Hidden Stealth Tax on Domestic Energy

Haarlem

A friend asked me to look at their Scotish Power dual fuel account.

It gives a breakdown of the % of costs that make up the total cost. It shows 9% (of which it states 5% is VAT) as Government charges.

As there is no climate levy charge on Domestic tariffs, I assume the 4% is for the financing of Social Tariffs. Can anyone confirm this?

If it is for Social Tariffs, it is often reported on this forum that Social Tariffs are not the cheapest available from most suppliers. If this is correct, doesn't the 4% just add to the cost to the majority, and is not being redistributed to those who need help with their energy accounts?

So where is it going?

penrhyn

Is your friend on a social tarrif then? Maybe its a green levy?

karatedragon

I do not have a 4% charge on my bills and would be pretty miffed if I were paying for Social Tariffs when I am currently paying 40% tax and loads of National Insurance.

SwanJon

Social tariffs are provided by the supplier, not by the government, so any subsidy wouldn't be under government charges.

It probably includes things like corporation tax. Would have to delve further to be more specific.

kippen_noedel

Carbon Levy is part of your bill,

KimYeovil

karatedragon wrote: »

I do not have a 4% charge on my bills and would be pretty miffed if I were paying for Social Tariffs when I am currently paying 40% tax and loads of National Insurance.

Be miffed. You are paying for them (twice (at least)).

Haarlem

The 4% was not added as a seperate amount, just part of an explanation of the elements that make up the total charges for energy. My friend is not on a Social Tariff.

I think Kippen Noedel is probably right about the carbon levy, and this is part of the 4%.

A representative from OFGEM was recently qoted that every customer contributes on average £39pa to subsidise Social Tariffs so I assumed this was part of the 4% as it is a government obligation put on suppliers.

I do wish the funding and administration of Social Tariffs were much clearer, as I do not trust the energy companies to apply them for the benefit of customers who do need the support the government says they are entitled to. Maybe it should be shown as a % added to bills, and an annual statement (number of customers helped and the total amount) on how this levy was used.

magyar

I think the 4% is likely to be the Renewables Obligation. This is different from the Climate Change Levy which is charged to businesses.

Joyful

This is the info that is going to Scottish Gas customers which provides a useful insight into the costs involved.

What makes up £100 of the average Gas bill?

£56 wholesale gas, £2 Government Environmental contribution, £22 delivery to your home, £8 Operating costs, £7 Vat and Corporation tax, £5 profit after tax.

What makes up £100 of the average Electricity bill?

£37 Wholesale Electricity, £11 Government Environmental contribution, £28 delivery to your home, £12 Operating costs, £7 Vat and Corporation tax, £5 profit after tax.

Haarlem

Joyful wrote: »

This is the info that is going to Scottish Gas customers which provides a useful insight into the costs involved.

What makes up £100 of the average Gas bill?

£56 wholesale gas, £2 Government Environmental contribution, £22 delivery to your home, £8 Operating costs, £7 Vat and Corporation tax, £5 profit after tax.

What makes up £100 of the average Electricity bill?

£37 Wholesale Electricity, £11 Government Environmental contribution, £28 delivery to your home, £12 Operating costs, £7 Vat and Corporation tax, £5 profit after tax.

Thank you that's interesting.

Poses further questions:-

Why are operating costs 50% more for electricity? This must be to just administer the relationship with the customer as distrbution costs have been taken out.

I am surprised delivery to your home is 27% more for electricity bearing in mind all gas supplies are underground, and ecomomies of scale should apply to electricity as almost every home, shop, factory etc has an electricity supply.

I do come to the conclusion that no-one knows the true breakdown of the cost of energy.

KimYeovil

I'm not sure if it is relevant but since a typical electricity bill is smaller than a gas bill then adjusted to a £100 the proportionate operating cost would be higher - the operating cost of making up the bills, answering the phone calls is the same. (Of course, by that theory, is should be a lot more than 50% higher.)

To receive a payment of £5 per month each off a £600 annual gas bill and a £300 annual electricity bill is £60 off £600 and still £60 off £300 - £10 per £100 compared to £20 per £100 )