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Energy Consumers To Pay For £25bn Green Energy Plan

July 10, 2020
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By Paul Homewood

 

 

Spend £25 billion to save £20 a year. That sounds like a bargain!!

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The energy watchdog has announced new plans to transform the UK’s gas power network, upgrading it to be more “green” and potentially saving Brits an average of £20 a year on their energy bills.

Ofgem, the energy regulator, on Thursday published plans to invest £25bn ($32bn) over five years to develop more “clean” gas energy network the UK. The investment will go into the infrastructure that transports energy around the UK.

The plan would be paid for by energy companies themselves. The regulator has proposed doubling a cap on how much money energy firms can return to their investors and reducing firm’s spending plans to ensure costs do not rise for consumers.

Ofgem estimates the average gas bill would in fact fall by £20 per year at the start of its transformation plan.

“Ofgem is working to deliver a greener, fairer energy system for consumers,” chief executive Jonathan Brearley said in a statement.

“This is why we are striking a fair deal for consumers, cutting returns to the network companies to an unprecedented low level while making room for around £25bn of investment needed to drive a clean, green and resilient recovery.

“Now more than ever, we need to make sure that every pound on consumers’ bills goes further. Less of your money will go towards company shareholders, and more into improving the network to power the economy and to fight climate change.”

https://uk.finance.yahoo.com/news/ofgem-green-energy-plan-25bn-bills-national-grid-sse-gas-082131746.html

 

If you read the small print however,  the £20 a year saving only applies at the start of its transformation plan.

By the time the plan is completed, households will have paid out about £1000 each to fight climate change. As the plan covers five years, that works out at £200 a year.

We are not told exactly what this will cover, but we know it only covers power transmission and gas distribution. Plans for electricity distribution will be announced later, and will doubtless cost billions more.

None of this money includes the cost of subsidising renewables, which is accounted for separately. Presumably it will cover grid enhancements necessary for accommodating renewable energy, and I suspect preparation for a hydrogen grid.

What is certain though is that this £25 billion is loose change, compared to the eventual cost to be placed on consumers. By doing it piecemeal in this way, OFGEM is hoping that nobody will notice the true impact on their energy bills.

47 Comments
  1. Phoenix44 permalink
    July 10, 2020 2:19 pm

    So the Regulator wants to reduce returns to investors but wants them to spend £25 billion?

    Er…opportunity cost? Why would they think that’s a good idea?

  2. Dick Goodwin permalink
    July 10, 2020 2:23 pm

    I didn’t feel too bad at first when I thought it was only £2bn. Must get new glasses if I have any money left.

  3. Gerry, England permalink
    July 10, 2020 2:28 pm

    Brilliant! Invest £1000 and get back £20. Where do I sign up?

  4. Joe Public permalink
    July 10, 2020 2:43 pm

    From Ofgem’s proposals:

    “…. potential plans to connect renewables along the East Coast, these and other projects are costed by companies at £10bn, but more funding can be considered if necessary….

    £3bn upfront funding to connect green electricity sources and transmission grid upgrades to make sure the network is resilient and copes well with rising levels of renewable power in our energy mix.

    Increased funding for the Electricity System Operator, to deliver their 2025 commitment “an electricity system that can operate carbon free”. “

    So more back-door subsidies going predominantly to intermittent wind-farm owners.

    The costs of their connections to the grid should be borne exclusively by them.

    • July 10, 2020 7:58 pm

      Point the first. Given that we are constantly told that the Weenewabuws are competitive, no cheaper than conventional WHY do they need more funding if they are SO wonderfully cheap and secondly what fairy land do these idiots live in when they come up with such fatuous statements as “an electricity system that can operate carbon free”? Firstly I totally object to this IGNORANT usage of the word carbon meaning CO2. If you mean CO2 then say CO2 or is there a problem with the dangerous carbon which constitutes 20% of your worthless bodies? Secondly where do they think the installations come from? Appear by magic when St Greta waves her magic wand? COAL has to be burned to make the steel and concrete and oil has to be consumed to extract more oil to produce the plastics and electrical systems and yes the wonderfully “environmentally friendly” bird killing wind farm blades which after 3-5 years of killing birds have to be buried because they have not got a clue what to do with them! . The infantile posturing of people spending my money brings down the red veil.
      The destruction of our economy by any thinly veiled marxist means!

