Meeting With MP
By Paul Homewood
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I had a very fruitful meeting with our local Tory MP yesterday regarding energy costs .
She is one of the new Red Wall MPs, and I believe a member of the Net Zero Watch Group.
I was in touch with her last year about the matter, and I contacted her again last month to offer my advice on how energy costs could be reduced, following which she asked for a meeting to discuss.
I started by explaining how all of the subsidies for renewable energy worked, based around the table above. I then made some recommendations as to how they could be cut or otherwise offset.
She seemed to be very receptive to these, and admitted she was not aware of some of the costs involved. She promised to discuss the issue with Craig MacKinlay, the head of the Net Zero Watch Group of MPs. (She did admit there was no point in discussing them with the government!).
MEETING NOTES
Explanation of Subsidy Mechanisms
1) Contracts for Difference
Renewable generators are paid an index linked, guaranteed price for 15 years. As the contracts are legally enforced, the government cannot cancel them. However the generators can withdraw at any time on payment of a small penalty charge.
2) Renewables Obligation
This is the subsidy mechanism for most renewable electricity generation commissioned prior to 2017, when it was replaced by Contracts for Difference (CfD)
On average, this subsidy is worth about £69/MWh to renewable generators, Wind farms account for two thirds of the subsidy.
3) Capacity Market
This covers payments to generators to provide standby capacity, for when intermittent renewable generation is low.
There are other costs incurred by the National Grid in order to manage intermittency and these are also passed onto energy bills, but not included by the OBR. The cost is estimated to be at least £2bn.
4) Feed in Tariffs
Subsidised payments to small generators
5) RHI
Grants paid for installation of renewable heating technology, such as biomass boilers. Unlike Environmental Levies, which are added to energy bills, RHIs are taxpayer funded
6) Climate Change Levy
Electricity generators must pay this levy to government for the fossil fuels they use.
7) Emissions Trading System
Electricity generators, energy intensive businesses and domestic aviation must purchase carbon allowances to cover their emissions.
Policy Suggestions
- Renewables Obligation
As well as being paid subsidies of £69/MWh, renewable generators also receive income from sales of electricity, which till the last few months used to be around £50/MWh – in other words a total income of £119/MWh
However, current market prices are close to £200/MWh , meaning the same generators now have income of at least £269/MWh.
This extra income is windfall profit and should be taxed, just as the Labour Party has suggested for North Sea oil. Average power prices in 2021 were about £100/MWh, So a tax rate of £50/MWh, for instance, would yield tax revenue of about £4.0bn, and should be raised on 2021/22 profits. (This would reflect the market price rising from £50 to 100/MWh).
Going forward, given the uncertainty and volatility of electricity market prices, it would be easier and simpler to reduce the value of the Renewable Obligation Certificates (ROCs), which actually generate the subsidy. Currently a price of £50.80 for each certificate is set, but there is no reason why this should not be much lower, say £10.
At the same time the number of ROCs that energy suppliers have to present should be reduced from the current level of 0.492/MWh – this would have the effect of flooding the market with unsold ROCs, thus making them worth much less.
As energy suppliers pass the cost of ROCs onto consumers, these two actions will reduce bills. For instance, a price of £10 would reduce bills by £4.8bn.
- Capacity Market
The cost of the Capacity Market, together with other grid balancing measures, is probably in the region of £3bn a year. These costs are directly attributable to intermittent renewable generation – wind and solar – and would not be incurred otherwise.
Therefore these costs should be charged to wind and solar farms, as an “Intermittency Tax”, charged per MWh. Saving £3bn.
- Climate Change Levy
This should be abolished – saving £2bn
- Emissions Trading
It is of great concern that the cost of this is projected by the OBR to rise from £0.9bn this financial year, to £4.9bn in 2022/23. I suspect however that part of this increase is already baked into current market prices.
My recommendation is that the cost should be frozen at £0.9bn, The current price for UK Carbon Allowances is £84/tonne, more than double the level of a year ago. Therefore a ceiling should be set of, say, £35/tonne.
