Electricity prices to rise 25% because of green measures say CCC - impact on bills less clear cut
- 15 Dec 2011, 14:34
- Robin Webster
Household energy bills are on the news agenda today, as the Climate
Change Committee release a short report into the impact meeting
the UK's carbon budgets will have on household energy bills. In
response, the anti-'green stealth tax' campaign have had to do some
quite inventive reporting - apparently cherry-picking figures that
apply to less than 1 in 10 UK households.
The CCC press release is titled: "Household energy bill increases
caused primarily by rising cost of gas, not environmental
policies", and so they are in agreement with recent analysis from
both energy regulator
Ofgem and DECC
that bill increases have more to do with gas price rises than green
policies.
The CCC say that between 2006 and 2010, green policies added
about £75 to bills, while rising gas prices contributed around
£290. In the future, the Committee estimate that green measures
will add a further £110 to bills by 2020, and that the rise in the
price of gas will again be more significant, adding £175.
In total, by 2020, the CCC predict green measures will add around
£190 to an average bill (£130 from measures to support greener
power, £60 to support energy efficiency measures in homes), and
will make up 16% of the total bill of £1250.
They
conclude:
"The Committee's finding therefore
disprove often repeated claims that recent bill increases are due
to environmental policy costs, and that major investments in
low-carbon power capacity will drive dramatic bill increases over
the next decade"
The Mail story focuses on electricity bills rather than energy
bills as a whole, and is headed:
"Electricity bills to rocket by 25%
because of 'green' targets, says Government"
However, the Climate Change Committee don't predict that
electricity bills will rise by 25%, either overall or as a result
of green policies, and they aren't the Government - they are a
separate advisory body, headed by Lord Turner.
The 25% comes from page 17 of the CCC report, and is detailed more
precisely in the article:
"In total, 'green' measures will add
23.8 percent to the price of electricity"
The CCC say:
We project an electricity price of 17.8
p/kWh in 2020; this is a 5.2 p/kWh (40%) increase on 2010 levels.
Of the increase, 1.5 p/kWh is due to the increasing wholesale
energy (i.e. gas) prices, 0.5 p/kWh is due to increasing
transmission and distribution costs, and 3.0 p/kWh is due to
increasing low-carbon policy costs
If current levels are 12.6 p/kWh, 3 p/kWh is roughly a 25%
increase in electricity price.
The Mail also notes:
The CCC's report suggests that people
whose homes are heated by electricity will see their average bills
rise from about £1,500 to £2,100 in 2020 … Around £400 of the
projected increase is directly related to 'low-carbon
measures'.
Initially, it looked to us like this is where the 25% figure
came from, as £400 of £1600 is about 23%, and this is discussing
impact on electricity bills, rather than prices. This figure
is contained in an annex to the main report titled "Assessment of
non-typical households", which discusses impacts on those who use
electric heating.
The Mail notes that this is for households which use electricity
only. So a 25% impact on electricity bills is only predicted
in the CCC's research for one in ten households.
It's worth noting that the CCC have engaged in a bit of spin of
their own. By focusing on the fact that green measures will add an
additional £110 to bills by 2020, the CCC make it less than clear
that the total amount, including the impact of measures which are
already in place now, will be £190. And you wouldn't know this from
reading the Telegraph's headline:
Green policies to add £110 to energy bills.
As a footnote, perhaps the most interesting bit of the report is
where the Committee take a detailed look at the likely impact of
energy efficiency policies on bills. The Government predict that
energy efficiency measures will reduce household consumption, and
mean that in 2020 bills will be lower compared to what they would
be without government intervention.
Such predictions have been met with widespread scepticism from all
sides of the political spectrum. The CCC's report highlights the
different opportunities for reducing electricity consumption
(particularly of more efficient products) and suggests that
overall, if they are implemented, energy bills in 2020 will be
broadly at 2010 levels.
They caveat this with the statement that "However, the Committee
stresses the need for new policies with strengthened incentives in
order to encourage energy efficiency improvement."
Updated 20th December 2012 following explanation of how the
figures in the article were calculated from the Mail
group.