    • It doesn't add up... permalink
      July 11, 2020 1:09 am

      Presumably it will include reactive power, synchronous condensers, more transformers and circuit breakers, HVDC conversion, links to interconnectors (to dispose of surplus wind at negative prices) etc. as well as more transmission lines and another HVDC link from Scotland offshore like the regularly breaking down Western Link.

  5. Gerry, England permalink
    July 10, 2020 2:51 pm

    And to think Ofgem was set up to protect consumers….. Or are they as stupid as the Tory minister who suggested that when they increased the tax on insurance – including non-discretionary car insurance – that the insurance companies could decide not to pass it on. In the old days the Tories could be looked upon to have MPs with business and commercial experience. Now they are just political dross like all the others.

    • July 10, 2020 8:01 pm

      Mate they are all infected with the same BS. You think this crapola would be any different under a marxist plot engineered by comrade corbyn if god forbe he had come to power with Diane (what day is it) Abbot as home sec?

    • It doesn't add up... permalink
      July 11, 2020 1:10 am

      That was all changed by Ed Miliband’s 2010 Energy Act, which granted primacy to green interests. Anything that is in their interest is deemed to be in the consumer interest in law.

  6. Phillip Bratby permalink
    July 10, 2020 2:56 pm

    This is what you get when Ofgem is run by climate change fanatic bureaucrat Jonathan Brearley, a former civil servant at the Department of Energy and Climate Change.
    https://www.thegwpf.com/is-britains-energy-regulator-a-consumer-champion-or-a-green-industry-patsy/

  7. Geoff B permalink
    July 10, 2020 3:00 pm

    National Grid is very profitable, seems to be an attempt to cut their return on capital employed, which is a good thing. However the devil is in the detail and Ofgems own press release is not an easy read. Jonathan Brearley is a committed green, having written the climate change act for Milliband. Watch this space!!!!

  8. Thomas Carr permalink
    July 10, 2020 3:19 pm

    Seems extraordinary that that Ofgem should assume that £25 Billion upgrade should not be explained with a list of projects for which the money is required. What happened when the relevant Standing Committee of MPs got to hear of it?
    It sounds like the bill for deferred maintenance and renewal and/or the failure to moderate off-shore supplies once ashore.
    Mr Brearley could make a similar case for a Ponzi scheme.

  9. MrGrimNasty permalink
    July 10, 2020 3:25 pm

    A bloke over the road from me is having something done to his solar PV, some sort of film fitted over the top by the looks of it. The panels have been up 5 or 6 years. It’s a 2 story house with a high roof pitch. Of course ‘working at heights’ regs. means scaffolding and handrails up the ridges. So that’s £700-£900 down the drain before they’ve even started.

    By the time the install/maintenance/removal scaffold costs are all added up, that’ll be half the cost of the panels these days. I bet that wasn’t in the original ‘sure fire investment’ sales spiel.

  10. Jason permalink
    July 10, 2020 3:25 pm

    Hang on. Isn’t gas to homes being banned???

    • mikewaite permalink
      July 10, 2020 5:10 pm

      If so someone should inform British Gas. Thy have just cold called me to offer me a deal on a new gas boiler with 2 years interest- free repayments ..

  11. Coeur de Lion permalink
    July 10, 2020 3:33 pm

    Is all still because U.K. emits just over one per cent of global CO2? What’s the objective? To control global temperature in 2100AD? Lunacy.

  12. Gerry, England permalink
    July 10, 2020 3:43 pm

    John Constable’s GWPF piece includes this:

    ‘The industry journal Utility Week has reported in the last few days that both Mary Starks, Ofgem’s Executive Director for Consumers & Markets, and Joe Perkins the Chief Economist, have resigned. Mary Starks was formerly at the Office of Fair Trading, the Financial Conduct Authority, and the Bank of England, while Joe Perkins was formerly at Her Majesty’s Treasury and the National Audit Office. Neither has been at Ofgem long, and their resignations are a surprise.’

