Green levies that were temporarily removed from household electricity bills will hit consumers again from the start of July.
The suspension, announced by Liz Truss’s government as part of a support package amid skyrocketing prices last September, was meant to last for two years.
But the cost will again be imposed on consumers from next month.
Levies more than pay for themselves by driving investment in renewables and other generation technology
The green levies have been temporarily funded by the Treasury as part of the Government’s Energy Price Guarantee (EPG), which limited annual energy costs to £2,500 for the average household.
But the Exchequer will no longer subsidise people’s energy bills – including covering the cost of the green levies – when the Ofgem price cap falls to below the EPG level.
The regulator will cut its price cap from £3,280 to £2,074 from July 1 following tumbling wholesale prices.
Even as customers again pay energy rates in full, including for green levies, the average energy bill will fall by £426 a year due to the drop in the price cap.
A Treasury source said the Government has not “made an active decision” to saddle consumers with the green levies again.
“That’s how the Energy Price Guarantee (EPG) works,” the said. “It’s part of the design of the scheme announced in September 2022.”
Green and social levies make up around £170 per year per household, the department said, and go towards funding cheap renewable energy and home insulation for pensioners and low-income households.
A Government spokesperson added: “Levies more than pay for themselves by driving investment in renewables and other generation technology and have saved consumers money on their energy bills overall over the past 10 years.”
But the change may raise eyebrows after Grant Shapps on Saturday told the Telegraph he did not want to “see people’s household bills unnecessarily bashed” by the drive to net zero as the cost-of-living crisis continues.
The Energy Security Secretary signalled a U-turn on a Government plan to impose an annual levy on energy consumers in 2025 to fund production of hydrogen.
Meanwhile, the Government has said a complete ban on coal power generation “isn’t appropriate”.
The Government suffered a defeat in the House of Lords earlier this year as peers narrowly backed a change to the Energy Bill banning the opening of new coal mines.
A Department for Energy Security and Net Zero spokesperson said: “While our reliance on coal is rapidly diminishing, there is still a need for it in industries such as steel and cement so now is not the right time to make changes.
“We will continue to listen to representations made by Members as passage of the Bill continues but oppose this amendment because a complete ban isn’t appropriate and risks meeting future demand from our own resources.”
