Mail fuels fears over energy bills but where’s the research to back them up?
- 15 Jun 2011, 12:00
Household energy bills are being inflated by subsidies for
"green" renewable energy according to
a slew of stories in the Daily Mail, followed up by the
Telegraph and based on
claims made by Dr Benny Peiser, the director of the Global Warming Policy
Reduced household incomes coupled with rising energy bills -
with all major energy companies increasing their bills, and the
announcement from Scottish Power that its domestic energy bills
will rise by £200 - has meant that rising fuel bills will be a
major anxiety for millions of people.
The GWPF are blaming price rises on green policies. Since 2002
energy bills have
risen sharply. For the most part these increases are due to
wholesale gas price rises, which also feed through into electricity
However, as renewable targets and energy efficiency policies
have become more ambitious a rising fraction may be due to green
policies. The question is, how much?
Dr Peiser says green taxes currently make up between 15 and 20
percent, or from £154 to £206 of an average household's combined
gas and electricity bill.
Despite the significant space and
editorial support given to this story, the Daily Mail fails to
provide sources for these figures in its front-page article on June
9 or any of the subsequent comment articles that have followed.
So what figures is Dr Peiser using? First of all, he states that
the average household spends £608 a year on gas and a further £424
on electricity, making for an average combined bill of £1032.
These numbers are the same as those presented by
energy regulator Ofgem as an average UK fuel bill. Peiser's
claim that green measures cost between £154 and £206 across these
two bills is then based on his estimate of green costs as between
15 and 20 percent of domestic energy bills.
However, the same Ofgem document demonstrates that
"environmental costs" account for just four percent of gas and 10
percent of electricity bills (on page 1.)
The Ofgem figures do not include the impact of the European
Emissions Trading scheme (ETS), which Dr Peiser
estimates at an average of £100 a year. However, in January
2011 they calculated that the ETS contributes just £13 a year to
the average bill (see table below).
Overall this brings green costs to £80 a year, or around 8% of
the average gas and electric bill.
Carbon Emissions Reduction Target (CERT)
Community Energy Saving Programme (CESP)
The Renewables Obligation (RO)
Feed-in Tariff Scheme (FITs) 2011 current year figure
EU Emissions Trading Scheme (ETS) 2011
Ofgem via email
When queried last week about his figures by
fact checking website Full Fact, Dr Peiser referred their
researcher to figures from the Department of Energy and Climate
Change, who in 2010 published comprehensive information relating to
the impact of
green policies on household and commercial energy bills
At first glance, DECC 2010 figures appear to be slightly higher
than Ofgem data. According to DECC 2010 green policies were
increasing the average domestic electricity price by 14
It may be that these are the figures Dr Peiser is quoting in the
Mail - judiciously rounded up to 15-20%. But the figures quoted are
for electricity only - not gas. The equivalent figures for gas
prices are much lower - 4% (for domestic customers) and 6% (for
non-domestic.) Applying the higher electricity figures to the whole
bill - both gas and electric - gives a significant cost
In addition, the DECC figures are for prices not bills. Some of
the green policies paid for by government are designed to reduce
energy consumption, reducing bills. In fact, the DECC report notes
that even if the unit price of electricity or heat goes up, green
policies can cut customer's bills through energy efficiency
measures. So while policies place upward pressure on price they
also place downward pressure in energy use - and these partially
DECC calculate the gross increase to household bills from green
measures in 2010 at around four percent - obviously significantly
less than 15-20 percent.
So, in summary, the Ofgem figures indicate that green measures
add around 8 percent to the average bill, but these figures to not
appear to take into account that green polices can also cut bills
DECC calculate the gross increase is four percent. None of this
takes into account of the long-term impact on bills of the rising
cost of fossil fuel, which the green measures are intended to
offset by encouraging more efficient use of energy and promotion of
We asked Dr Peiser on Monday for clarification on his figures,
but had received no reply at the time of publication. If the GWPF
can't transparently justify their claim, they must withdraw it.
Updated 12.15pm June 16th - I had quoted DECC figures for
the amount green policies were increasing gas prices as 3% (for
domestic customers) and 5% (for non-domestic) - it's actually 4%
and 6% respectively.