E.On UK has called on the Government to relieve firms of the extra burden from energy policy costs on their electricity bills, saying a switch to general taxation or a dedicated energy transition fund would encourage businesses to invest in electrification and low-carbon technology.
Policy costs seen as a brake on business investment
Chris Norbury, chief executive of E.On UK, told the Press Association that many British companies are keen to adopt low‑carbon technology but are deterred by the upfront and ongoing costs. The supplier argues that reallocating policy levies — such as the renewable obligation and feed‑in tariffs — away from electricity bills would create a more stable backdrop for capital spending.
Analysis from E.On’s ReIndustrial Revolution research suggests manufacturers that shift from gas to clean electricity and scale up low‑carbon technology could realise substantial savings, with the company estimating more than £2 billion of potential savings for UK manufacturers by 2035.
“Whether it’s small, medium or big businesses, they are concerned about rising energy costs, some of the rising commodity costs and therefore don’t want to see an impact from higher policy costs.”
Norbury said he had discussed the issue with Energy Secretary Miatta Fahnbulleh and described E.On’s relationship with ministers as “positive and constructive”. He pointed to recent moves such as the removal of VAT from consumer electricity bills by Andy Burnham’s administration as evidence that ministers are thinking about the benefits of electrification.
What this means for wages, prices and jobs
Shifting policy costs onto general taxation would reduce the direct price signal on electricity consumers in industry, lowering operational bills for firms that are electricity intensive. That can free cash-flow for investment in electrification — pumps, heat pumps, electric furnaces and other capital items — potentially supporting manufacturing competitiveness and future job creation in green sectors.
However, moving costs to general taxation would spread the burden across taxpayers, with implications for public finances. The immediate consumer benefit would be lower business energy bills, which could ease pressure on firms’ margins and reduce the need to pass costs on to households via higher prices or slower wage growth. The net effect will depend on how any new funding route is designed and whether it replaces or supplements existing departmental spending.
For households, the argument is less direct: if businesses invest and raise productivity, there may be downward pressure on prices and stronger long‑term employment prospects. But if policy costs are transferred to general taxation without offsetting fiscal measures, households could face higher taxes or reduced public services elsewhere.
Corporate consolidation and market context
E.On’s plea comes as the company moves to expand its market presence. The group has agreed a deal to buy rival supplier Ovo, a transaction that — subject to regulatory approval — would create Britain’s largest supplier, serving around 9.6 million customers. That prospective consolidation increases the political relevance of E.On’s recommendations, since the future structure of the retail market will shape where costs fall and where investment decisions are made.
Policymakers will weigh several trade-offs: incentivising electrification via lower bills for business could accelerate decarbonisation of industry, but shifting costs onto the public purse means other priorities may have to be adjusted.
- Key figure: E.On estimates UK manufacturers could save more than £2 billion by 2035 by switching from gas to clean electricity and scaling up low‑carbon technology.
- Market note: E.On has agreed to buy Ovo, which would create a combined supplier with about 9.6 million customers if cleared by regulators.
- Policy ask: Shift levies such as the renewable obligation and feed‑in tariffs from electricity bills to general taxation or a dedicated energy transition fund.
The proposal will be tested against competing fiscal priorities and the broader goal of ensuring energy bills reflect the cost of decarbonisation. Ministers must decide whether smoothing policy costs across taxpayers is the most effective route to unlock private investment, or whether targeted support mechanisms and clearer regulatory signals would better protect both investment and public finances.
