‘Green’ bill rises: what the papers say

  • 23 Nov 2012, 11:30
  • Carbon Brief Staff

Details of the UK's new energy bill have been published, with an announcement that £7.6 billion a year will go to fund low carbon energy, which the government will fund from household energy bills. Here's our rough roundup of all the media interpretations of how much this will cost consumers, and where we think the numbers come from.

BBC environment correspondent Roger Harrabin cites two estimates for how much the £7.6 billion will add to household energy bills. He reports a DECC estimate that the measures will add £95 a year, or seven per cent to an average energy bill by 2020 - although Harrabin notes "some analysts think it would be more".

That apparently includes the government's decarbonisation advisor, the Committee on Climate Change, which apparently thinks it would add about "£110 to the average household energy bill by 2020."

Other media outlets have all come out with rather different assessments of the likely impacts on bills.

Here's what the papers say:

The FT writes:

"Mr Davey said the costs that some newspapers were reporting were "utter rubbish" and that it would only cost £20 a year per household in 2012, rising to just under £100 in 2020."

The Telegraph reports the same DECC £95 estimate for additional costs to consumers by 2020, but the headline reads: 'Wind farms to increase energy bills by £178 a year'.

However, the article itself 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, with the contribution to nuclear and renewables making up £95 by 2020"

Setting aside for a moment the fact that the Telegraph headline wrongly attributes the cost to wind power only, we contacted the Telegraph to find out where the £178 figure came from.

According to the Telegraph the figure comes from an estimate of how much all green measures will add to household bills that DECC released in 2011, coupled with figures Ed Davey quoted this morning on the publication of the bill.

The Telegraph also suggests that some of the confusion may have stemmed from DECC not putting their own estimate of bill rises into their press release, and notes DECC's argument that their policies will result in a net reduction in bills:

"Officials have not yet worked out how much the deal will cost households and businesses... They claimed that bills would rise by £245 a year without these policies, which reduce dependence on gas prices."

The Mail also quotes the £178 figure, but it also says:

"Electricity bills could rise by £75 a year by 2020 to fund a new generation of wind farms and nuclear reactors, it emerged last night"

"And by 2030 annual bills will go up by an estimated £178 under all the Government's green and fuel poverty policies."

As far as we can tell, the £75 figure here is based DECC's estimate that green measures currently account for £20 in the average household energy bill - the Mail has subtracted this sum from DECC's £95 estimate, to give a £75 rise.

The Guardian, meanwhile, writes:

"Energy firms will be allowed to triple the amount of money they add to customers' bills to pay for renewable power, nuclear and other environmental measures [...]"

"[...]the total amount energy suppliers can add to domestic and business bills will rise from £2.35bn this year to nearly £10bn at the end of this decade. Adjusting for inflation that would be worth £7.6bn in today's prices, an increase of nearly three times."
"Based on government estimates that green measures make up £20 of the average domestic gas and electricity bill of £1,249 a year, the cost of increasing the cash set aside to pay for renewable investment would rise to about £80, or £60 adjusted for inflation."

The Independent takes a similar line:

"Based on government estimates that green measures make up £20 of the average domestic gas and electricity bill of £1,249 a year, the cost of increasing the cash set aside to pay for renewable investment would rise to about £80, or £60 adjusted for inflation."

These seem to be (roughly) the same figures that the Mail is citing, based on calculating the knock-on effects of a three-fold increase in spending on consumer bills, as suggested by the DECC press release. Oddly, though, another Independent article is headlined " Energy bills to rise by £170 a year to fund wind farms", which seems to be following the Telegraph's lead.

The Times says:

"Householders will have to pay up to £100 more a year for their electricity under Government plans to treble the levy on consumers to help to pay for nuclear power stations and windfarms.

"They include an agreement that the clean energy levy on households, commerce and industry will rise from the current £2.35 billion a year to £7.65 billion by 2020. The cash is set aside for investment in nuclear or renewable energy schemes.

"The current levy accounts for about 5 per cent of the average household electricity bill, which is reckoned to be £440. However, for larger family homes it is far higher and could mean the levy on electricity bills increasing from about £40 a year to £140."

Where do the numbers come from?

Again, this essentially seems to be a report of the DECC press release, with slight rounding.

It gives numbers on the Levy Control Framework (LCF), which forms the mechanism the government uses to control the total amount that can added to consumer electricity bills. The release says:

"The LCF budget is currently £2.35 billion for low carbon electricity in 2012/13.  Under the agreement announced today low carbon electricity spending under the LCF will rise to £7.6bn in real terms in 2020/21.  The final limit will be set in nominal terms on revised ONS and OBR numbers in the New Year.  On current figures this would equate to £9.8bn in 2020/21."

Updated 1.20pm - EnergyUK had told us that the figure that low carbon energy funding would add £178 to household bills by 2030 reported in the Telegraph came from an unpublished report they were finalising. They have subsequently told us that this is not the case, and the Telegraph have confirmed that the estimate actually came from its own calculations - based on a 2011 DECC's estimates of how much all environmental measures will add to household bills by 2030.

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