U.K. Energy Policies Raise Business Bills as Much as 50%

U.K. energy policies are projected to raise power and gas bills for the biggest business users by as much as 50 percent in 2020, the government said.

Subsidies for renewable energy, payments to generators to guarantee supply and charges on emissions will add as much as 13 million pounds, or 37 percent to annual bills for a typical industrial user in 2020, in the government’s mid-line outlook, according to a document today on the website of the Department of Energy and Climate Change.

Household bills in 2020 are projected to be 7 percent lower than they would be without measures introduced by the government, at 1,319 pounds in 2014 prices. That is because of energy saving policies that encourage the insulation of homes and improve the efficiency of electrical goods. This year, the government estimates its policies have cut the typical household bill by 90 pounds to 1,369 pounds.

Energy bills became a political flashpoint a year ago when Opposition Leader Ed Miliband pledged to freeze them for 20 months if his Labour Party wins the general election slated for May. Companies including Tata Steel Ltd. have said the government is being too slow to protect industry from rising energy costs.

If fossil fuel prices are lower than expected, government policies would add as much as 50 percent to bills for energy-intensive users in 2020, though because of the underlying assumptions, the extra cost would be lower than under the mid-line forecast, at 11.6 million pounds. Measures to compensate the biggest users could dampen the impact to just a 5 percent rise under the mid-line scenario and 11 percent if fossil fuel prices are lower, the government said.

 The government in 2011 announced funding totaling 250 million pounds to compensate the most energy-intensive industrial users, such as steelmakers and ceramics companies, through 2015 for costs resulting from a domestic “floor price” on carbon. Payments to date had totaled 31 million pounds, the then energy minister Michael Fallon said in April.