee.

They said officials had “failed to prepare properly” for the possibility that forecasts might be wrong and that the Treasury had not provided sufficient oversight.

In October, a National Audit Office report found that the £7.6bn cap on subsidies for low carbon electricity set by the Government for 2020/21 will be breached by more than £1bn by the end of the decade.

The costs of green energy schemes are capped as part of a framework, are funded through levies on energy companies and inevitably paid for by consumers in their energy bills.

But the Public Accounts Committee said the Government’s management of the framework lacks “transparency, rigour and accountability”.

The committee’s chairwoman Meg Hillier said the Government had “failed to meet its commitment” to report annually on the impact the policies were having on bills.

“Current arrangements just aren’t good enough,” she added.

“At the same time, the Government expects the cost of levies to continue to bust the budget, meaning customers will pay more than expected.”

For this, she blamed “poor forecasting” and “further evidence of excessive optimism in the implementation of energy policy”.

A spokeswoman for the Department for Business, Energy and Industrial Strategy (BEIS) said: “The Government is committed to helping ordinary working people keep more of what they earn and supporting households with the cost of living.

“The strong, decisive action we took reduced projected costs by over half a billion pounds to protect people’s household budgets and ensure value for money while delivering more environmentally friendly energy.”

The news comes just days after energy regulator Ofgem demanded an explanation from Npower after the energy provider announced 1.4 million customers would be hit with a 9.8% rise in their energy bills.

In December, rival supplier EDF announced a rise in its electricity charges to take effect from 1 March, while some other smaller suppliers have also raised tariffs.

The increases come as consumers already face soaring prices following June’s EU referendum, which led to a collapse in the value of the pound.

Inflation hit a two-and-a-half year high of 1.6% in December, and is expected to rise further as the cost of imports increases due to the weaker pound.

Source:  Sky News | Wednesday 08 February 2017 | news.sky.com

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