Also included in these charges are:
The Renewables Obligation, which aims to increase investment in renewable forms of energy generation
The EU Emissions Trading Scheme, which aims to cut the amount of carbon emissions made by electricity generators
So that Britain meets its climate change targets, the energy industry may take on new obligations which couldaddmore environmental charges to the energy bill.
Value added tax is charged at 20% on energy bills, which is lower than in most other EU countries.
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Transport and distribution costs
The electricity and gas transmission and distribution networks bring energy to customers' homes. This is the only part of the bill which is still directly controlled by the industry regulator.
Since privatisation, these costs have fallen as energy companies have become more efficient.
New demands on energy networks like the need for more renewable energy and the introduction of smart grids could mean that these costs could rise. Any increase in this charge has to be approved by the industry regulator.
The environmental charges added to energy bills pay for schemes such as the Carbon Emissions Reduction Target (CERT). These schemes aim to increase the energy efficiency of households and to tackle fuel poverty.