Why you'll be paying £3,250 extra for gas and 'leccy in coming years
It's not 'gas prices': It is the Will of The People, says Psychohistory prof
Analysis Almost all Britons know that their home energy bills have been climbing painfully in recent years, and many are realising that this process is now set to continue indefinitely. What's not clear is just why this is happening: some lay the blame on rising gas prices, others on profiteering energy firms.
Meanwhile, apropos of nothing in particular, the government has just announced that it has asked the British people what they think about energy, and that they are "overwhelmingly committed to moving away from fossil fuels towards renewable forms of energy production".
'Gas prices' in green, corporate profiteering in red. Money being cranked up for green purposes, confusingly, is blue and yellow.
That last bit is interesting, because just lately the big energy-supply companies have begun very cautiously to mutter quietly - but in public - to the effect that a lot of the price rises past and future are caused not by them gouging us for bigger profits, not by rising fuel prices, but by something the government is doing.
In fact just this week the loudest muttering yet out of an energy company has been heard, as Big-Six supplier RWE npower has issued a report (pdf) into energy price rises in the UK. One of the most significant figures in it is the way that commodity and production costs - that is, the price of buying crude gas (along with some coal, and a little oil and uranium) and turning these things into household gas and electricity - have changed since 2007, and how they are set to change. These are the "gas prices" that we so often hear of as the reason why our bills keep going up.
Care to guess how much "gas prices" have surged over the last six years, as the average household bill has climbed by roughly thirty per cent?
They are up by just ten per cent. That's strange.
And it gets stranger. RWE npower's analysts believe that the relatively small rises in commodity/production prices we've seen will probably go away again by 2020, so that their costs in this regard will return to the same level as they were in 2007. This will be due to gas fracking, more efficient powerplants and other factors.
In the year 2020, then, "gas prices" will have gone up by zero per cent since 2007. What will have happened to bills? Will they have gone down again to reflect this, in npower's view?
Certainly not. By that point, the company forecasts that our energy bills will have climbed even more. They will be up no less than fifty-six per cent on 2007 levels, on top of no increase at all in "gas prices".
That's bloody cheeky.
So what does npower CEO Paul Massarra have to say for himself?
"For a long time, blame has shifted back and forth from energy suppliers to government, each pointing the finger at the other for rising costs," avers the energy kingpin. "This blame game hasn’t helped people - if anything, they don’t know who or what to believe. It’s led to confusion, mistrust, and misinformation, and that’s something we urgently need to address."
Alright then, so what's the true story?
"A recent npower survey showed that people believe supplier profits are typically about 40 per cent, and general perception is that bills are rising because of supplier-controlled costs. In fact, our profits are more like 5 per cent and the main factor behind rising costs is government policy and regulation to fund this country’s transition to a more efficient economy, with modern infrastructure and warm, insulated homes for all."
OK, so Massarra is claiming that it's not surging profits for him that are going to see bills up by 50 per cent while gas prices (and coal, oil and uranium) remain stable. He says the soaring bills have been ordered by the government to fund "modern infrastructure" and "warm, insulated homes for all".
It's pretty clear that with energy bills based on a given consumption figure up by half, people on low or even ordinary incomes are going to need insulated homes or they won't be warm at all. In fact they'll be freezing every winter, unable to afford to turn the heating on, and lots of them will get sick (and die, if they're old or weak enough). So the push for insulated homes is not a benefit here, it's a necessary damage-limitation measure to stop the government's main push for "modern infrastructure" from causing too much misery, disease and death.
And anyway, the "warm, insulated homes" bit is only a small part of this. In 2020, Joe and Jemima Average's bills will be up by no less than £533. Just £84 of that rise will be for "improving customer energy efficiency" and "supporting vulnerable customers", according to npower's figures - those are the warm-insulated-homes bits. Massarra and his henchmen admit that they hope their profits will remain at 5 per cent of the swelling bills, accounting for another £27 of increase.
