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Homeowners Fleeced By Renewable Subsidies

February 15, 2021

By Paul Homewood

 

 

How much of our electricity bills goes to pay for “green crap”?

OFGEM kindly provided this analysis last year:

 image

https://www.ofgem.gov.uk/data-portal/breakdown-electricity-bill

This information is not theoretical, it is derived from audited accounts data from the big energy suppliers, published in their annual Consolidated Segmental Statements, with allocation of expenses meeting strict rules.

I have downloaded the 2019 statement from Centrica, which closely matches the OFGEM table:

 image

Looking at the Electricity Supply column, Environmental Costs works out at 23% for domestic, and 27% for business, an average of 24%. I presume the lower percentage for business reflects the fact that the selling price is lower.

But more significant is the cost of environmental levies per MWh. Domestic is £43/MWh, and business is £39/MWh.

Based on annual household usage of 5500 kwh, typical for a 3 bed house, this equates to £236. VAT would be extra.

We can cross check these numbers against the OBR figures:

2.7 Environmental levies

£ billion

Outturn Forecast

2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25








Renewables obligation 6.0 6.4 6.3 6.4 6.6 6.8 6.9
Contracts for difference 1.0 1.7 2.2 2.5 2.7 2.9 2.8
Capacity market1 0.2 1.7 1.1 0.9 0.5 0.7 1.0
Green gas levy 0.0 0.0 0.0 0.0 0.0 0.1 0.1
Feed in Tariffs 1.5 1.5 1.6 1.6 1.6 1.7 1.7
Environmental levies 8.7 11.3 11.2 11.5 11.4 12.1 12.5
Memo: Expenditure on renewable heat incentive (RHI) 0.8 0.9 1.0 1.1 1.1 1.1 1.1
Note: The ‘Environmental levies’ line above is consistent with the ‘Environmental levies’ line in Table 3.3 of the March 2020 Economic and fiscal outlook.
1 The ONS have yet to include capacity market auctions in their outturn numbers. If they were included, they would have been £0.2bn.

In 2019, electricity consumption was 103 TWh for domestic and 192 TWh for others. Applying the rates of £43 and £39/MWh gives a total cost of £11.9bn. This is slightly higher than the OBR, (who simply take government numbers), which suggests they have underestimated.

 

 

The earliest CSS was for 2013, when domestic environmental costs were only £19/MWh:

image

Of course, all of the cost, domestic and otherwise, ends up getting paid by the public one way or another. Higher electricity costs for the public sector have to be paid for by higher taxes or spending cuts. While higher costs for companies result in higher prices or lost jobs.

It is worth noting by the way that network costs have increased from £36 to £43/MWh for domestic, between 2013 and 2019. This may simply reflect inflation, but I suspect at least half of the rise is for network upgrades etc.

15 Comments
  1. geoffb permalink
    February 15, 2021 7:45 pm

    OFGEMS remit is to stop consumers being gouged by high prices, generally due to collusion between suppliers to price fix (oligopoly). Jonathan Brearley, now head of OFGEM co-authored the climate change act for Ed Milliband, causing all the environmental costs on the electricity charges. Thus he is responsible for all these extra costs, so why did he get this position, totally unsuitable person.

    • It doesn't add up... permalink
      February 15, 2021 8:11 pm

      Actually it was Ed Miliband who changed OFGEM’s remit in the 2010 Energy Act, so foolishly passed without opposition at the end of the Parliament during “wash-up”. It deems anything that is green to be in consumer interest, with no regard to cost. Just as in 2009, the value of CO2 emissions was set to be whatever is required to meet the target level of emissions as declared from time to time, again with no regard to cost or whether in some sense it represents value in terms of the benefits of any social dividend from lowering emissions. That neatly avoided having to justify policy in anything other than sui generis terms.

      I wonder if Brearley had a hand in changing the OFGEM remit too?

  2. February 15, 2021 8:19 pm

    Thanks Paul. Took me a while to figure out what to divide by what to get your figures, but I got there in the end…

    This should be on every energy bill up and down the land (not that most get paper bills any more, and I suspect few look beyond the headline figure).

  3. February 15, 2021 10:57 pm

    Paul says “Based on annual household usage .. this equates to £236.”
    don’t be fooled into thinking that’s is all the extra you pay.

    Everything granny pay for has an electricity cost component
    ..That’s when he buys a beer at Wetherpoons
    When she donates money to charity
    When she funds the school & NHS etc.

    A more green grid = LESS NURSES
    Cos the leccy is more expensive and a large hospital has to get rid of some nursing jobs to pay for it’s leccy bills and the leccy component of the things it buys

    PLUS there is zero mining tax on solar/wind
    so we have to increase granny’s tax to make up for lost oil/gas mining tax.

    • February 16, 2021 4:00 am

      “A more green grid = LESS NURSES” – stugreen

      Cost cutting measures are being put in place to balance that out.
      https://www.weaselzippers.us/464421-u-k-to-impose-do-not-resuscitate-orders-for-all-covid-19-patients-with-learning-difficulties/

      • dave permalink
        February 16, 2021 10:24 am

        Not exactly.

        The actual story is that the UK Govt is to investigate reports that SOME hospitals have imposed DNR’s too automatically on SOME patients with learning difficulties. But there is no suggestion that the DNR will go up above your bed as soon as you enter hospital, just because you are a bit slow-witted!

        ‘Learning difficulty’ is often a euphemism for ‘generally damaged in development’ and so such people often have severe comorbidities – which might be the real reason for the DNR..

        ‘Learning difficulties’ affect a smallish part of the population, at 2.5%
        The more general category of ‘disabled’ includes 17% of the population over the age of 30. “And more than half of all “Covid-19 related deaths” do occur in this sub-population.

        However, when you allow for the fact that ‘disabled’ overlaps with old and poor and ill, it becomes clear that disablement alone is not the full story.

        OT

        The Climate Analyser site of the University of Maine has its global anomaly* for temperatures at 2-meter height at ZERO. Have not see that for a long time!

        *Baseline time being 1981-2000

      • Ben Vorlich permalink
        February 16, 2021 12:45 pm

        The NHS has 80K FEWER beds now than in the year 2000, presumably with similarly fewer nurses and frontline hospital staff (poters, cleaners and 5he like). The cost cutting has been evident for decades despite it being safe in every political party’s hands.

  4. February 16, 2021 3:56 am

    The Name Of The Game

    “Homeowners Fleeced By …(any means necessary)

  5. Dave Burridge permalink
    February 16, 2021 8:39 am

    Off topic but thought this was amusing.
    https://video.foxnews.com/v/6232518760001#sp=show-clips

  6. Phoenix44 permalink
    February 16, 2021 9:38 am

    Where does depreciation (capital costs) fall in those costs? If we have to build additional capacity to supply when renewables cannot, those costs should be included in “Green crap” too.

  7. tomo permalink
    February 16, 2021 9:48 am

    TEXAS

  8. tomo permalink
    February 16, 2021 12:48 pm

    OT

    I’ve just been informed by National Grid that there are two types of Hydrogen

    Blue Hydrogen and yes…. Green Hydrogen

    Science!

    Blue vs. Green – I’d always associated that colour clash with Roman chariot racing.

  9. A man of no rank permalink
    February 16, 2021 5:32 pm

    Fascinating video Tomo and Dave. I try to use the idea of ‘elites’ vs working man (about to be a pauper) in my comments on online newspapers. New President made to look vacant and foolish by Tucker.
    OT, but someone please tell me that the centres of all these great American cities have not become full of tents and desperate people.

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