Household energy bill increases caused primarily by rising cost of gas, not environmental policies

A report out this morning from The Committee on Climate Change suggests that evidence suggests that recent bill increases are not due to environmental policy costs but instead are primarily due to increased wholesale gas costs.

The report found that up to 2020,policies to achieve a low-carbon economy will add
around £110 to bills, with scope to offset this if energy efficiency can be improved.

The Committee’s analysis focuses on the 84% of UK households (21 million) that
have dual-fuel energy bills that is that they use gas for heating rather than electricity or other fuels.

For these households, energy bills increased from around £605 per household in
2004 to £1,060 in 2010

Of this increase, around £380 (84%) was unrelated to low-carbon measures, with £290 due to increases in the wholesale costs reflecting increases in the price of gas and supplier costs, £70 due to increasing transmission and distribution costs, and £20 due to VAT.

Around £75 (16%) was due to policies that reduce carbon emissions, including £30 to support investment in lowcarbon power generation, and £45 for funding energy efficiency improvements in homes.

Lord Adair Turner, Chair of the Committee on Climate Change said:

“We were keen to provide a dispassionate analysis of household bill impacts in what has become a politically controversial area. We found that bills have increased primarily in response to increased wholesale gas costs and not due to environmental policies. Over the next decade, we anticipate a rise of around £100 in the average bill as a result of investment in low-carbon power capacity, which will benefit the UK in the long run. And if we introduce new polices to stimulate energy efficiency improvement then bills in 2020 could broadly be contained at current levels.”

Don't panic over oil just yet

According to BP anyway we are four decades away from running out of oil.

Check out this clip which tells us that at current rates we have 42 years left if no further reserves are found

If you were wondering ................

So just how do you turn off the gas supply to a country.

Well take a look at Slate magazine's explanation

Switch off valves in the pipeline or shut down the compressor stations. Gas pipelines typically have valves spaced out every several miles, enabling gas to be shut off if necessary. In addition to regulating how much gas is being delivered downstream, the valves are there for safety purposes, enabling pipeline operators to stop the flow of gas immediately if there is a leak, for example. The valves also allow operators to shut down a section of the pipeline when it needs maintenance. Depending on the pipeline, a valve might be closed manually, or operators may be able to push a button that mechanically shuts the valve

Energy policy and why no windfall tax

It would be safe to say that the government's energy announcements yesterday have not set the world alight.The main issues being that first of all this is going to take time to implement,some estimates are saying that less than 150,000 are going to be able to take up the insulation schemes that may reduce bills by up to £300 a year.
Secondly it is becoming that the energy companies may simply be passing this cost onto the consumer.

The Independent this morning reports that

David Porter, chief executive of the Association of Electricity Producers, warned that whenever costs were imposed on an industry "the bill to some extent always ends up with the customer". Mr Porter, whose members include E.ON, Centrica, EDF, Scottish and Southern Energy and RWE Npower, said: "In the end, somebody has got to pay for this." Electricity suppliers "will try to contain this because they have to, but it remains to be seen just how much of it ends up on the customer's bill in the longer run".

Undoubtedly the question will arise as to why the government did not revert to the tactics of the windfall tax.

Writing in this morning's FT,Ed Crooks concludes that even though

Gordon Brown began hatching his plan to drag more money out of energy suppliers to help with fuel bills even before he was prime minister, in autumn 2006.

That he has ended with a programme that falls well short of many Labour supporters’ ambitions is a testament to the vigour with which the energy companies have fought their corner, and to the formidable administrative difficulties involved in making them pay.

As I have written before,the policy is an example of some medium term thinking as opposed to short term headline hitting measures.
Brown now has to be on his guard against a cold winter and deaths of old people.The headlines will be cutting and savage if that happens

Inflation,high fuel prices and now....blackouts?

A bad day for the economy yesterday and that pervayor of gloom and doom to the Middle Classes Peter Hitchins follows it up with the claim that

It will not be long now before sensible people, and sensible businesses, start buying their own private electricity generators. The time is soon coming when power blackouts will be common in Britain, in the way they already are in the Third World. But they will be much worse than in the Third World, because we have become so dependent on electronics for everything we do. Our whole commercial system, our phone network, our banks and our transport will simply come to a halt, for long, unpredictable periods each day, and probably cease to function in the middle of the night as well

.

According to Hitchins

It is a sign of just how useless our political leaders are that they have done nothing to avoid this danger, being obsessed instead with the questionable problems of allegedly man-made global warming.

The article paints a gloomy scenario for the future energy of the country but Hitchins makes a valid point within all the scaremongering that polititians form all sides have not really addressed the long term future of our energy supplies.

The reason is the political realities of today with short term voter aspirations driving far more our future eneergy policy than long term and unpopulr solutions.

Hats off to the party that takes this issue by the horns