Understanding what actually makes up the charges on your quarterly bill can offer up some interesting ideas and insight into how politics is affecting the money in your pocket. There are three key reasons that energy bills continue to rise in the UK, and we've summarised them here in no particular order.
Investment in the National Grid
Revenue recovered from your bills helps to pay for works and repairs on the national grid, as well as low carbon generation projects. Ofgem have insisted that this will not be "adding to consumer bills" and that the cost of upkeep on the grid will stay relatively "flat" moving forward. Currently, grid costs make up around a fifth of the average UK household bill but are averaged out over decades, which many officials are saying won't have any impact on consumer bills. Still, this is a difficult pill to swallow when you consider that smart meters and other technological imporvements come under the umbrella of 'grid costs' too. Nevertheless, this is something you're paying for every time you pay your energy bills.
An energy market which is "oudated" some have argued
We've seen some impressive advancements in recent months in empowering the consumer. Smart meters may well change things for the better, allowing customers to better budget and anaylyse their energy usage as well as taking advantage of "demand response" and lower prices, but many have argued that our energy market is too outdated for this effect to be beneficial. The Smart Energy Demand Coalition has commented on the UK's plan to reward energy producers for their capacity to produce rather than the service and prices they could provide, saying they risk "shutting out the consumer" and effectively offering a giant subsidy to the big six.
energy efficiency at home
The Governments energy efficiency schemes aren't working hard enough to offset the increasing energy costs. People are consuming less energy than they did ten years ago but are paying a great deal more in real terms. Transform UK have argued that increasing energy efficiency in work places and households is the key to reducing energy bills, but the focus is too heavily on production capacity rather than effciency at the consumer end. A perfect example is the Government stripping of green levies and subsidies - the ECO (energy companies' obligation) been virtually cancelled after the big six complained about the cost, and this was something which was designed to make homes more energy efficient.
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