Want to understand energy bills?
- 24 Nov 2011, 17:41
- Robin Webster
Green tax to rise every year" blared the front page of the Mail
this morning - rather predictably - and then (in rather smaller
but don't worry, ministers claim overall bills will be lower -
because their policies will make you use less energy".
Why predictable? Because yesterday, the Department for Energy and
Climate Change (DECC) published the latest iteration of its
policy impacts document, which estimates the impact of energy
and climate change policies on energy prices and bills.
last updated in July 2010, was published alongside the
Annual Energy Statement, which Chris Huhne delivered in a
statement to Parliament at lunchtime. He also launched the
consultation on the Green Deal.
The key prediction that the government made is the rather clunky
one that, by 2020, green energy measures will, on average, lead to
a £94 (or 7%) reduction in household energy bills compared to what
they would have paid in the absence of policies. Policy
measures will, the government say, add £280 to bills; but they
also say that bills will fall by £373 as energy efficiency measures
reduce overall consumption and bring down bills. So overall, the
argument goes, £94 less.
This information was delivered in something of a PR blitz, with
full spectrum press release, some
Q&A, and even an infographic to illustrate the
There are various schools of thought on whether the government
argument that consumption will fall due to efficiency measures
stacks up, with the Daily Mail taking a very straightforward
approach - focus on the predicted £280 increase and rubbish the
rest of the government's predictions about bills falling. This is
hardly unexpected, given the Mail's editorial line. Even more
unsurprisingly, Benny Peiser of the Global Warming Policy
Foundation is cited (along with the de rigour photo of Peiser -
does the Mail have a contract with the GWPF to print this photo
every time he is quoted?) - slating the Government's predictions on
energy reduction as "not based on any sound economic facts. They
are pure guesswork.'
This is a pretty good line to take, given that in June of this
year the Mail kicked off its anti green-taxes campaign with a front-page
headline and a slew of follow up stories based on an estimate
by the GWPF that 'green taxes' are currently adding £200 to
consumer bills - a figure that has not been explained or
substantiated. The Mail subsequently corrected this figure
following a PCC complaint from Carbon Brief; and
corrected it again after the Mail on Sunday repeated the
figure. The GWPF has never backed it up. But never mind.
Leaving aside the Mail's sourcing policies, they are not alone in
questioning the Government's figures. The BBC reported the story under the
headline "Electricity costs to rise due to Government
the Telegraph reported that "Households face rising energy
bills due to green taxes" and
on Newsnight, Chris Huhne defended himself against accusations
from Jeremy Paxman on abrasive form that the proposed 7% reduction
in energy bills by 2020 were "an entirely bogus statistic".
Amongst all this however (and perhaps this is just because we're
feeling optimistic today) there are a few signs that some sanity is
returning to the debate. A few key points are emerging and
reflected in most of the media coverage:
outlined by Ofgem a few weeks ago, the Government figures
confirm that the blame for recent rises in consumer energy bills
lies not with 'green taxes', but with rising gas prices. According
to the new documents released yesterday, wholesale gas and
electricity costs represent around £600 (48%) of an average
household energy bill; and the wholesale prices of gas this winter
is around 38% higher than last winter. This is now something that
is being featured in coverage of the issue across the board, from
the Mail to the BBC.
The Government estimates that energy and climate change policies
currently make up around 7% (£89) of the average household energy
bill - or more specifically, 4% of gas bills and 10% of electricity
bills. Some Government policies are intended to help householders
save energy (including for example the
Community Energy Saving Programme and the
Carbon Emissions Reductions Target) - thus reducing their
bills. Once these are taken into account, DECC estimates that in
2011, energy and climate change policies are adding £19, or just 2%
to the average household energy bill.
Predicting energy prices is a difficult task which has a
tendency to blow up in your face. But there seem to be strong
reasons to think that energy bills are going to go up whatever
Huhne stated unequivocally yesterday that "Overall, we
anticipate that rising world gas prices will push up bills."
Advocates for shale gas like
Dieter Helm claim it will push down prices in this country, but
they are at odds with others, including the
UK Parliamentary Committee and
The Government's predictions on falling energy bills are dependent
on a high take-up of energy efficiency measures - the Government's
According to the Mail, the government figures will work out
only if electricity use by households is cut by a third by 2020.
all sides of the debate remain sceptical about whether the
energy efficiency measures proposed will really deliver that. As
said in the Mail, "'If take-up is lower than expected, energy
bills will be pushed up even further".
For anyone who wants a fairly reasonable assessment of some of the
key issues, take a look at
last night's Newsnight - which includes a thirty minute segment
on energy bills, with voices from all side.
Only one point seems to have slipped out of the debate - no-one,
anywhere, mentions climate change.