Not all of this saving will be passed through to electricity bills, as some will accrue to industry. Nevertheless, we could estimate a saving on £1bn on bills.
- International Climate Aid
I an advised by the Foreign Office that the budget for Climate Aid is £11.6bn for the five years 2021/22 to 2025/26, ie £2.32bn a year. As this is funded from the Overseas Aid budget, which is fixed, this does not represent new money. Instead it is taken from other parts of the ODA, such as for genuine humanitarian needs.
Nevertheless I suspect most of the public would be horrified to learn that they are paying billions to build wind farms in Africa, while also having to subsidise British ones at the same time.
My suggestion would be to use the 2022/23 allocation to fund the cost of abolishing the Climate Change Levy. If affordable, payments could be increased in future years to catch up.
Summary
The above savings can be summarised:
£bn
ROC Windfall: 4.0
ROC Price Reduction 4.8
Capacity Market 3.0
Climate Change Levy 2.0
Emissions Trading 1.0
TOTAL 14.8
This would be at little or no cost to the Treasury, and if applied solely to domestic bills would equate to about £550 per household. This would offset most of the increase in the energy price cap just announced.
Comments are closed.
NOT A LOT OF PEOPLE KNOW THAT 
Well done Paul. Your suggestions coupled with your background notes should hit a positive note with her group. I bet the MP was a bit surprised to see the extent of the subsidies that has grown over the years. She should see an opportunity of informing her constituents and let them see that she is on their side.
Boris should take note.
Boris won’t take note. He is totally brainwashed by the greeny leftie Carrie!
Brilliant Paul, excellent figures for future reference, but don’t hold your breath. You could try sending them to Steve Baker MP (High Wycombe).
Yes. Its an ‘art’ all MPs learn about ‘nodding the head’ to appear to agree,
then next to say ‘not aware so Ill look into it’
then Thanked of course ‘for bringing it to their attention’
Then nothing is done
“The first trick learned, by the new man, when elected to a representative body, is pretending to ponder a question, after he has sold his vote to the highest bidder in caucus.”
Paul Homewood and Nigel Farage, dream team, but who will be prime minister?
A very comprehensive explanation of costs Paul and you made some valuable suggestions to your MP. I sincerely hope that some of them are taken on board so that monies recuperated by the government can be used to offset peoples ludicrously high fuel bills.
It absolutely should be discussed with government.
Brilliant Paul, well done.
When I asked my MP (a cabinet minister) whether the government was prioritising Net Zero over energy security, I received this reply from an assistant:
“Whilst [MP] appreciate your concerns, the assessment of the independent Committee on Climate Change (CCC) has concluded that this target is feasible, deliverable and can be met within the same cost as was estimated for our previous target of 80 per cent which was set back in 2008, such has been the power of innovation in reducing costs.
That is not to mention that the actual impact could be partially or completely off-set by wider benefits such as better health through reduced air pollution, improved efficiencies across the economy and the creation of green collar jobs and clean growth. We can also reduce the risks of catastrophic and costly climate change driven impacts, such as flooding.
However, it is right that we should look carefully at how these costs are distributed in the longer-term. In October 2021, the Treasury published its Net Zero Review which found that the majority of global GDP is now covered by net zero targets. As the world decarbonises, UK action can generate benefits to businesses and households across the country. The report highlighted that the transition to net zero implies a significant transformation of the UK economy over the next three decades. It noted that the overall impact is uncertain and challenging to estimate. However, existing estimates suggest that the impact on GDP by the end of the transition is likely to be relatively small, and dwarfed by the costs of global inaction.
The most recent cost estimates in the Net Zero Strategy present a net cost, excluding air quality and emission reduction benefits, equivalent to 1-2 per cent of GDP in 2050. This is easily justified when another report estimated the overall costs and risks of global warming to be equivalent to losing between 5 per cent and 20 per cent of global GDP each year. While the UK might be less exposed to physical risks of continued global warming than many other nations owing to its temperate climate and status as an advanced economy, there are potentially still significant indirect impacts. For example, damage to global supply chains affecting trade, reduced production in trading partner nations pushing up the cost of imported goods, or changes to migration from regions heavily affected by climate change.