    • Mark permalink
      July 11, 2020 1:14 am

      Not green enough for Brearley? It would be fascinating to get their views, but I suppose they have to think of their careers.

  13. Thomas Carr permalink
    July 10, 2020 3:55 pm

    A supplemental:
    Page 41 in the Times today “Ofgem was founded 20 years ago to protect the interest of the consumers” etc. .
    See also Alistair Osborne ‘s col. on P 37 in The Times headed ” Ofgem chief gets it wrong first time”. No doubt the other serious papers will be covering this .
    To some extent it is Brearley v. the monopoly network businesses — National Grid was able to pay their boss £18.2 M for 4 years’ work.
    So yesterday’s “published plans” deserve a bit more scrutiny and Osborne says that Brearley is in fact demanding more efficiencies. So my previous above is faulty although I would like some MPs to attempt to understand the issues.

    • July 10, 2020 7:23 pm

      “Page 41 in the Times today “Ofgem was founded 20 years ago to protect the interest of the consumers” etc. .”

      i.e., All consumers have an equal right to be robbed on behalf of a few wealthy overseers, who promise to continue to ensure their rights to your money.

      Don’t forget to thank them on the way to debtor’s prison.

  14. Ariane permalink
    July 10, 2020 4:10 pm

    If MPs passed the Net Zero and 2008 and 2009 and 2019 climate laws, they won’t want ‘to understand’ any nasty impacts of said legislation. It all needs repealing by a different set of MPs and MSPs. Start with a referendum.

  15. Gamecock permalink
    July 10, 2020 4:57 pm

    “This is why we are striking a fair deal for consumers, cutting returns to the network companies to an unprecedented low level . . . .

    Now more than ever, we need to make sure that every pound on consumers’ bills goes further. Less of your money will go towards company shareholders, and more into improving the network to power the economy and to fight climate change.”

    Cutting incentive to invest and demanding investment in the same breath guarantees collapse of your electricity supply. This is suicidal.

    YOUR LIVES DEPEND ON YOUR ELECTRIC UTILITIES.

    Screwing over those who keep you alive isn’t sustainable.

    • July 10, 2020 7:37 pm

      Consumers being forced to pay for upgrades that wouldn’t be necessary, or at least not to this extent, if it weren’t for all the “renewables” garbage that make it necessary, is something consumers should be grateful for? Seriously?

      • Gamecock permalink
        July 11, 2020 1:35 pm

        The enemy is government. Not the utility. The utility keeps you alive. Attacking them is suicidal. You want them healthy and profitable. Else you die.

        ‘cutting returns to the network companies to an unprecedented low level’

        This will kill you.

        ‘Less of your money will go towards company shareholders’

        Fatal.

      • July 12, 2020 5:21 am

        @Gamecock

        I agree. Yes, the govt., is the culprit here. They set it up so the consumer has to pay inflated prices for an inferior product. And if you protest you suffer. But the govt., hacks who force this on you remain unaccountable. It’s pretty run of the mill extortion. Sure you have no choice, but all I’m saying is why should consumers be grateful to the crooks (politicians and “renewables” investors) who are robbing them blind?

        You want it to change, stop voting for crooks and fools, …if that’s not all you have left.

      • Gamecock permalink
        July 13, 2020 12:38 am

        Other things are happening. The Board of Directors of the utilities see this edict, and quickly decide, “No more capital spending in the UK. The government can’t be trusted.”

        The presidents will say, “Don’t send me any projects unless government mandated. I won’t sign them. And start looking around for where we can better invest our capital.”

        Industrial customers know this is happening. They will start the process of determining where to relocate (I highly recommend their moving to South Carolina).

        The Ofgem plan is a national suicide note.

        You MUST protect your utilities as your lives and livelihoods depend on them.

        Perfidious Albion.

      • July 13, 2020 2:58 am

        @Gamecock – July 13, 2020 12:38 am

        OK, I see where you are coming from more clearly now.

