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DECC Forced To Release Data Showing Impact Of Climate Policies On Energy Prices

December 14, 2014

By Paul Homewood

 

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http://www.telegraph.co.uk/news/earth/energy/11292367/Green-policies-to-add-up-to-40pc-to-cost-of-household-electricity.html

 

I’ve now had a chance to dissect the numbers that the Department of Energy & Climate Change, DECC, have been forced to release, regarding the effect of climate policies on energy prices.

 

They base their assumptions around three scenarios of fossil fuel prices – high, central and low, and all numbers are at 2014 prices, so do not reflect normal annual inflation. They do not clarify exactly what constitutes the fossil fuel price bands, but they use Sep 2014 wholesale electric prices as the starting point.

 

Let’s start by looking at the central band. First the effect on households.

 

 

 

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I have not shown the projections for 2030, as these are little more than guesswork. The key numbers are:-

 

1) The various green levies will add £188 to household dual bills by 2020, about 13%. Of this, we are already paying £89/yr.

2) Based on 26 million households, this will equate to £4.9 bn a year by 2020.

3) DECC claim that we will all be saving £276 on average by using less energy because of their kind and thoughtful policies. This rather ignores the fact that energy efficiency has continually improved over the years without government help.

4) Notably, a large chunk, £77, arises from “building regulations”. Unfortunately, very few people live in new houses affected by this, and therefore will not save a penny.

5) Electric only households will be disproportionately affected, as electricity price rises will be much greater than gas. The projected green levies will add 23%. It should be remembered in this context, that government policy is to massively switch consumers onto electric heating of homes and electric cars, leaving us ever more vulnerable to higher electricity prices.

 

DECC have been a bit crafty in the way they have presented their figures, as the “Bill impact of price effects” is calculated against the anticipated lower consumption figures. For instance, household electricity use is expected to fall from 4.5MWh to 3.2MWh by 2020.

 

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The reality is that they expect electricity prices to rise from £141/MWH to £194/MWh by 2020, as a direct result of their policies, an increase of 37%. If we carry on using 4.5MWh a year, the extra cost to households will be £238.

 

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Based on a low fossil fuel price scenario, the extra cost of climate change policy is even greater, adding 42% to electricity prices. Even under the high fossil fuel price option, climate policies will still be adding 29%, and as consumers will be paying more still for energy, the slightly lower climate subsidy won’t come as much of a consolation.

It is also worth pointing out that,even under the high fossil price scenario, by 2030 climate policies will have increased the price of electricity to £233/MWh, from £181/MWh without such policies. In other words, the argument, often wheeled out, that we need renewable energy to protect us from ever rising fossil fuel prices, is dead in the water.

 

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Effect on businesses

The effect on small and medium sized businesses is, if anything, even more scary. Again using the central scenario, we can see that small businesses will be paying 50% more for their electricity, and medium sized ones an astonishing 62% extra.

 

 

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As the Renewable Energy Foundation correctly points out, it is domestic households which will end up paying for these extra costs to business, through higher prices, lower wages and lost jobs. That is, of course, assuming we have any businesses left.

 

Following the non agreement that appears to have emerged from Lima, there can be no possible justification left to continue with the flawed and huge expensive Climate Change Act. It is not difficult to see why DECC attempted to hide this data from the public.

 

 

 

Sources 

All of the DECC data is here.

https://www.gov.uk/government/publications/estimated-impacts-of-energy-and-climate-change-policies-on-energy-prices-and-bills-2014

8 Comments
  1. saveenergy permalink
    December 14, 2014 4:04 pm

    Paul, Well done & thank you;…. but how can you say
    “DECC have been a bit crafty in the way they have presented their figures,” ??

    They’ve been downright deceitful & fraudulent (worse than the financial misselling or secondhand car salesmen), led by the inanely grinning ‘Despicable Davey’.

  2. Paul2 permalink
    December 14, 2014 4:37 pm

    This needs further publicity rather than a page five article ranking. Here’s another climate change measure most people won’t be aware of:

    http://www.energymyway.co.uk/news/are-gas-boilers-soon-to-become-museum-pieces/

    Reading the forums it seems that the date for the banning of gas boilers in new homes is 2016 though I can’t verify this Paul.

  3. Retired Dave permalink
    December 14, 2014 4:49 pm

    I will second the remarks of saveenergy above – thank you.

    I seem to remember that in one of their reports going back 3 years or so, that we were all going to save a huge of money and that by 2050 we would all be quids in, and it would be massively cheaper to use renewables by then. While one was scratching ones head trying to see how anyone could believe this, it dawned that a basic assumption was that we would all be using half the energy we do today. Well I want be here, but good luck with that.

    I have said before that the biggest con at the moment is the proposed scam to move people from gas to electric through the promotion of heat pumps (via RHI). It only makes sense if you can make your masters (The EU) believe that the electric is renewables generated, towards your mandated reduction of CO2 – yeah right.

    As you say Paul, we are expected to move everything to electric including transport. Some one of my acquaintance is mad keen electric cars because of the low cost of their fuel – more than 120 mpg equivalent he says. So they are going to give up all the £billions they take in fuel duty then? – I say. Silence and a little light goes on behind his eyes.

  4. Retired Dave permalink
    December 14, 2014 5:04 pm

    Paul2

    According to a couple of articles I have seen in the self-build magazines it could be that the current government is looking to scrap the CSH and move many of its provisions into the normal building regulations, where they should have been all along.

    It is not clear what effect this would have but although many (the CO2 obsessed) are unhappy with this. But a recentish Grand Designs prog showed someone struggling to make level 6 of the CSH (it was a stipulation of the planning permission) but managed it in the end by having a rotary drier in the garden and a few wild flowers here and there – the whole things is madness.

    I know that LPG was going to be banned for use in rural areas after 2016 where there is no mains gas, effectively moving people to electric via heat pumps not because they are more efficient, but because they ain’t gas – it is DECC trying to con the EU that it is part of our generating 20% by renewables. Also worth stating that electricity is three times the price of gas per unit of heat anyway.

    We truly are governed by cretins.

    • John Palmer permalink
      December 14, 2014 5:20 pm

      “governed by cretins” yes, certainly – but maybe only for a few more months…
      Fingers crossed.

    • December 14, 2014 8:11 pm

      And a heat pump’s Coefficient of Performance is inversely proportional to external temperature. They become very poor performers at the times most needed, especially by our Scottish brethren.

  5. December 14, 2014 8:07 pm

    As mentioned in my comment on your “Electric Prices To Rise By 40%” posting, ALL householders pay for BOTH the extra cost directly on their household bill, PLUS all bar ~10% of the extra cost of businness’s energy costs too. [i.e. All except that proportion some businesses manage to include in ‘production’ exported.]

  6. December 15, 2014 10:46 am

    “That is, of course, assuming we have any businesses left.”

    That’s the problem. After the massive over spending of labour, we already have a massive problem paying back that debt. We’ve already got the EU which is nothing but a dead weight pulling us down in the water. Now they plan to increase costs to UK business even further meaning that anyone competing internationally is having all these extra costs.

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