Ultimately, in fulfilling the scale of the commitment, technological and logistical changes are needed in the way we use our land and to seize the opportunity to support investment in a range of new or advanced technologies, including in areas such as carbon capture, usage and storage, hydrogen and nuclear. The Treasury’s interim report noted that well-designed policy can reduce costs and risk for investors, support innovation and the deployment of new technologies.
As we recover from the Covid-19 pandemic, we have an opportunity to build a greener, more resilient economy and Grant welcomes the Prime Minister’s £12 billion Ten Point Plan which lays the blueprint for a green industrial revolution, while supporting and creating 250,000 green jobs.
The Government’s Net Zero Strategy builds on the Ten Point Plan and sets out a clear path for the changes needed to secure our energy, create jobs and new industries, and end the UK’s contribution to climate change. The UK can rapidly cut carbon emissions, while creating new jobs, new technologies and future-proof industries that will generate economic growth for decades to come.”
Utter tosh, and seemingly proof that not only is the priority Net Zero, but that energy policy is being dictated by the CCC.
Your MP needs to ask the CCC(p) to justify the infinitesimal changes the UK’s NZC plans would make to base CO2 and the Climate. And at what cost?
You might respond, tokalo, that it would be as well for ‘Grant’ to check both the source and reliability of his figures, noting that you have ensured that a copy of his response (which you regard as being nonsensical) is preserved for posterity.
You might add that you regard your question as being so fundemental to the actual survival of the most vulnerable, not top mention the survival of the Country, that it is, in your eyes, a “cock on the block” issue. And whilst you fervently hope he has a long and successful life, he should be aware that others may have good memories and be less forgiving.
Thanks Martin. I’m planning to send as concise a response as possible. I think the “Ten Point Plan” needs to addressed, but what makes me angry is the stupidity of making renewables the priority over anything reliable, affordable or secure.
Would you buy a used car from your (Cabinet Minister) M.P. ?
“I received this reply from an assistant:” . How do the fine words from the assistant align with the recent monstrous increase in energy costs?
Neither my MP nor her assistant will reply to me re: why not build coal-fired power stations?
Nothing like keeping things short…..
“…green industrial revolution…”
“…250,000 green jobs….”
Pure politico weasel words.
Typical answer – a word salad. Total bovine faeces to boot
Yes, quite. I found it really difficult to follow- it’s almost as if they are trying to fob me off rather than making clear, concise points. I wonder why that might be 🤔
Why is one of the members of the CCC a senior member of the Nudge Unit?
JF
The claim that you can move from 80% to 100% at the same cost is not only pure fiction it’s economically illiterate. What’s the benefit of the additional 20% versus the increase in cost? Saying its the “same cost” actually means the 80% has got cheaper.
I met with my MP, Richard Fuller (Con), last year and discussed Net Zero and all the damage it would cause for NO benefit. He seemed quite receptive and also unaware of much of what is discussed here. I will be meeting him again shortly and will continue along this path. We should all be constantly in touch with our MPs and perhaps they’ll start to listen. I feel with the huge energy price hike there may be more willing to question this madness.
I have been meeting with Kwasi Kwarteng on energy matters since 2012, through his tenure as Energy Monster and BEIS SoS. He is my MP. I follow up with short written papers that are statements of easily validated facts. He knows the facts very well. Denies the reality because it conflicts with policy, imposing policy, (from Carrie, Alegra, Zac?) is his job, not deliver what is best for our wholly energy dependent developed economy. Policy is designed to make Billions pa poorer to enrich governments crony subsidy farmers. Simple, knowing, legalised fraud. Malfeasance..
Yep…GWS. BAU.
A very damning assessment. I have to agree that he seems entirely willing to ignore reality.
