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£100 or £1000? The Times and the Telegraph interpret Energy Bill figures in very different ways

  • 23 May 2012, 15:00
  • Robin Webster and Ros Donald

Journalists' gnawing desire to put a number - any number - on the cost to households of the UK's new draft energy bill has led to some peculiar results.

Today, in two pieces of reporting based on the same set of figures, the Times and the Telegraph come to wildly different conclusions on the matter, with the Telegraph deciding domestic electricity bills will go up by £100 a year, while the Times goes all out for a doubling of household electricity bills to £1000.

The short version? We think the Telegraph piece is accurate, and the Times piece is not.

For the backstory, rewind a couple of weeks to when the Telegraph's political correspondent Rowena Mason wrote that the government's draft energy bill, which the Department of Energy and Climate Change (DECC) announced yesterday, would add £200 to consumer electricity bills by 2020. This assessment was based on figures from an earlier  white paper.

But, as we pointed out, the figures the Telegraph were referencing actually showed government predictions of what would happen if no new policies were introduced - not the scenario if they were.

We didn't hear anything back from the Telegraph, but presumably someone read our email because this morning the paper has reported that the government believe the effect of the policies will be to add £100 to electricity bills by 2030. We think this is an accurate description of what DECC says.

This sort-of-correction is particularly welcome, as the Telegraph repeated the inaccurate £200 figure yesterday in the run-up to the release of the draft bill - and the number even made it onto the BBC's Today programme with presenter John Humphrys quoting the £200 estimate at Energy Secretary Ed Davey during yesterday's centrepiece 8am interview.

But even as the Telegraph is getting its reporting of government figures right, the Times appears to be getting it wrong, suggesting in the headline of an article on page 35 of today's paper that £1000 will be the price consumers pay for "clean energy".

Needless to say, although when you look at this closely the Times mean that an electricity bill will rise to £1000, this is still a significant advance on the Telegraph's £100 increase. Yet, remarkably, it looks to have been calculated from the same source: Table 6 on page 280 of the government's Draft Energy Bill:

Screen Shot 2012-05-23 At 14.29.41

This is DECC's explanation of what this shows:

"The impact of the [energy market reform] EMR package on domestic bills, relative to the baseline, is shown [...] under central DECC  assumptions. The analysis shows that household electricity bills after the implementation of Electricity Market Reform are expected to be, on average, four per cent lower than they would have been without the reforms in place over the period up to 2030."

The first column - 'typical baseline bill' - refers to the government's 'baseline' figures - its projections for what happens if the measures in yesterday's energy bill are not introduced. The second column shows what it thinks the impact on domestic energy bills will be if the measures in the energy bill are introduced.

Here's how (we think) the two papers create such wildly different interpretations:

Rowena Mason's piece in the Telegraph says that electricity prices are due to rise from £573 now to £669 by 2030, a rise of approximately £100.

Where do these numbers come from?

£573 is the 'typical baseline bill' now. £669 comes from taking the baseline bill in 2026-2030 (£785) and subtracting 14.8% - to reflect what DECC says will be the impact of new policies. This gives you £669. So as far as we can see, the Telegraph has (now) read this table correctly.

It looks like Robert Lea, the Times's industrial correspondent and the man behind the £1,000 figure, looked at the same numbers:

"Latest Energy Department figures, identified by The Times, reveal that the average domestic electricity bill - £493 in 2010 - will have risen to £785 by 2030. Factoring in inflation at the Bank of England target of 2 per cent per annum, the average bill will probably double to £1,000."

In fact, the £785 figure is from the 'baseline' column of the DECC chart, so it's actually what the government predict bills will be without the new policies. So basically, the Times is quoting government figures for what happens if the energy bill is not introduced. Ironically, this is exactly the mistake the Telegraph appeared to make last week, although its headline wasn't as good.

The Times then ups the game by considering inflation, to end up with a neatly rounded £1,000. DECC told us that its figures are quoted in 'real terms' so that they are directly comparable to current costs. In other words, the price of milk, the cost of a copy of the Times, and everything else will have gone up by 2030 due to inflation, but (hopefully) so will your wages. So you're already essentially comparing like for like without adjusting for inflation.

The Times presents this figure under the headline:

"The price to be paid by every household for clean energy - £1,000 per year"

Even if the figure it's quoting was accurate, (it is not), this headline is misleading in two ways. First, because £1000 is its calculation of consumers' total electricity bills in 2030, not the amount they are expected to rise by when the legislation is enacted. (The clear suggestion of the headline is that consumers will pay £1000 extra for clean energy.) Secondly, because "clean energy" is only one reason for the rise in costs DECC is discussing in Table 6.

As DECC told us a couple of weeks ago:

"The increase in the baseline average bill captures globally higher gas prices leading to higher electricity price, rising network costs and the impact of climate change and energy policies.

Phew.

An important point here is that everyone - including DECC - knows that making these kind of predictions is only ever going to be an incredibly broad-brush exercise. This is probably why we've noticed an increasing tendency for DECC to talk about bills being relatively lower in the future, without giving exact numbers.

However, it's clearly the case that if the media are reporting what the government says, they should make sure they understand what the government says - and report it accurately.

Finally, we said that untangling the way that journalists have reported the energy bill was going to be complicated. Seems that assessment was pretty much right.

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Update: 6pm - DECC have emailed us saying that the Telegraph's article is not a totally accurate reflection of their position.

They say the figures suggest prices will be driven up by a combination of factors, including the cost of green measures, rising gas prices and network costs. This could drive prices up by up to £200. However, they say that policies specifically contained with the Energy Bill will have an effect to reduce prices, so that the net rise is around £100.

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