Why your electricity bill is on the rise

Q What has happened? A British Gas has raised the price of electricity bills by 12.5 per cent, equivalent to an average annual increase of £76 for each of its 3 million customers. Q

Why is it going up by so much? A British Gas says that prices are increasing because of increased energy network costs, and more contentiously, because of government policies.

It says that environmental levies on the average energy bill have risen by 62 per cent to £148 over the past four years.

An analysis by the Office for Budget Responsibility suggests that the levies are likely to rise by significantly more over the next five years.

However, the wholesale price of electricity has actually fallen. Q How do green A subsidies work? In order to ensure green energy sources are viable, the Government runs several multi-billion pound subsidy schemes. One provides a guaranteed price for electricity from green sources, while another obliges suppliers to source an increasing proportion of renewable energy. Power companies meet the cost of their investment in green energy through bills. Q Is this contentious? A Yes. Tory MPS have warned the policy will hit the hard-working families the party has pledged to help. They say the Government should be picking cheaper energy sources than renewables. Tensions are likely to rise after Michael Gove, the Environment Secretary, pledged to ban the sale of new petrol and diesel cars by 2040.