Energy firms could cut energy bills - if green schemes cost are cut

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A number of the UK's energy suppliers are set to offer to reduce energy bills by as much as seven percent if the government cuts the cost of its green schemes.

The two options revolve around the Energy Companies Obligation (ECO) scheme. The first option would involve removing the costs of the scheme from energy firms entirely, whereas the second would involve delaying the ECO scheme by 18 months to allow for consideration of more cost effective energy efficiency measures.

Under the first measure, the energy firms have predicted they could instantly cut bills by between six and seven percent. Whereas under the second measure, the energy firms are said to believe there could be room for a price cut of three percent on current energy bills.

The 'Big Six' energy firms have estimated current green levies will add a massive £112 to the typical gas and electricity bill this year alone. At present, these costs are anything between £45 and £75 depending on the energy supplier households use.

However, energy secretary, Ed Davey, seemed reluctant to simply toe the line and go with some of the suggested proposals, especially the idea of delaying things to spread the costs over an extra 18 months.

He said: "There is no way I could support any move which undermined our effort on either energy efficiency or fuel poverty.

"We have got to help people with their bills. If we were to pull back on our ambitions for tackling fuel poverty and energy efficiency, we would actually be hurting people."

The government also runs another scheme, its Green Deal, in which energy customers can contact their energy firm about arranging a loan for things such as a new boiler or wall insulation to improve their home's energy efficiency.

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