A new winter of discontent: The continuing controversy over energy bills
The coldest spring in half a century has made energy bills the hottest topic of the season. But the heat has shifted in recent days, from rising gas prices in the face of supply shortages, to the cost of green and energy saving measures such as wind power and loft insulation.
The focus on the green contribution to energy bills has intensified this week following the launch on Sunday of the Powerline lobby group, whose manifesto is light on detail but which essentially believes an over-reliance on wind energy is pushing electricity prices far too high and heightens the threat of blackouts.
Powerline, which is led by former British Energy commercial director Philip Stephens, is arguably raising more questions than it answers. It has failed to identify its backers and does not give a source for an alarming graph suggesting that 40 per cent of our current energy supply is at risk over the next five years thanks to carbon taxes.
But the fact that Powerline has made such big waves with so little cargo only serves to underline the void left by a government that is unwilling to acknowledge the full cost of low-carbon power in the face of widespread opposition to rising energy bills.
Hopes that the government may be about to close the void were raised a fortnight ago when it announced its intention to be “open and transparent about the impacts of our policies on the cost of energy for consumers” and published a 97-page report breaking down the likely path of household energy bills over the next two decades with forensic precision.
However, while the government’s intention might have been noble – to explain why rising utility bills are inevitable, to quantify the elements behind the increase and to help customers minimise the financial damage – many experts feel that it essentially “chickened out” of presenting the true picture.
“The government is very fearful of pushing through extra green charges at a time of austerity and so it tried to put the costs in a positive light. But by doing this, it was being disingenuous, sending mixed messages when there is a need to be clear about the message they are portraying,” said Andrew Horstead, of the energy consultant Utilyx.
Essentially, the report forecast that costs associated with “energy and climate change” policies such as subsidies for renewable power generation and carbon taxes would jump from £112 this year to £286 in 2020 – that’s an increase of £174, or 155 per cent. But with the government already under the kosh about rising energy bills at a time of austerity, it attempted to sugar-coat that piece of bad news with a claim that many experts find to be dubious.
The government attempted to re-cast the “green issue” as being good for bills, arguing that it could actually be a benefit rather a cost, so long as households take a series of measures. These include replacing old tumble-driers, fridges and other gadgets with newer, more energy-efficient, models, insulating lofts and walls and installing wind turbines and solar panels.
The government claimed that green measures had the potential to knock £452 off the average annual household energy bill by 2020 – more than offsetting the £286 increase from the other green costs.
This enabled the government to claim that green concerns would ultimately result in annual energy bills being £166 lower in 2020 with them, than without them. However, bills would still be considerably higher then than now because of rising wholesale energy costs, a far bigger driver of prices.
The government’s decision to offset what experts see as optimistic estimates of the theoretical benefits of households taking expensive, inconvenient actions to become greener – against the actual and calculable cost of clean energy measures – has raised a few eyebrows.
“My concern with this report is that it’s making a very high assumption about the level of energy efficiency at the domestic level. By saying bills will be £166 cheaper because of energy and climate change measures it puts a spin on renewables,” said Mr Horstead.
“Instead of hiding behind the fact that energy bills are going to rise, the government needs to do more to get the real message out. Consumers need to be made aware that bills are going to go up and there is only so much that government and suppliers can do. They must take control and ask if they need numerous tvs and iPads,” he added.
Critics of the government’s green-benefit campaign say it discriminates against the poorer consumers at a time when 5m UK households are already in fuel poverty – meaning they spend more than a tenth of their income on adequate heating – because it would cost thousands of pounds to introduce the measures they recommend.
Early reports suggest that the much-trumpeted Green Deal has had little impact since it launched at the end of January. This scheme involves lenders giving customers loans to finance energy-saving measures such as a new boiler or solar panels which the borrower (technically the house rather than the householder) repays over the next 25 years through higher electricity bills. However, the initiative has reportedly got off to a sluggish start amid criticisms that awareness of the scheme is low, the interest rate is relatively high and that a more than £200 assessment and set-up charge is putting people off.
To be fair to the government, it is in an extraordinarily tough spot. The country needs an estimated £200bn of investment by 2020 to transform its aging energy infrastructure into a clean, secure and reliable system against the very real threat that it will fail and the lights will go out. As part of the major energy reconstruction project, Britain must increase the percentage of electricity it generates from renewable sources from 11.3 per cent to about 30 per cent.
The government can’t possibly afford that level of investment, which means that the consumers must foot the bill through subsidies and other charges that feed through into higher bills. The trouble is, the extra cost couldn’t have come at a worse time for customers who are feeling the pinch after a prolonged period of austerity.
Thus the government dances around the subject in an energy charade.
Amid all the talk of austerity and triple-digit recession, it’s worth remembering the bigger picture. Time is running out to contain global warming, while short-term pain could lead to longer-term gain if a serious low-carbon drive paves the way for Britain to become a leader in low-carbon technology.
As Professor Paul Stevens, from the Chatham House thinktank puts it: “It’s not a very popular message at the moment when people are under the kosh. But if you are taking climate change seriously you can argue that energy bills are too low.”
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