        Thx

      • Mikehig permalink
        July 13, 2020 3:45 pm

        ‘Less of your money will go towards company shareholders’

        And those shareholders are?
        Without checking I would expect a large proportion to be pension funds, insurance companies, building socs, etc.. Those returns help finance their payments on annuities, pensions, etc. held by millions of citizens.

  16. July 10, 2020 5:26 pm

    Makes the nearly £730m. (up to early June) we have paid windfarm companies in Scotland to switch their wretched turbines off because the Grid can’t take their electricity look like small beer. They keep building more to be switched off – makes perfect sense. Why am I complaining, it’s not billions, yet.

  17. phildarley58 permalink
    July 10, 2020 7:47 pm

    What climate crisis? The earth has been much hotter and much colder than now and the co2 has been higher when temperatures were lower and vice versa.

    The Sun, clouds and water vapour determine temperature NOT man made CO2!

    It’s all just Agenda21
    Manipulation just like Covid19!!!

  18. Nancy & John Hultquist permalink
    July 10, 2020 11:39 pm

    Less of your money will go towards company shareholders, . . .

    Via mutual funds, we are investors in companies – both stocks and bonds. The directors/advisers of the funds try to buy and sell so as to produce appropriate (high) returns. Folks will respond to officialdom in different ways. As an individual, I’d be searching for a better investment.

  19. July 11, 2020 1:23 am

    never stops this nonsense

    Sent from my iPad

  20. It doesn't add up... permalink
    July 11, 2020 2:58 am

    If I read this right OFGEM decides what the money will be spent on and somehow provides it “up front” to be recovered from consumer bills. The transmission industry is now completely renationalised, with the grid companies now no more than contractors for OFGEM. I hope Sunak knows this will count as government spending. Who is accountable for this decision? No-one that I can detect.

  21. Mad Mike permalink
    July 11, 2020 10:37 am

    The trouble is when all political parties believe the Sun goes round the Earth all policies will support this kind of economic nonsense so voting for a change of direction is not possible. Where’s Farage?

    • It doesn't add up... permalink
      July 11, 2020 12:53 pm

      Not on this page yet.

  22. Carl Kop permalink
    July 11, 2020 5:42 pm

    It’s strange that those who tout the “Paris Accord” religion as the salvation of mankind have not heard of of the prophet, Maurice Strong, the instigator of the whole greenie movement from its inception in the late 1980s. He was the man whom Kofi Annan nominated to form and lead the UNFCC and the IPCC. Not bad for a backwoodsian Canadian who left school at the age of 14 years. His science knowledge was obviously zero.

    As a member of a family with high level contacts in the Chinese communist regime and together with his time in the Canadian “oil patch”, he realised the dependence of the western world on oil and coal and without these fuels the western anti-communist world would collapse. He is on record as saying that that one has a duty to ensure the collapse comes about.

    I am surprised that Mo Strong is an unknown villain of the plot. Perhaps he has been disowned by his fellow conspirators because of the fraud he perpetrated in the Food for Oil scandal. To avoid prosecution Mo reckoned it was better to flee to China where he is buried as a hero of the communist state in Beijng.

    He must have felt the rewards of his campaign in his terminal years when the Paris Accord consigned the western industrial nations to death by limiting the amount of cheap fuels (notably oil and coal) that they could use on the ruse of saving the world from all sorts of catastrophes from CO2 emissions. The essential take away from the agreement is that while the western world would be forced to limit the use of cheap fuels, there is absolutely no similar restriction on China (and India).

    This chinese virus or meme shows no sign of reaching a peak and the consequences are much more serious than covid.

    • Ariane permalink
      July 11, 2020 7:59 pm

      Spot on, Carl Kop, about the influence of Maurice Strong. He preferred to work behind the scenes and much enjoyed the unaccountable power of the UN institutions. However, his attitude was less pro-communist than it may seem and his own inspiration came more from the likes of the Club of Rome and neo-Malthusians. He was against industrial civilisation per se and wanted, like other wealthy people at the time, to halt the economic growth of the developing world – like those wealthy Westerners who promoted and continue to promote the nebulous idea of ‘sustainable economic growth’ – whatever that means in practice. Chinese communists (after recovering from their ‘cultural revolution’) promoted as they continue to do – industrialisation, trade, commerce and strong economic growth, using as much and as cheap energy as they can. The Chinese communists are definitely not into decarbonisation, veganism, sustainability or infantile Left-wingism. Maurice Strong used his Chinese contacts to live safely when he left the West. That never meant he was a communist or even a socialist, and those who follow his pernicious ideology because they think he was, are very mistaken.

