The Government has confirmed that it will cut the cost of the Energy Company Obligation (ECO), as it unveiled plans to reduce the impact of energy company price rises on householders yesterday (2 December).
Under the new measures, the period which ECO covers will be extended from two to four years (to 2017) and the Carbon Emissions Reduction Obligation element of ECO will be reduced by 33 per cent up to 2017. The number of solid wall insulation installations energy suppliers are required to make under ECO will also be reduced to 100,000 over the new four year period (25,000 per year). In 2012 alone, industry installed 80,000 solid wall insulation measures.

Reducing the cost of ECO will result in a £30-£35 saving on bills, on average, next year, the Government says. The existing dedicated support in ECO for low income and vulnerable households will be maintained and extended from March 2015 until March 2017.

Chief executive of the UK Green Building Council, Paul King, said: 'Make no mistake, this is bad news for people who cannot afford to heat their homes, especially if they live in solid walled properties, and bad news for thousands of construction industry workers who may well be joining the dole queue this Christmas.'

He continued: 'It remains perverse that the Prime Minister is attempting to reduce energy bills by slashing the very scheme that is designed to bring them down for good.

'We have to recognise that some in the Coalition have fought hard for a package of incentives to sweeten the pill. Encouraging households to take up energy efficiency measures when moving into a property through a 'Stamp Duty rebate' is something we have repeatedly called for.'

The Government has also confirmed that it will reduce the current cost of levies by establishing a rebate saving the average customer £12 on their bill, for the next two years, worth a total of £600 million. In addition, electricity distribution network companies are willing to take voluntary action to reduce network costs in 2014/15.

All of the major energy suppliers have confirmed that they will pass the benefits of this package to their customers. However, the reduction in individual household bills will depend on the energy supplier. The value of the benefit will vary between companies, but, on average, this package, including VAT, will be worth £50 to households.

Energy and Climate Change Secretary Edward Davey said: 'Energy bills are a big concern for many people, which is why we've been working to reform the energy market, increase competition and make it easier for people to shop around and switch supplier. [Today's] announcement confirms a serious, workable package which would save households around £50 on average.'