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« Cook’s consensus: standing on its last legs | Main | Ivo Vegter on green misinformation »
Friday
Oct112013

Reign of madness

Paul Homewood's analysis of expected future increases in household electricity bills is sobering stuff. Buried in the back of a House of Commons report on electricity prices we find that the cost of greenery is currently 10% of the average household bill (say £1200). This is expected to rise to 33% by 2020, which would make the bill £1450 or thereabouts, and to 41% (£1540) by 2030.

However, the costs of all this greenery fall, in the first place, mainly on non-domestic users - two thirds in fact. But the charges to industrial users simply gets passed onto consumers anyway (some of them being overseas consumers, but the majority are in the UK). So while domestic users are picking up an extra £450 in green costs (1540 - (1200/1.1)), in fact they are also eventually going to have to pick up most of the tab for the £900 charged to industrial users as well. That means by 2030, costs to consumers will have doubled.

 

 

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Reader Comments (58)

Entropic Man, I think you'll find that Bishop Hill is a victim too; he has been as badly misled by the energy companies and newspapers as others. Now that I have pointed out above that "greenery" can only be said to account for 4% of a typical energy bill, not 10%, I am certain that he will seek to reverse any misunderstanding on the part of his readers. That is the obvious course of action for one who wishes to avoid misrepresenting the situation any further.

Oct 12, 2013 at 7:19 AM | Unregistered CommenterChandra

Watching Jimmy Carr 8 out of 10 Cats comedy quiz show last night last nightJokingly mentioned power cuts.

But more seriously has there been panic buying of candles camping stoves gas bottles out door generators warm weather gear for skiers .
Public Panic great story for all the Newsdesks at the papers just as Levison is being implemented.

When winter hits could be looking at 2 days of power cuts..Government is always mentioning the COBRA .Cameron drawn up plans.

Oct 12, 2013 at 8:23 AM | Unregistered Commenterjamspid

Chandra - I agree that the increased cost of energy bills needs some analysis.

U-Switch reckon that 45% of our electricity bills can be attributed to the cost of Natural Gas. (source: http://www.uswitch.com/gas-electricity/guides/wholesale-gas/).

This graph if it is correct does not show the wholsale price spiraling up in the last few years: http://www.bluemarkconsultants.co.uk/business-gas-wholesale-prices.php

As I pointed out in my earlier comment, SSE has increased their electricity prices significantly for the last 4 years:

Dec 2010: 9%

Aug. 2011: 12%

Nov. 2012: 9%

Nov. 2013: 8%


That's an increase of about 40% in 4 years, much more than the increase in wholesale gas prices which only make up a maximum of 45% of the bill (and less in SSE's case as they have a lots of renewable plant, and the last time I checked rainfall had not increased in price).

I am not an expert in corporate finances, but here's my take: SSE particularly in Scotland, have a significant generation capacity from Renewables (about 1GW from post war hydro schemes which now only have fairly low maintenance costs, the capital cost being paid for decades ago by taxpayers). And about 2-3GW of windmills, which roughly have a capital cost of around £1 million per MW. So that's £3 billion on windmills, most of which have been constructed in the last 5 years. Okay, once commissioned, they get handsome subsidies but these are proportional to the energy produced, which at best is about 25% of the installed capacity (e.g. the load factor of SSE's brand new 250MW Griffin farm was only 15% last year). They have also had to spend a fortune on the new 200 miles long Beauly-Denny 400kV line, which was only constructed so that future generation from windfarms in the north-west highlands and the Moray Firth could be connected to the grid. SSE's annual profits have not been soaring in the last few years, and I contend that this is because they are using the revenue from the bill increases to pay for the capital cost of their bird mincers and unnecessary Beauly Denny 400kV line. If not where else has the 40% of the 55% gone? My conclusion is that the switch to low carbon generation is costing a lot more than the claimed 4-10%. And it will end in tears because no-one is building any back-up for winter cold spells when the wind stops and the rivers run low.

Oct 12, 2013 at 10:00 AM | Registered Commenterlapogus

Have a listen to a Mr Charles Perry on the today program on Friday 11th Oct in an interview about energy pricing.
WARNING! Ensure all sharp or delicate objects and hot fluids have been removed from your immediate vicinity before clicking 'play'.
Skip to 01:26:10
http://www.bbc.co.uk/programmes/b03c46gh

You'll like him even less when you see his bio on SecondNature Partnership.
http://www.secondnaturepartnership.com/Who_we_are.html

Oct 12, 2013 at 10:35 AM | Unregistered CommenterAlan Ogden

Taking wind alone, 5.3% of electricity production was met by its output in 2012. Its market purchase cost is *4 times that of coal/gas then, by displacing those the generation cost rises by 15.9%. Confounding/disinformation factors aside.

*Probably more, depending on the offshore/onshore mix.

Oct 12, 2013 at 11:39 AM | Unregistered Commenterssat

For anyone interested a table of FITs can be found here

Table of Feed-In Tariffs from 1st April/May* 2013

Oct 12, 2013 at 8:21 PM | Unregistered CommenterSandyS

JD
I notice that no where in the article did Harrabin or Stern say over what period It is clear, he says, that the real culprit for bill increases has been the soaring price of gas. is supposed to have taken place.

From what I can see the wholesale price of gas in Europe peaks around March particularly after a cold winter. March 2006 being the high point. It is very hard to find (at least for me) charts of the European wholesale gas price since then.Do you have a reference to see the trends suggested by yourself, EM, Lord Stern and Harrabin?

If March after colder winters is the high point in prices this would suggest lack of planning by those who bought into Snow is a thing of the past/The European Ski Industry is Doomed myths.

Oct 12, 2013 at 8:54 PM | Unregistered CommenterSandyS

SandyS - here's the link to the graph I posted above -

http://www.bluemarkconsultants.co.uk/business-gas-wholesale-prices.php (2004-2012) and interactive)

It is corroborated (or the data from 2007 to 2010 is at least) by http://www.consumerfocus.org.uk/files/2010/11/Comparative_Wholesale_Retail_Gas_2007_20102.jpg.

Here's another which shows the wholesale and retail divergence: http://i.dailymail.co.uk/i/pix/2012/10/12/article-2216677-15782B94000005DC-888_634x450.jpg, but not sure if the retail prices include the green taxes.

Oct 13, 2013 at 10:44 AM | Registered Commenterlapogus

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