Source · Select Committees · Public Accounts Committee
Recommendation 11
11
Deferred
DESNZ plans to rebalance electricity and gas costs have been substantially delayed.
Recommendation
DESNZ plans to work on rebalancing the costs of electricity and gas, but it said that doing so is difficult because of large structural issues in the sector. It had aimed to rebalance costs to some extent by moving levies from electricity to gas bills, but its plans to do so have been delayed by nearly two years. It explained that it was looking at options that are fair and affordable for consumers and taxpayers, and will set out its approach during 2024.22 In the meantime, one energy company, Centrica, noted that it had created tariffs 14 DHH0014, Written evidence submitted by The MCS Foundation, 29 April 2024 15 DHH0033, Written evidence submitted by Energy UK, 29 April 2024 16 Qq 9, 43; C&AG’s Report, para 17 17 Qq 3, 30 18 DHH0033; DHH0045, Written evidence submitted by Fuel Poverty Action, 29 April 2024; DHH0046; DHH0050, Written evidence submitted by Octopus Energy, 29 April 2024 19 DHH0008, Written evidence submitted by The Heat Pump Association and The Heat Pump Federation, 29 April 2024; DHH0014, Written evidence submitted by The MCS Foundation, 29 April 2024 20 DHH0011, Written evidence submitted by EDF Energy, 29 April 2024; DHH0014, Written evidence submitted by The MCS Foundation, 29 April 2024 21 Q 30 22 Qq 30; C&AG’s Report, paras 16, 3.10 12 Decarbonising home heating that encourage households to move their electricity use away from peak times. Centrica added that the wider issue, however, must be tackled without penalising those households with gas boilers who are unable to move to low-carbon heating.23 Complexity and confusion
Government Response Summary
The government agrees with the recommendation to rebalance electricity and gas costs but defers the implementation date, stating it is dependent on further ministerial steers. It confirms it is considering ways to lower running costs for low-carbon technologies and highlights existing innovation programs.
Government Response
Deferred
HM Government
Deferred
The government agrees with the Committee’s recommendation. Target implementation date: to be confirmed 1.4 The implementation of recommendations is dependent on further steers from new ministers, and the department will inform the new Committee as soon as an implementation date is agreed. 1.5 The department has evidence that heat pumps are over three times more efficient than gas boilers. However, current differentials in electricity and gas prices do not always make them cheaper to run. 1.6 The government wants to ensure that consumers are supported to make greener choices, which will help deliver on net zero ambitions. As such, the government is considering the best and most efficient way to bring down the running costs of low-carbon technologies such as heat pumps. 1.7 The government is investing up to £42 million in the Heat Pump Ready innovation programme to overcome barriers to heat pump deployment and support innovation in product design, including improving performance. The Heat Pump Ready programme is part of the £1 billion Net Zero Innovation Portfolio and builds on the previous £16.5 million Electrification of Heat Demonstration Project. Heat Pump Ready projects are currently underway and will conclude in 2025.