HC Deb 26 May 2004 vol 421 cc1671-3W
Mr. Clifton-Brown

To ask the Secretary of State for Trade and Industry by how much she estimates prices of(a) gas and (b) electricity for (i) domestic consumers and (ii) industry have changed as a result of Government policy on reducing emissions of carbon dioxide; and what her forecasts are for future price changes. [172528]

Mr. Timms

The Government have put in place a range of measures for reducing emissions of carbon dioxide.

For domestic customers, electricity prices have increased as a result of the introduction of the Non-Fossil Fuel Obligation (NFFO), the Renewables Obligation (RO) and the Energy Efficiency Commitments. The European Emissions Trading Scheme (ETS) will also have an upward impact on domestic electricity prices. Gas prices have been affected by the Energy Efficiency Commitments.

For business consumers, gas and electricity prices have been affected by the introduction of the Climate Change Levy (CCL) in 2001. Electricity prices have been affected by the NFFO and the Renewables Obligation. The introduction of the ETS in 2005 will also have an effect on electricity prices and the costs of using gas for business consumers.

Projecting future price increases is highly uncertain. Such impacts will depend on the operation of markets as well as policy measures. The estimates in the following tables are made on particular assumptions and can be indicative only.

Estimated impacts to date and forecasts for the period to 2010 are shown in the following tables:

Domestic gas prices
Impact to date Impact 2004–10
Energy Efficiency Commitments 1 1
Total 1 1
Industrial gas prices
Impact to date Impact 2004–10
CCL—with Climate Change Agreement (CCA) 4 0
CCL—without CCA 19 0
Emissions Trading 0 8
Total (with CCA) 4 8
Total (without CCA) 19 8
Domestic electricity prices
Impact to date Impact 2004–10
NFFO/Renewables Obligation 2 3
Energy Efficiency Commitments 1 2
Emissions Trading 0 3
Total 3 8
Industrial electricity prices
Impact to date Impact 2004–10
NFFO/Renewables Obligation 3 7
CCL—with Climate Change Agreement (CCA) 3 0
CCL—without (CCA) 15 0
Emissions Trading 0 6
Total (with CCA) 6 13
Total (without CCA) 18 13
1. Impact of Emissions Trading Scheme is on gas costs as users of gas will need to hold emission allowances. Not all business users of gas are covered by the EU ETS and those that are will receive an initial free allocation of allowances that will largely cover their projected emissions.
2. Estimates for renewables include the impact of the Non-Fossil Fuel Obligation, which has already impacted on electricity prices.
3. Average impact from Energy Efficiency Commitments. For those benefiting from energy efficiency measures, bills should fall. It is estimated that the average annual on-going financial gain for consumers benefiting from measures in the 2005–08 period, in lower energy bills or increased comfort, would be around £15 a year for the lifetime of the measures. The annual benefit from cavity wall insulation in a standard three bedroom house is likely to be £80 to £100.
4. Impact of Climate Change Levy estimated for those with a Climate Change Agreement who receive an 80 per cent. reduction in the rate of levy and for those without a CCA who pay the full levy. Impact of emissions trading based on a price of €5 per tonne of carbon dioxide.