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Energy bills to rise £500 due to low-carbon plans – or more likely not
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 decided to report on the government's electricity market reforms under the eye-catching headline: "£500 on electricity bills to pay for green energy".
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
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
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.
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.
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.
Huhne is 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 mis-reporting of outdated figures.
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