I’m not sure they understand their own argument

Britain’s biggest energy suppliers are in line for a £245m windfall because their savings from the Government’s “green levies” deal will be greater than they have passed on to consumers, it has been claimed.

Ministers in December announced a deal with the Big Six energy firms to cut household energy bills by about £50 a year by reforming several levies paid for on bills.

But analysis by the Association for the Conservation of Energy (Ace) suggests that the Government underestimated the benefits to the companies of the changes.

The group calculates that the companies will in fact save an extra £10 per household, which they have not passed on through lower bills.

OK, removing
some of the green levies removes more costs to the companies than the companies are reducing the bills by. That’s the argument:

The Government calculated that a watering-down of the scheme, lowering the targets for the installations, would result in £30 to £35 per household bill reductions.

Suppliers duly cut their bills or reduced the scale of planned rises, including an average £32.35 reduction attributed to the Eco scheme changes, according to Ace analysis.

But the group predicts that the companies’ costs for the scheme will, in fact, be reduced by £41.90 in 2014-15 alone.

“This represents a windfall to suppliers of at least £9.55 per household – and at least £245 million on aggregate,” Ace said in a consultation response to the changes.

Yep, that’s exactly the argument.

So, we do now all agree that the green levies were costing consumers £245 million more than previous estimates, do we? For if their removal saves more then their presence must have cost more…..

2 thoughts on “I’m not sure they understand their own argument”

  1. No, the levies weren’t costing consumers £245million more than previous estimates – because when the levies are removed, consumers didn’t get that £245million back (at least not immediately and directly).

  2. @ Jamie
    Yes, because British Gas sets it prices so as to get a 5% profit margin on domestic retail sales – and last year operated at a loss for several months in the summer because the long spell of cold weather in what should have been spring resulted in their making more profit than they intended to do. British Gas has by far the largest market share and at least some of the others set their prices so as to compete with it.
    So, if Ace is right, the levies DID cost the consumers that much more.
    Your claim is that that removal of these levies will save the consumers less than the levies previously cost them. That is NOT the same thing. Think!

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