On every gas and electricity bill that UK households receive, there is a hidden tax. A tax of more than 8%. It's called the Renewables Obligation. Energy companies are obligated – that is, they are forced by the government under pain of fines and imprisonment – to spend a chunk of their revenues developing and installing non-fossil energy production systems. That means they are forced to pay for things like wind factories, photo-electric technology and wave power, whether or not they think these generation methods have the slightest value, either to themselves or the nation.
Like all political efforts to make companies pay for things, the government's plan does not work. The energy companies do not pay for these generation technologies. The cost does not come out of their profits, or their shareholders' dividends. It comes from their customers, naturally. All of us who use energy in the home – and there may be one or two completely self-sufficient households in the UK, but the other 28 million or so do have to buy in gas or electricity – end up paying. We pay this premium on our bills so that our energy companies can subsidise wind farmers.
This information is taken from The Renewables Obligation, August 26, 2010, written by Dr Eamonn Butler, The Adam Smith Institute. Click here for the full article.
Like all political efforts to make companies pay for things, the government's plan does not work. The energy companies do not pay for these generation technologies. The cost does not come out of their profits, or their shareholders' dividends. It comes from their customers, naturally. All of us who use energy in the home – and there may be one or two completely self-sufficient households in the UK, but the other 28 million or so do have to buy in gas or electricity – end up paying. We pay this premium on our bills so that our energy companies can subsidise wind farmers.
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