I don’t know that assuming policy is *designed” to make money for ministerial cronies is all that helpful to be honest. Cock-up trumps conspiracy nine times out of ten. More likely that government has been swayed by the green arguments about climate because there is nobody in government or civil service with a decent science brain.
And you can rehearse all the anti- arguments you like because:
1. It is virtually impossible to argue a man out of something he wasn’t argued into in the first place, and
2. It is difficult to get a man to believe something when his continued employment depends on his not believing it.
On these two well-established adages, a lot of things in life — not least climate change — depend!
Which is not to say that there isn’t self-interest and occasionally some twisting of the rules — humanity being what it is! — but to charge government as a whole with being corrupt makes no sense. If you’re wrong, you’re barking up the wrong tree; if you’re right you’re on a certain loser from the start!
I’ve only once met a politician that I knew to be corrupt and he didn’t last long! We’re in this for the long haul, I’m afraid, but we need to assume that politicians are misguided (and often naive), not that they are all venal!
My view is that the real problem lies with civil servants. Ministers just do as they are told
And this precisely illustrates the flaw in our ‘democratic’ system – because you have Kwasi Modo as the MP for your constituency, you have no representative in Parliament as he works for the government not you. The Harrowgate Agenda would introduce an elected Prime Minister and appointed ministers that are not MPs – and therefore could actually know their brief – so every constituency has a representative.
When she presents this to Craig MacKinlay I just hope he doesn’t delegate it to one of the many Green spads in the House to analyse. Any response is going to be VERRRY interesting. Well done!!
Craig is the head of the Net Zero Watch Group, closely allied to the GWPF
Sorry about that, Paul. When I read; “…Craig MacKinlay, the head of the Net Zero Watch Group of MPs…” I assumed he was an MP – part of the group -more than I thought he was part of Net Zero Watch.
Craig MacKinley is an MP (Thanet South) and he is thoroughly sound. His famous quote is “I didn’t come into politics to make people colder and poorer”
Do the elect. generators.put the climate change levy on our bills?
Paul Homewood.
From modest blogger to political influencer.
Impressive.
Well done Paul. It sounds like this expertise is rare indeed! 🙂
Another angle to this is just how quickly our energy imports will rise, given the current policies:
Which MP? Put her in touch with Redwood.
Not sure any MP will raise their head above the parapet, and they certainly won’t be found dead in a ditch opposing anything that suggests net zero is pointless.
Depends where they are in their careers and how much they rely on being an MP to fund their lives. We have a novice MP who as an British Indian female is touted for better things and so won’t be doing anything to represent us that spoils her promotion chances.
Fantastic work Paul. My MP (Rosie Duffield) is somewhat unsure which party, if any, she is currently in but I will try the same approach with her. Meanwhile just a few miles from me Mr Macron is seemingly on his road to Damascus over nuclear power. Perhaps the tide really is turning. Even the Graun is acknowledging this.
https://www.theguardian.com/world/2022/feb/10/france-to-build-up-to-14-new-nuclear-reactors-by-2050-says-macron
Macron’s plans are still way short of what is needed. They’ve 60GW of capacity to replace before 2050 and more to add if they plan to further electrify the economy.
I canvassed against Duffield in the last election but it was obvious that the huge student vote, which was well organised to vote for her, was going to get her in. I did it more to keep Corbyn out than against her specifically but I didn’t think that a teaching assistant, her job title at the time, had the depth of knowledge required to represent a constituency. I’ve written to her a few times but only get replies from her staff. Unsurprisingly, although they always reply, aren’t sympathetic to the idea that CC Alarmism is incorrect nor that renewables are not part of the future.
Good luck with your correspondence. Be interested to hear what she says.
Ray, I have just emailed Rosie with a link to this item. I have also pointed her to the professor Helm item pointing out that Helm is hardly in the climate scepticism camp so called. Let’s see what she says to our approaches.
I sent Paul’s link because it says all we need to say in a much better way and form than i could ever achieve and i thank him for that.
