Anti-wind lobby group criticises DECC's projections on energy bills - is it right?
- 22 May 2012, 16:00
- Robin Webster
A new report, which criticises the government's predictions on
the cost of renewable electricity, was featured in the
Sunday Telegraph this week.
Produced by oddly named anti-wind lobbyists the Renewable Energy
Foundation, it takes issue with projections the Department of
Energy and Climate Change (DECC) produced
last November on the estimated future impacts of green policies
on energy prices and bills.
Rising energy prices look to be here to stay. Nevertheless,
prediction in November was that green policy measures will lead
to a net reduction in energy bills of £94 in 2020 - net, because
that's compared to what bills would have been otherwise. Some
policies will cost consumers, DECC argue, but others will reduce
energy use and cut bills.
REF's report takes a less cheery interpretation of DECC's
numbers. As such, it isn't really new research, more a
reinterpretation of already-existing government figures. The main
points out is that the 'average net reduction' figure quoted
above doesn't give the full picture of how bills will change.
This is because many of the policy measures DECC believes will
reduce bills only apply to a limited number of households. These
include those with lower incomes, for example, those who are in
fuel poverty. They also apply to households that are already
benefiting from policies like feed-in-tariffs.
REF highlights that according to the DECC figures, only 35 per
cent of households will see a net reduction in their energy bills.
In contrast, 65 per cent will see a net increase. This argument has
been made before - REF's conclusions tally more or
less with those of free market think tank Policy
Exchange and this piece in
the Guardian - but it is a good point that unpacks the averaged
stats, and bears repeating.
The REF report also devotes considerable space to criticising
the government's predictions on savings from energy efficiency
measures. One area it looks at in particular are the savings driven
EU Products Policy, which is the label given to European
legislation that sets legally binding minimum energy efficiency
standards for electrical equipment.
anticipates that EU Products Policy will cut £158 from the
average domestic energy bill by 2020 - and this makes up more than
two fifths of the amount it thinks energy efficiency measures will
save an average household.
REF is sceptical about whether the savings will be delivered. In
particular, it points out that the legislation driving one third of
the savings in question - under the second 'tranche' of the
legislation - has
not yet been negotiated by member states. Given the sometimes
tortuous rate of negotiations in Brussels, this could create a
genuine uncertainty over a portion of DECC's predictions.
Finally, the REF report accuses DECC of spinning what's going to
happen, and being unduly optimistic. Given that predicting the
future on these issues can be a somewhat murky enterprise, this is
perhaps hardly surprising.
But of course, REF is not immune to a bit of spinning itself -
press release says the report
"...shows that the UK's energy and
climate policies will be responsible for major increases in the
retail price of gas and electricity in 2020, with percentage
increases for electricity ranging from +27% for domestic households
to +34% for medium-sized businesses and, for gas, +7% and +11%
But REF didn't calculate this - these numbers are actually
DECC's own estimations for gas and electricity prices (see
tables p.26 and 3.38).
In the Telegraph, this is phrased as:
"REF [...] estimates that electricity
prices on domestic bills will rise by 27 per cent by 2020 and by 34
per cent on bills for medium-sized companies. Gas prices will rise
by seven per cent and 11 per cent respectively."
As we have pointed out before, there is a recurring confusion
in the press between 'energy prices' - the retail price of
electricity - and 'energy bills' - which are a product of prices
and how much a customer uses. If, as the government hopes, people
start using less energy, prices can go up faster than bills.
Deliberately conflating prices and bills can be a good way to
inflate numbers and get a more sensational headline. The
Telegraph's use of the phrase "electricity prices on domestic
bills" is technically accurate, but could easily mislead the reader
into assuming that electricity and gas bills will go up by those
amounts. (We had to read it twice to see what it meant.)
In order for these numbers to apply to energy bills, rather than
energy prices, energy efficiency policies would have to have no
impact at all on bills. And while it seems reasonable to question
how effective such measures are going to be, saying they'll have no
effect at all seems like a stretch.
Finally, a question. Can you dismiss a report by looking at who
produced it and funded it? Blog
Left Foot Forward noted yesterday that gas company Calor Gas
funded REF's report. Calor Gas is a subsidiary of SHV Gas
Group, a global gas company based
in the Netherlands, and which clearly has an interest in
encouraging the UK government to "dash for gas" rather than
renewables, or nuclear.
Furthermore, the Renewable
Energy Forum, which wrote the report, is the consultancy arm of
the Renewable Energy
Foundation (REF). REF
has said that any profit the Renewable Energy Forum generates
finances its work. While REF
maintains that it supports renewable energy, it is generally
viewed as an anti-wind lobbying organisation and it certainly
seems to confine
itself to expressing hostility to wind power.
The Telegraph doesn't mention any of this in its article, which
is a shame. Whilst we believe that you shouldn't use the source or
funder of a report to dismiss it out of hand, it's usually a pretty
good indicator for what the report is going to say. In a highly
contentious and polarised energy debate, unfortunately that just
seems to be the name of the game.
The framing of the REF report is: "We can't predict what's going
to happen, so it isn't going to work". A green organisation might
use the same data to say: "We can't predict what's going to happen,
so the government needs to do even more to make sure it works".
Given these different messages coming from the same numbers, it's
always useful to know who's saying them.