Energy bills to rise £500 due to low carbon plans – or more likely not

17 Dec 2010, 13:41

You hear a lot about politicians trying to spin a story, but it is not just our political leaders who are adept at the dark arts spin. Journalists are pretty good at it too.

Yesterday, the Telegraph reported on the government's electricity market reforms under the eye-catching headline: "£500 on electricity bills to pay for green energy".

The strap line went further still: "Electricity bills will have to rise by up to £500 a year to pay for a new generation of environmentally friendly power stations, it emerged."

You had to read to the fourth paragraph to discover that the £500 projection comes not from the government, but the price comparison website uSwitch. It is also at this point that you find out the Department of Energy and Climate Change (DECC) disputes the figures. Although "disputes" does not really do it justice; as anyone looking at the government's proposals knows, it is predicting the reforms will lead to an increase in electricity bills, not energy bills, of £160 by 2030. Moreover, that increase is expected to be £30 lower than what would happen if we continued under the current market framework.

What the Telegraph story does not tell you is that the £500 figure to which it gives such prominence comes from a report released by uSwitch on Monday 22 June, 2009 – that's right, it is 18 months old.

The report – which is clearly designed to put the fear of God into customers and encourage them to look at ways of reducing their energy bills, perhaps using a price comparison website – is itself based on a combination of an Ernst & Young report from 2009 predicting the UK will need to invest £233.5bn in its energy infrastructure over the coming decade and projections based on the energy price rises experienced over the past five years.

The £500 figure, which covers both electricity and gas bills, appears to have been reached by looking at total investment costs and dividing them by the number of households in the UK with a modest adjustment made for the fact we are already investing to some degree in renewable energy.

In fairness to uSwitch, a spokeswoman for the company was quick to acknowledge the report is indeed 18 months old and that the firm has not analysed the latest market reform proposals. She also admitted uSwitch's latest projections suggest more modest energy bill increases of £450 by 2020, before adding that the huge level of price volatility in the market make any forward-looking projections difficult.

She also revealed uSwitch did not push out its old report yesterday. A Telegraph reporter requested it.

Chris Huhne is an experienced enough political operator to know how the world works, but if I was him I would be furious at the way these important reforms are being spun as costly and damaging.

The simple fact is energy bills will increase over the next 20 years regardless of whether we shift to a low-carbon economy or not. What the government's proposals help to do is reduce price volatility, insulate the UK against future spikes in the price of fossil fuels, enhance energy security, and reduce costs in the long run. All of that is acheived even before you begin to consider the central fact that we must cut greenhouse gas emissions – you can be opposed to the scientific consensus on climate change and still support the thrust of these reforms.

Next year will require a serious debate about the future of the UK's energy market, and there is plenty in the government's proposals that deserve close scrutiny (in particular, will the Green Deal really deliver the promised energy efficiency savings for households and can the capital required for new infrastructure be raised?).

But it will be impossible to conduct a mature debate against a backdrop of energy bill scare stories based on the misreporting of outdated figures.

  
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Previously known as the BusinessGreen Blog, James' Blog features musings, observations and occasional rants from BusinessGreen editor James Murray

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