Not just nuclear. The EU has decided that gas is also to be encouraged.
Mano has very kindly given me 100€ to help with my energy bill. This represents a little more than the MONTHLY INCREASE I have just been advised will take effect from Mar 1!
I can’t do much about the UK’s problem but I can assure you my neighbours here are well aware of the reasons why their bills are going through the roof.
There are small signs of some backtracking from net-zero here. Whether they will survive the upcoming French elections time will tell. The situation (even to an extent in Germany) is that protests are against rising prices, starting with the gilets jaunes campaign over diesel prices; in the UK protests are by the (comparatively) well-heeled middle-classes wanting to go further down the suicide route. And for as long as they are the ones getting the headlines, a return to sanity will be delayed.
(And what May thinks she’s doing trying to dictate to the Aussies how to run their country, goodness only knows. The mind boggles!)
Net Zero has become a religion, not to be questioned for fear of being an outcast from the groupthink CC cult.
It will be a brave person puts their head above the parapet to challenge Net Zero, they will be ridiculed, smeared and side lined by the Green lobby.
My one hope is the Net Zero Watch Group can become as effective/influential as the ERG.
At least we have some Tory MPs who are starting to see both the dangers and futility of Net Zero,
I think I can imagine some of the pushback that will come for BEIS.
Renewables Obligations: You will find that the price and volume are set by formula under Statutory Instruments and tied into legislation which includes guarantees that the government will not undermine the benefit through taxes or other devices. A slam dunk win in the Supreme Court for the wind farms if you attempt it. So I think the best you can do in the short term is to defer payment of ROCs until electricity prices have reached that Saudi Arabia of Wind Nirvana. You can otherwise try twisting arms to secure agreement otherwise by threatening wind farms with no nice repeat business, but that is unlikely to be successful with a government strategy of maximising wind, because it lacks credibility. Some high cost projects getting more than 2 ROCs/MWh might argue that they shouldn’t lose out on all their ROCs. In practice around 40% of ROCs are paid to those getting 1ROC or less per MWh, and over 95% to those getting 2ROC/MWh or less: allowing those with higher ROC entitlements to defer only part of them would still recoup most of the £6.6bn to be paid currently.
The Capacity Market has been a failure anyway – it sorely needs a revamp. For 2022-23 there was an auction at the beginning of 2020 which cleared at just £6.44/kW for about 45GW of adjusted capacity. So that was just £290m. The capacity looks to be far too little which is why BEIS has just agreed to pay £75/kW for another 5.361GW (or as close to that as they can procure), or another £400m. The real problem with the capacity market is that it has failed to secure enough dispatchable capacity in a timely manner, because National Grid and BEIS have set the amount too low (partly because they were trying to eliminate coal), so now we have capacity shortages and big premia for short term fixes (a.k.a. diesel STOR?). The loss of interconnector capacity to outages has not helped, and neither has early nuclear closure. When you don’t have enough capacity there is no competition in the Balancing Mechanism and balancing prices go beserk. In 2021, balancing costs were £2.35bn – of that £586m was in November alone. We desperately need capacity. Don’t try to knock it. Get them to keep the coal for a start. Otherwise they’ll start turning the lights out via smart meters.
An excellent reference; thanks Paul. Reading other comments, it’s disappointing that some MPs are claiming (or feigning) ignorance. Where have they been these last ten years?
It’s not just MPs, though. Local authorities are throwing money at all sorts of projects, using money thrown at them by national government, all in the name of the “climate emergency”. They won’t stop until they get the message that, to coin a phrase, “there’s no money left”.
UKA auctions have already raised over £5bn since the first one on 19th May 2021: the results can be accessed here:
https://www.theice.com/marketdata/reports/278
Here’s a chart of the key elements
Prices have been screwed higher by cutting the volumes offered at auction. The market in fact applies to large industrial operators and short haul aviation, not just electricity generators. But the clearing price can hit hard depending on the technology and sector. Even an aluminium smelter running on hydro power might be paying an additional £350-450/tonne of aluminium – so the production simply migrates to coal fired China instead, where the CO2 output is doubled and more. A coal fired power station will just add the UKA price to the cost of generating a MWh, while for CCGT it will add 36% of the price in baseload operation, but perhaps as much as 45% if forced to ramp up and down to keep pace with changing wind and demand.
