Rachel Reeves’ pledge to take £150 off household energy bills could be wiped out because of the costs of nuclear energy, hidden green levies and new levies being introduced by the energy regulator, it has been claimed.
In her Budget last week, the chancellor promised to take £150 off household bills by scrapping the Energy Company Obligation (ECO) scheme.
During the election, Labour had promised to decrease bills by £300 through investment in green energy but this has yet to materialise.
But former Labour donor and green entrepreneur Dale Vince has now claimed that the impact of paying for building nuclear energy capacity will largely wipe out the £150 because of the £1bn cost in the first year and ongoing costs for nuclear power.
Further analysis shows that, under plans announced by Ofgem, levies on bills to fund gas pipelines and the high-voltage electricity grid are set to rise £40 from £222 a year in April when the government’s £150 discount is due to come into effect.
The levies are due to rise for the following four years - reaching £338 a year by April 2030, according to Ofgem’s impact assessment.
Meanwhile, the Office for Budget Responsibility (OBR) also revealed in its report with the Budget that £1bn a year will be added to household energy bills to fund energy secretary Ed Miliband’s next auction for renewables projects, known as “allocation round 7” (AR7).
The concerns are that instead of reducing household bills by £150, energy bills will instead rise.
Mr Vince told The Independent that the chancellor’s much-publicised £1bn in energy bill savings will be entirely wiped out by the costs of the Sizewell C nuclear project — costs the government is forcing households and businesses to pay years before construction even begins.
He claimed that the £150 discount is almost identical to the total annual charges that will hit homes and businesses through the Regulated Asset Base (RAB) nuclear levy, created to fund Sizewell C.
He said: “The chancellor’s energy savings will be wiped out overnight by the cost of Sizewell. From November, the government has decided to load the financial risk of this project straight onto our energy bills — before a single shovel hits the ground. And this isn’t some one-off charge.
“We’ll be subsidising Sizewell for at least 10 years, maybe longer — nuclear projects always run late. And we could still be paying for decommissioning well into the 22nd century.
“Imagine ordering a car and the dealership starts charging you before they’ve even built the factory — that’s what’s happening here.
“EDF say Sizewell will be ready in 2035, but Hinkley Point is running 14 years late and its price has jumped from £18 billion to £46 billion. Sizewell won’t bring bills down or help us get to Net Zero in time — but it will cost us for years.”
He claimed that the extra cost would be at least £35 and grow to £140 for a small hairdressing salon.
The levy applies to every home and business connected to the UK grid, with only officially exempt Energy Intensive Industries spared. Ofgem has confirmed allowed revenue of £1.4 billion for the first charging period (4 November 2025 to March 2027).
But the government has disputed Mr Vince’s figures.
A DESNZ spokesperson said: “This claim is wrong. Sizewell C will add around £1 a month on average to household bills during construction, a small fraction in comparison of the average £150 of costs off household energy bills from April announced in the Budget.
“We are delivering a golden age of nuclear - securing thousands of good, skilled jobs and billions in investment.
“Sizewell C will deliver clean electricity for the equivalent of six million of today’s households for at least six decades. Analysis shows it could save £2 billion a year across the future low-carbon electricity system once operational, resulting in cheaper power for consumers.”
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