  23. Carl Kop permalink
    July 12, 2020 12:32 am

    Maurice Strong originated in the Canadian outback and grew up during the depression. His schooling was only up to the age of 24 years. But he maintained that his teacher was a dedicated socialist who imbued in young Mo an enthusiasm for socialism.

    In later life he was a bit duplicitous, when asked about his politics – he claimed he was a bit of both socialist and capitalist.

    He was under the influence of his aunt [I forget her name] who made friends with the top echelons of the Chinese communist party, including Mao, starting before they rose to power in the revolution. She continued her infatuation with them and seemed to do PR work for the party. When she died she was buried with honours in China.

    I remember Strong appearing on TV in Canada after he was made chief executive of Ontario Hydro (now renamed) the huge electric power utility in Ontario, Canada. He was put in this position by the extreme loony leftwing (some would say communist which nearly bankrupted the province) provincial government of the time. There he lectured us that the utility would be shrink its power output and we had to amend our very wasteful use of power etc etc.

    Strong rose in standing from a lowly security guard at the United Nations to become second in rank to Kofi Annan. Because of his close affinity for communism Annan made him special envoy to North Korea.

    While on the run on exile in Beijing he got involved in another bid to disrupt western industry. Apparently with some US bankers he developed an automobile called the Chery for China to hit the US market hard with this very low priced vehicle. Unfortunately for China, Strong and the banker Quislings, the quality of the Chery was so abysmally bad that it was unsellable.

    He did his duty for communism by burdening the west with the climate change dogma and leaving China without any hindrance to produce as much CO2 as it wants.

    • Carl Kop permalink
      July 12, 2020 12:38 am

      CORRECTION – Maurice Strong’s schooling was up to the age of 14 NOT 24.

    • Ariane permalink
      July 12, 2020 12:09 pm

      My quibble with Strong’s attitude is that, together with well-off (Western) so-called Leftists, his dream of de-industrialisation (behind his well-funded campaign in the West that all ‘must-reduce-CO2-emissions-to-save-the-planet’ nonsense) is an utterly alien concept to the Marxist view that the workers must have control of the means of production so that workers can avoid exploitation and become more prosperous etc. Nobody who wants de-industrialisation and the end of economic growth for ordinary people either in the West or in developing countries can be a socialist/communist. The ideological basis is totally different – whatever they call themselves.

  24. Carl Kop permalink
    July 12, 2020 12:35 am

    CORRECTION – Maurice Strong’s schooling was up to the age of 14 NOT 24.

  25. July 12, 2020 12:36 am

    If renewables had the technology and the economics they would not have needed the policy imperative; and conversely, since they need the policy imperatives …

    • Thomas Carr permalink
      July 12, 2020 1:41 pm

      Absolutely Chaamjamal. However no cash or kudos from that direction.

  26. Gerry, England permalink
    July 12, 2020 1:31 pm

    The closure of our last coal mine in Northumberland is getting some publicity – note that the Tory scum are stopping the approved Cumbria mine going ahead at the moment – and the loss of 250 direct jobs producing something that is required. To save the planet we will import the same coal from Russia, bringing it 6000 miles doubling the CO2 produced – as if that is relevant to the real world – as the coal is needed to male steel. But then under the Tory plans steel-making will be driven off-shore anyway due to the energy costs.

  27. Ariane permalink
    July 13, 2020 10:05 am

    It appears that Ofgem is organising its new energy programme according to EU law!! So what happens to Brexit and will the European Court of Justice jurisdiction remain over UK energy policy??
    See very top of page 14 of Ofgem publication RIIO-2 Framework:

    Click to access riio-2_july_decision_document_final_300718.pdf

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