Fuel Poverty: has the shilling dropped?

It seems that the light is beginning to dawn.  A press headline from August 4th reads “Reforms to add £300 to energy bills“.  Consumer groups have warned that this increase could be “the last straw” for hard-pressed households.  The energy pricing website uSwitch.com says “seven million families could be left shivering under the spectre of fuel poverty”.

And it seems that David Cameron is listening, and is alarmed.  And so he should be — this could lose him the next election.  But the question is — why only now?  Industry sources, academics and think tanks have been pointing to the appalling effects of our “green” plans on our energy prices for many months.  We are set to give ourselves the most expensive electricity in the world.   If I can say so modestly, I’ve been banging on about it for years. Whole books have been written about it.  But apparently it takes a report from a Downing Street insider, Ben Moxham, to get Cameron’s attention.  Admittedly, Mr. Moxham has considerable expertise in this field, having worked for BP, and later for a private equity firm run by Lord Browne.  But one might have expected Downing Street to have been aware of the problem before now.

So far, Cameron’s response to the crisis has been to seek to bring down energy prices by giving more powers to Ofgem, and by increasing competition.  Chris Huhne, on the other hand, pins his faith on energy-saving measures by householders — as though some extra loft insulation could counteract price rises of 30 or 40%.

These “solutions” are simply whistling in the wind (a slightly more robust metaphor comes to mind, but is unsuitable for family reading around the fireside).  It is fiddling at the margin, while energy prices continue their relentless escalation.

Apparently DECC, the Treasury and the Department for Local Government are going to get their heads together to see what can be done.

I don’t imagine for a moment that Cameron’s aides are chewing on their fingernails in anticipation as they await my advice, but I shall offer it anyway.  First, we have to abandon this lunatic race for wind energy.  It can’t be said too often: wind energy means we have to make the same investment twice over: once for the turbines, and again for the conventional back-up (probably gas).

So the alternative strategy is:

1  Cancel the wind turbines

2  Build gas-fired capacity for the medium term

3  Tell the EU that we are unable to implement the Large Combustion Plant Directive, and that we will not close down our coal-fired power stations.  Add that we will not entertain any fine or penalty for being in breach of the directive.

4  For the long-term (ten years plus), build nuclear power stations (and keep building them until they can supply say 50% of UK capacity, against less than 20% today).

There will still be high costs for new investment, but at least the investment will deliver competitively-priced energy.

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7 Responses to Fuel Poverty: has the shilling dropped?

  1. Alfred says:

    “But the question is — why only now? “ The answer is that the public is waking up. As you suggest, many have known about this for a long time, but it is only now that it seems to be affecting re-election prospects. Also Cameron is only now waking up to the 2005 directive about agency workers.

    This is sadly par for the course. Try to ignore the EU until it looks like the electorate is actually waking up and might vote against you.

    I am totally disillusioned with the Conservative Party. It seems to lie and deceive more even than the last government which itself hit new lows in lies and deception. The Conservative leadership seems only to be interested in retaining power, certainly not in serving the people.

    It is well past time for all thinking people to leave that particular sinking ship.

  2. maureen gannon says:

    I left it when Cameroon made the speech in Scotland calling people I consider patriotic, as Little Englanders, he butters up to the coalition ideal believing this will keep him in No 10.

    {I wasn’t driving} Hulme is a main investor in wind turbines maybe thats his sweetener to keep him on-side,

    As a pensioner there is no way I could afford a hike of that magnitude to stay warm. I really do believe the whole system has been corrupted by not the ferrel underclass. but the people who through self interest are selling us down the river, and in the main spend their working lives in a cacooned village called Westminster, I will think of them in the cold, as if one takes notes of nature the berries and acorn are thick in growth usually a bad sign, still maybe if they kill a few thousand of us off with hyperthermia save them money , for their inflation safe pensions nice work if you can get it.

  3. Rozza says:

    Roger, after some back of the fag packet maths that I’m sure you would approve of, I figure that in 2020 my bills are going to be more £100 more expensive in 2020 under the current system.

