Energy regulator Ofgem announced Tuesday that the Fossil Fuel Levy in England and Wales, collected from licensed electricity suppliers, would reduce to zero from the present level of 0.3 per cent from April 1 2002.

The Fossil Fuel Levy represents only a small percentage of the electricity customer’s final bill, and proceeds are used to meet the costs incurred by electricity suppliers in complying with the Non Fossil Fuel Obligation under which they contract renewable generating capacity.

The amount of the levy is reviewed each year and reflects the Government requirement to support renewable energy commitments. Ofgem anticipates that over the coming months there will be sufficient funds to make up the difference between payments which the Renewables Scheme guarantees to generators and the amount they will be able to secure in the market.

Ofgem said it could not specify for how long the Levy rate will remain at zero but said it would endeavor to ensure that future rate reviews keep it to a minimum level consistent with the obligation.