Will the Energy Bill really add £178 to fuel bills? Dissecting energy bill numbers

  • 27 Nov 2012, 14:33
  • Robin Webster

"Wind farms to increase energy bills by £178 a year" announced the the front page of Friday's Daily Telegraph - adding in a subheading that the price rise will occur under a deal just struck over the government's new Energy Bill. Since then, other newspapers seem to have used the figure to suggest that the government's new energy bill will add around £170 to bills. So is this correct?

The Telegraph article followed an announcement from the Department for Energy and Climate Change (DECC) that the government will be publishing the energy bill this week. The legislation contains provisions to increase the amount of energy the UK gets from renewables and nuclear power.

The Telegraph searched out a figure for how much government policies will add to bills: £178. A closer look shows:

  • The claim that bills will go up by £178 over the next two decades is based on figures from DECC which are a year old. The figures do not refer specifically to the impact of the measures in the energy bill;
  • The extra £178 DECC calculated is due to a range of factors, including rising gas prices over the next two decades - it's not solely attributable to climate and energy policies.
  • The same figures show DECC believes energy bills would go up by a greater amount without new energy and climate policies;

The price rise is not attributable solely to subsidies for wind farms, as the Telegraph's front-page headline claims.

Given all these considerations, it's perhaps unsurprising that other newspapers mistakenly started to warn of a bill hike of around £170 as the result of the new energy legislation.

Let's take a look at the details.

DECC's announcement

Last Thursday night, DECC announced details of the forthcoming energy bill, designed to revamp the UK's energy system.

It's worth noting the bill's measures don't encompass all of the government's energy and climate change policies. No energy efficiency measures are included in the bill, for example.

The government press release on the energy bill wasn't very informative on the subject of how much DECC thinks the energy bill is going to cost consumers. The only hard number in the press release says it is limiting consumer funding for renewables by 2020 to £7.6 billion. A spokesperson for the department told us it thinks the cost of support measures for nuclear and renewables on household bills will rise from £20 in 2011, to £95 in 2020.

The Telegraph article gives DECC's figures another airing

The Telegraph quotes this £95 figure, but it also cites an estimate for the impact of policies on bills by 2030. The article says:

"Bills will go up over the next two decades by an estimated £178 a year under all the Government's green and fuel poverty policies..."

We contacted the author of the article, political correspondent Rowena Mason. She told us that the figure is from DECC's most recent assessment of how much bills will rise under all energy and climate change policies by 2030. The report was published in November 2011.
Indeed, this table shows DECC projected that household energy bills will rise by £178 between 2011 and 2030, under its "Bills with policies" scenario:

 Screen Shot 2012-11-23 At 15.34.40

Source: Table 1, Estimated impacts of our policies on energy prices & bills November 2011, DECC, 2011

The scenario assumes DECC enacts its low carbon policies. However, these figures aren't attributable to the impact of climate and energy policies in isolation. The £178 figure includes a variety of factors increasing energy bills, including the cost of wholesale gas and upgrading the network grid. Climate and energy policies don't account for the whole amount.

The Telegraph article: poorly headlined

The Telegraph article describes these figures carefully - saying that bills will go up by 2030 "under all of the Government's green and fuel poverty policies". The piece also flags DECC believes that bills would go up by more - £245 - if those measures were not introduced.

But given the headline of the piece, it's easy to misread the text and conclude that a predicted price rise "under" all of the government's energy and climate change policies will occur directly as a result of them. In an article published as the energy bill is announced, it might also be easy to assume that the figures refer to the cost impact of the  new legislation - even though this would be a mistake, as the main article text does not make this link.

The article's headline and sub-heading could also mean that readers are more likely to misread the article than not - despite the caveats in the text, the headline and sub-heading give a different message. The headline is:

"Wind farms to increase energy bills by £178 a year"

And the sub-heading adds:

"Energy bills are poised to rise by up to £178 a year under a deal struck between [Chancellor] George Osborne and the Liberal Democrats to pay for a series of wind farms and nuclear power stations."

This gives the impression that the figure is a result of wind farm subsidies - which is not accurate - and that it has emerged from negotiations on the energy bill. This is not right either - the DECC scenario the figure is taken from is a year old and was created long before the current energy bill wrangling.

A new number for the energy debate

The estimate that household energy bills could rise by "about £170" has appeared in other newspapers over the last few days - including the Daily Mail, the Independent and the Sunday Times. It seems likely that these are sourced from the Telegraph article.

The Independent
is the only outlet to lay the blame on wind farms. All the other newspapers, implicitly or explicitly, lay the blame at the door of the energy bill. This week, for example, the Sunday Times uses the figure of £170 in a briefing about the energy bill. It says:

"The measures are expected to lead to a rise of £110 in the annual energy bill of the average household, though some estimates say it could be as much as £170."

And in another article, the Telegraph writes:

"[I]t emerged that energy bills are poised to rise by up to £178 per year to pay for a series of wind farms and nuclear power stations."

Confusion over what the figures in this article refer to appears to have launched a new, misleading number into the energy debate, as other newspapers pick up on the Telegraph's carefully described estimate - and somewhat less careful headline - and link it to the energy bill.

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