Energy Secretary Miatta Fahnbulleh acknowledged on Wednesday that the UK's Net Zero initiatives are contributing to soaring energy bills, stating "it is both, we have to be honest." This admission comes as households face the highest energy costs in three years, with further increases anticipated this winter.
Fahnbulleh was confronted with the argument that political choices to subsidize renewables, rather than solely international conflicts like the war in Iran, were responsible for the price hikes. She conceded that both factors were at play.
The average annual dual fuel bill is set to rise from October to £1,723, according to the energy watchdog Ofgem. This figure represents the highest level since 2023 and follows a 13 percent increase in the price cap implemented between July and September. The Prime Minister has announced plans to remove VAT from electricity bills, a measure set to take effect in October, which is projected to save households approximately £45 annually. However, this saving is expected to be negated by the rise in the energy price cap.
Neil Kenward, Ofgem's director for markets, noted that high international gas prices continue to drive energy costs in the UK. He welcomed the government's intervention to remove VAT from electricity bills, stating that without it, customers would have faced even higher costs this winter.
Fahnbulleh, who replaced Ed Miliband as Energy Secretary last month, emphasized the necessity of upgrading Britain's energy infrastructure regardless of Net Zero targets, stating that such upgrades are crucial for system operation. She also denied claims from the Conservative party that the government's green strategy was adding hundreds of pounds to bills due to investments in wind and solar power. Fahnbulleh asserted that clean power is not only beneficial for the environment but also critical for delivering more affordable bills by decoupling them from global fossil fuel markets.
Experts are forecasting a potential further increase of 9 percent in January, which could raise the price cap by another £149 to £1,872.
Conservative energy spokesperson Claire Coutinho criticized the Labour government, stating, "Labour promised to cut energy bills by £300, but since the election, they have gone up by nearly £400 instead." Opposition leader Kemi Badenoch added, "Energy bills are going up because Labour is ducking tough decisions."