    Given that the bulk of my total bill already goes to the gas companies, can you guarantee that it will improve matters if the nation follows your advice and invests in more gas as supplies dwindle?

    What percentage of these green payments would you scrap given that the Moxham report notes that the payments are split between energy conservation and efficiency and subsidies to encourage the development of renewable energy?

  4. Pingback: Will Conservatives finally accept Cameron and Europlastics have deceived them over EU? « Autonomous Mind

  5. Peter Hulme Cross says:

    “Fuel poverty: has the shilling dropped?”

    The short answer, Roger, is NO.

    Cameron will not heed your advice, despite its undeniable logic. He is too wedded to his “green” policies which he actually believes in. It would also spoil his image and that of the Conservative Party. Remember “Vote Blue, Go Green”

    Labour wouldn’t heed your advice either. They were responsible for the Climate Change Act 2008.

    Nor would the Lib Dems who believe in the Climate Change targets set by the EU which these policies are designed to achieve.

    Conclusion: despite being a so called democracy, there is absolutely no person or Party to vote for who has any Common Sense or who actually cares about the voters or their concerns.

  6. Lazarus says:

    ‘A press headline from August 4th reads “Reforms to add £300 to energy bills“. ‘

    Ain’t it lucky truly sceptical people don’t believe all they read in the press. The Telegraph has published Moxhams letter as the source of this erroneous claim and it is clear that their reporter wouldn’t have even got a D- in GCSE maths and I’m disappointed that you fell for this and didn’t even bother to check primary sources but I suppose by the end of the misrepresentive article you has seen all that you wanted to. As a MEP representing me you really must do better.

    Ben Moxham’s letter is actually a brief report and analysis of the DECC’s (Department of Energy and Climate Change) assumptions.

    It determines that ‘Policy costs currently make up around 10% of the average household energy bill’ and this proportion will rise. But it makes no determination if this rise will actually lead to higher costs for the consumer because as well as relying on overall policy, it all depends on the future wholesale price of gas. The letter said;

    “Turning specifically to gas, if one were to assume low gas prices in 2020, the cost of policies to encourage more nuclear and renewables would be high – since it would turn out cheaper not to pursue these policies and to instead to be more reliant on gas. On the other hand, if one were to assume very high gas prices in 2020, being more reliant on nuclear and renewables could conceivably make consumers better off compared to the alternative of greater reliance on gas.”

    There are two things to understand about the above paragraph;

    1) It is not talking solely about ‘green policies’ as the Telegraph claims. It is also talking about nuclear. So to claim that any resultant price rise is because of green policies when most environmentalists would baulk at the thought of nuclear is misrepresentation.

    2) We need to know what price of future gas DECC has set. If it is too low then it will look as if any policy change will cost more than doing nothing and if it is too high it will be too optimistic about costs. Moxham gives us the answer; ‘DECC’s analysis is based on a mid-case gas price counterfactual, assuming a gas price broadly consistent with today’s forward prices’

    So the analysis, on this point, seems to be accepting that Huhne’s department has made realistic and reasonable assumptions about ‘a significant factor behind the household energy price’.

    “The letter also states ‘Our policies would have a relatively small impact on household gas prices
    Our policies would increase household electricity prices by 25% in 2015 and 30% in 2020 compared to what they would have been in the absence of policies.”

    So it is clear that the price increases are only referring to electricity prices because there is ‘a relatively small impact on household gas prices’. The letter also helpfully gives us a break down of ‘the average household energy bill’ which is ‘£1,059, made up of £591 spent on gas and £468 spent on electricity’. So simple schoolboy arithmetic can calculate a 30% rise in electricity (for 2020).

    30% of £468 is £140.40. Where does the Telegraph get an increase of £300 from? Well it looks as if they cant comprehend the letter and used the whole £1,059 bill. What are the chances of them ever admitting to this schoolboy error and correcting the value? Then again ‘more than £300 a year as a result of the Coalition’s green policies’ sounds a lot better than admitting to half that for an energy policy that includes nuclear.


    You really must try harder Mr Helmer, C-.

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