Source · Select Committees · Public Accounts Committee
Recommendation 22
22
Deferred
Department repeatedly delayed electricity-gas price rebalancing for three years without a timetable
Conclusion
The Department recognised that rebalancing was an important issue, given the ratio of electricity to gas prices was “high compared to many comparative countries” as a “lot of the policy [ … ] and network costs in this country are placed on electricity rather than on gas”.61 But it has delayed addressing this issue for three years.62 The Department told us that it is important to address this issue in a way which is affordable and fair.63 This is because some households cannot avoid using gas and might see their bills increase if levies were moved from electricity to gas bills.64 The Department provided assurances that it was taking this issue seriously, but could not provide a timetable for completing its planned work on rebalancing.65
Government Response Summary
The government agrees rebalancing is needed and will set out proposals in due course, with a target implementation date of July 2025, but notes the complexity and difficult fiscal environment.
Government Response
Deferred
HM Government
Deferred
5.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2025 5.2 The UK has a particularly high ratio of residential electricity price to gas price compared to many countries in Europe. The UK’s electricity price does not reflect the cheaper wholesale price of clean energy. This means low carbon technologies can be more expensive to run than fossil-fuel powered alternatives. The price disparity between electricity and gas needs to be addressed to make it more attractive for consumers to install clean technologies like heat pumps. 5.3 Close attention is paid to the balance of costs recovered on energy bills. The department is considering a range of different options to ascertain which best delivers on its priorities but is mindful it is currently operating in a difficult fiscal environment. 5.4 This is a complex issue and there are difficult decisions to be made which must be informed by robust research and analysis. The department will ensure it keeps fairness and affordability at the forefront of its mind throughout this process. 5.5 The government will set out proposals for rebalancing domestic energy bills in due course.