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Panorama on energy bills: a look at the sources

  • 08 Nov 2011, 16:00
  • Robin Webster

With the energy debate often clouded by dodgy figures, opaque reports you can't get hold of and the unreferenced opinions of lobbyists, activists and analysts, Panorama last night had an opportunity to provide some much needed clarity.

The programme promised to answer the question: "What's fuelling your energy bill? Profit or policy?". Well, their enthusiastic answer was that it is green energy policy that are responsible for energy bill price hikes.

Other commentators - including Damian Carrington at the Guardian - have already pointed out the aspects of the question that Panorama failed to consider in making its case. Chief amongst these is analysis released by Ofgem just a couple of weeks ago, which showed that energy bills have risen over the last decade largely as a result of increasing gas prices.

Following our interactions yesterday with KPMG, we have taken a look at some of the sources which Panorama cited in support of its argument, and detailed them below.

Figures cited in the programme:

Many of the figures cited in the programme are difficult to analyse.

Panorama cited a Citibank prediction that energy bills will rise to £2000 by 2020. We have tried to find the source for this today in order to understand the projection - so far Citibank haven't pointed us to it, although they did say they were very busy. (We will update this blog if and when they do so.)

The programme also noted "research by the price comparison site USwitch" which suggests that energy bills will rise to £3202 by 2020. USwitch told us that they calculated this figure by basing future price trends (2012 - 2020) on the trends over the last few years (2004 - 2011).

In citing both of the figures cited Panorama stated that

"Whatever the precise level of your future bills, one reason for their acceleration skyward is fairly straightforward. Sadly, green energy isn't yet cheap energy."

It may well be the case that green energy measures will add to energy bills in the coming years (although the Government contests this). Panorama, however, gave the strong impression that both of the 'higher' figures cited above, from Citibank and Uswitch, were strongly influenced by the cost of green measures.

Obviously we can't assess the Citibank figures. We asked USwitch if their analysis of bills running up to 2020 was particularly to do with investment in renewable infrastructure. Their answer was that it wasn't.

Panorama suggested that switching to more gas and nuclear power generation could be a cheaper option, an argument sourced to a new report from KPMG which was  due to be launched this week. As we noted yesterday, however, KPMG are currently being somewhat coy about how they got their conclusions, whether they have finished the report, and when they are planning on launching it. So again, we can't assess these figures.

The commentators:

The programme relied on a variety of commentators to make warnings about the costs of renewables and 'green' policies. These included Simon Less, introduced by the programme as an "Ex-Treasury official (1998 - 2007)". More recently, Less is the current head of environment and energy at Policy Exchange, a  think-tank which advocates free market and localist solutions to public policy questions, and  opposes renewables targets. (His affiliation with Policy Exchange was not mentioned by Panorama.)

Another contributor was Peter Atherton of Citigroup, who described offshore wind as "eye-wateringly expensive". Citigroup released a report last Friday, which has apparently been  distributed to companies around the world, criticising the expansion of renewables in Scotland. (Other companies have  disagreed with their analysis.)

In discussing future price rises, Panorama also touched briefly on the potential for energy efficiency measures to bring down household bills. The programme introduced predictions by the Government that energy efficiency measures will lead bills to fall, rather than rise, by 2020.

We were then introduced to a family who have undertaken energy efficiency measures in their home, but for whom paying energy bills is "increasingly a struggle". The householder interviewed added

"...I think the days of cheaper energy and things are over. The sooner everybody realises it, and we start planning for that, the better."

This is a good point. But presenting it as a response to DECC's analysis (as the programme did) is questionable, given Ofgem's suggestion that gas is largely to blame for the current high state of fuel bills. 

Panorama didn't actually examine the thorny issue of whether energy efficiency can help keep bills lower - we heard no more about energy efficiency. Instead, energy academic Dieter Helm made the case that gas prices may fall in the future, making renewables relatively more expensive. The unstated assumption - which Helm has  frequently promoted - is that indigenous production of shale gas will be the cause of that. Fair enough - it's a point of view. Both a  UK Parliamentary Committee which looked into the question and  DeutscheBank have concluded that shale gas is unlikely to have a dramatic impact on gas prices in this country, but we did not hear from them in the programme.

Identifying a polemic

Last night's Panorama was an accomplished piece of polemic. It started with a thesis, and setout to find the arguments to prove it.

Some reasonable points were made, and some interesting questions hinted at - should we be persuaded by DECC's argument that energy efficiency measures will help restrain price rises in the future, for example.

But arguments against the views of the experts and reports cited were given no space, or not even identified. The programme's conclusion was made abundantly clear from the start, with extensive use of dire warnings about the cost of green technologies, and scenes set in gambling dens.

In this context, the meaning of the figures we've mentioned (which we can't interrogate, and viewers certainly wouldn't have been able to at the time) was not made clear. The failure to be clear about the role that gas prices in particular have played in driving costs to consumers up is hard to understand. There's taking a particular line on something, and then there's just missing a huge chunk of the story.

Polemic is hardly unusual in politics, and energy politics is no exception. But when other media sources (in particular the Daily Mail group) have been so successful in producing it, we find ourselves wondering if this is really what we need from the BBC's flagship investigative reporting programme. Pehaps a more genuinely discursive programme on rising energy costs and energy policy would have been a more useful contribution.

UPDATE 9th November, 1pm: The presenter of the programme, Tom Heap, has responded to criticisms of his programme on the Guardian website. It is also worth looking at start of the comments section, where Damian Carrington has written a response to his piece, clarifying where they disagree.  

UPDATE 29th November: Citibank came back to us with an explanation of their position on 10th November. They said: "Our actual position is that meeting the 2020 targets could add between 30% to 50% to household fuel bills. Panorama did their own calculations around that." We asked them for some further explanation on where their figures came from, but to date have received no reply (apologies for the delay in writing this update!). 

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