Did British Gas really ignore gas when talking about energy bills?
- 24 Feb 2012, 14:26
- Christian Hunt
British Gas told the Sun's City desk today that
"government eco charges" are to blame for rising bills. But which
bills does it mean?
The Sun writes:
Chief executive Sam Laidlaw said
Government eco charges and taxes now account for 15 PER CENT of
every home's power bills.
Some media outlets have made much of
incorrect claims about the impact of green
costs on energy bills, but Laidlaw's comments here are accurate -
albeit with one rather important caveat.
Which is: Mr Laidlaw refers to 'power' bills. In energy geek
world, this means electricity bills, rather than the combined
electricity and gas bills which most people pay.
The effect of green policies on a combined electricity and
gas bill is significantly less than 15% - it's around 7%, according
Confusing energy bills with electricity bills produces
headlines like the one we fact-checked
in the Mail earlier in the week, which incorrectly
stated that 15% of an entire energy bill is made up of green costs.
It meant 15% of electricity prices.
According to figures from parent company Centrica, gas
accounts for about 54% of an average British Gas customer's bill.
In the context of a discussion about costs to consumers, talking
about electricity alone seems quite odd - only
1 in 10 households rely solely on electricity
for their energy needs.
We suspect that the distinction between 'power' and 'energy'
will probably pass most readers by, and the result of that will be
for plenty of people to take away the suggestion that 15% of energy
bills are made up of green costs - that's how we read it first time
We don't know whether it was Laidlaw or the Sun who chose to
focus on 'power', but the end result is an article which, while
technically accurate, is weirdly also probably
In more technical documents, Centrica appear to accept that
overall about 7% of an energy bill is made up of 'social and
environmental costs', as the government label them.
preliminary results released yesterday state
that 19% of a British Gas electricity bill and 10% of a gas bill is
made up of "Government obligations and taxes inc. green levies and
social support" (p.30). Their press office confirmed that this is
an aggregate figure which includes VAT at 5%, so knock that off and
you basically have the DECC numbers.
It's worth noting that although British Gas lay the blame
for rising bills on "eco tax", the Sun notes that a major component
of higher bills is that their gas rates went up by 18% last year.
Why was this? As we have noted before, it's largely due to the
rising price of wholesale gas, with Ofgem recently
Higher gas prices have been the main
driver of increasing energy bills over the last eight years.
Finally, Mr Laidlaw apparently warned that
"environmental costs could DOUBLE to
£160 per household per year by 2015."
As we have noted in the past, statements about future
costs are difficult to unpack, unless you have information about
the assumptions. Centrica said that this was based on internal
calculations, and that it would send us more information. We'll
update the blog when it does.