Since CCGT tends to set market prices a lot of the time effectively the tax is adding over £30/MWh to market prices, also increasing the subsidies to renewables via a back door. the current plans call for 80.5 million allowances to be auctioned in the year, which would raise £6.4bn at £80/tonne CO2e from all industries while adding £8bn to electricity prices split about 50/50 between costs to fossil fuel generators and extra subsidies to renewables.
Cutting UKA prices by increasing the supply of allowances or even cancelling the requirement for them is one way to reduce the subsidies to renewables on ROCs that doesn’t fall foul of the rules, and directly lowers costs for consumers.
Idau: Excellent post!
Your closing point about the overall impact on electricity prices is of huge importance. I very much doubt it has been recognised by anyone in government. Indeed, this is the first time I have seen it mentioned.
It’s one more example of unintended consequences following interference in the market.
Paul; Great work! Hopefully you will get the opportunity to make the MP aware of this crucial point.
The problem with most MPs is that they are innumerate and inexperienced since most have never run a business, met a payroll from the profits, or had to deal with the bureaucracy created by government. Money and tax bills are voted on with out any awareness of their consequences because it won’t affect them personally. Only when they have to fill in their own VAT returns, Tax returns, National Statistics returns, Compliance forms for this and that, do they realise what this costs.
It’s because every tax increase and every regulation can be justified on its own. After all, its just one regulation with a small cost.
Some MPs understand this is nonsense as its the CUMULATIVE effect thst matters, hence the attempts at at One In, One Out rule. But governments just ignore it. And they day “business” is fine with it but of course big, established businesses are – they have large departments already dealing with compliance and tax and the costs keep out competitors. So we not only have the actual costs as consumers but we also have the costs if not having innovation and new, better jobs. But they are invisible so nobody cares.
The ‘transition to net zero’ is either an illusion, or a transition to economic suicide. Take your pick
Good stuff. I suggest (if you haven’t already done it) that those figures are translated into £/household e.g. the £11.2 billion outturn works out at £375 per household. That’s how much we could reduce bills by ow by abolishing the Green nonsense.
Very informative article, thank Paul and one of the most telling responses is that this MP is not getting briefing from the party which is too wedded to following the science – perhaps she could be prompted to forward this article to the Conservative Party where at least the ordinary member could have access to an alterative view https://www.conservativepolicyforum.com/
I would not be surprised if the Chinese Communist Party has not got its fingers on the levers of power throughout our entire Civil Service and Government itself ! Otherwise how could the case for domestically generated Gas have been so convincingly proved, yet the Oil & Gas Authority has decreed that our fracking sites are to be concreted over. Our enemies work stealthily from within. I also wonder why Christeen Lee still works in the UK unhindered.
Hi Paul.Have a look at an article in this mornings Mail on Line by
Andrew neill. Regards John Bowers.
We’re not the only ones being hammered by carbon taxes….From World Nuclear News:
“Some 60% of the cost of electricity in Poland from January to November 2021 was the price of carbon dioxide emissions, the Ministry of Climate and Environment has announced. In that time, the average carbon cost was EUR53 (USD61) per ton, whereas today it is even higher at around EUR90 (USD103) per ton, indicating the percentage is far higher now. Poland has been asking the European Commission to reform the EU Emissions Trading Scheme to reduce the impact of speculation, among other things.”
Interesting that the MP for Prickville did not know about the costs of the green agenda and didn’t think that there was any point in contacting the government about reducing the forthcoming bills.
In Skunkville on Sea, where I live, the Green MP wouldn’t even understand. When I spoke to my Green counsellor and offered to explain why their energy policy was a disaster, he said he eas really more interested in social issues and inequality.