Homeowners Fleeced By Renewable Subsidies

By Paul Homewood

How much of our electricity bills goes to pay for “green crap”?

OFGEM kindly provided this analysis last year:

https://www.ofgem.gov.uk/data-portal/breakdown-electricity-bill

This information is not theoretical, it is derived from audited accounts data from the big energy suppliers, published in their annual Consolidated Segmental Statements, with allocation of expenses meeting strict rules.

I have downloaded the 2019 statement from Centrica, which closely matches the OFGEM table:

Looking at the Electricity Supply column, Environmental Costs works out at 23% for domestic, and 27% for business, an average of 24%. I presume the lower percentage for business reflects the fact that the selling price is lower.

But more significant is the cost of environmental levies per MWh. Domestic is £43/MWh, and business is £39/MWh.

Based on annual household usage of 5500 kwh, typical for a 3 bed house, this equates to £236. VAT would be extra.

We can cross check these numbers against the OBR figures:

In 2019, electricity consumption was 103 TWh for domestic and 192 TWh for others. Applying the rates of £43 and £39/MWh gives a total cost of £11.9bn. This is slightly higher than the OBR, (who simply take government numbers), which suggests they have underestimated.

The earliest CSS was for 2013, when domestic environmental costs were only £19/MWh:

Of course, all of the cost, domestic and otherwise, ends up getting paid by the public one way or another. Higher electricity costs for the public sector have to be paid for by higher taxes or spending cuts. While higher costs for companies result in higher prices or lost jobs.

It is worth noting by the way that network costs have increased from £36 to £43/MWh for domestic, between 2013 and 2019. This may simply reflect inflation, but I suspect at least half of the rise is for network upgrades etc.

2.7 Environmental levies
	£ billion
	Outturn	Forecast
	2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25

Renewables obligation	6.0	6.4	6.3	6.4	6.6	6.8	6.9
Contracts for difference	1.0	1.7	2.2	2.5	2.7	2.9	2.8
Capacity market1	0.2	1.7	1.1	0.9	0.5	0.7	1.0
Green gas levy	0.0	0.0	0.0	0.0	0.0	0.1	0.1
Feed in Tariffs	1.5	1.5	1.6	1.6	1.6	1.7	1.7
Environmental levies	8.7	11.3	11.2	11.5	11.4	12.1	12.5
Memo: Expenditure on renewable heat incentive (RHI)	0.8	0.9	1.0	1.1	1.1	1.1	1.1
Note: The ‘Environmental levies’ line above is consistent with the ‘Environmental levies’ line in Table 3.3 of the March 2020 Economic and fiscal outlook.
1 The ONS have yet to include capacity market auctions in their outturn numbers. If they were included, they would have been £0.2bn.