The other £420+ will be down to government action under the heading of "modern infrastructure", they say - and it is this which causes the need for "warm, insulated homes" in the first place, and which will raise RWE npower's turnover so that its profits can climb too.
The government's £420-odd in "modern infrastructure" stealth levies will go on the following headings in the npower report, which mean the following things*.
"Carbon tax" and "supporting low carbon technologies"
These are the various government schemes such as the Renewables Obligation and Feed In Tariffs, which ensure that energy supplier companies like RWE npower must pay out huge sums over and above the price of any energy produced to windfarm operators and people who put solar panels on their roofs. This ensures that there will be windfarms and rooftop panels. There are also the costs of the EU Emissions Trading Scheme, intended to make some businesses use energy more efficiently - and which has the unintended effect of making it greener for you to travel by airline than by bus.
"Maintaining security of supply"
This covers the extra costs arising from keeping gas and other thermal power stations around to provide backup for erratic supplies from windfarms and solar panels, even though the thermal plants must run less and get expensively thrashed on and off more often (this also generates extra wear and tear on the gas grid). An alternative method, already often used, is paying windfarms not to produce power when it gets too windy, thus giving the ordinary powerplant owner a chance to preserve his or her equipment.
This is the cost of moving energy from the gas well, tanker or power station to your meter via the national energy grids and networks. It has gone up a lot, and will be going up more. RWE npower notes:
Britain’s networks are undergoing substantial investment to ensure they are fit for a low carbon future. New power stations need to be connected to the network with new lines, and new renewable energy technologies tend to be located in areas with little existing network infrastructure. Planning difficulties have meant a new emphasis on underground lines which can be up to ten times more expensive than traditional overhead lines.
In other words, this bit is the cost of modifying the national grids to suit wind farms and solar panels.
And EVERYONE is OVERWHELMINGLY in favour of this, says Psychohistory prof
And that's basically it.* Mr Massarra doesn't want to look as though he's bashing green power so he doesn't say this straight up - and indeed he's not at all averse to collecting his 5 per cent of a much bigger bill. He just wants to make it clear that he isn't simply cranking the price up and keeping it all; he's being made to crank it up and hand most of the new revenue to the green machine. Nor was this his idea, it was the government's.
So it has not been and will not be "gas prices" or corporate greed that will have taken several thousand pounds extra (on average) away from you by the year 2020. It will be the owners of windfarms and solar panels skinning you, plus various other parties involved in making sure that they can and will get to skin you - the government itself as prime mover behind the plan, the power networks and supplier firms such as RWE npower.
You will personally pay all that money so that there is renewable power, bottom line. Nobody asked you if you wanted that, not in those terms ("would you like to spend an extra £400+ a year so that the UK can cut its carbon emissions by a couple of per cent - oh, and pay another hefty chunk on top so that not too many old and poor folk will freeze and get sick and die as a result?")
But hold on. The government tells us this very week that actually it did ask you if you wanted this, and you said yes, you did. Why, here's psychology professor Nick Pidgeon telling us that, following a big government consulting and survey effort, he has found that the great British public are "overwhelmingly committed to moving away from fossil fuels towards renewable forms of energy production".
Are we? Overwhelmingly?
It does seem odd, in that case, that the government didn't just get the power companies to offer us special optional green tariffs, 50 per cent more expensive, with no benefit for the consumer other than the knowledge that some windmills and solar panels would appear. Being "overwhelmingly committed" to renewable energy, we'd all have gone for those tariffs of our own free will - apart from a few poor folk who genuinely couldn't afford them - and the same result would have been achieved.
Why have ministers of all parties and their civil servants instead felt the need to make the move compulsory, and also to pretend that it's not even happening - with a lot of smokescreen talk of "gas prices" and profiteering?
Well, it might be because we the public are not very committed to renewable power at all - certainly not if it costs us a lot of money. If you ignore Professor Pidgeon's waffley advertorial propaganda report, and the meaningless focus-group vox-pop public consultation parts of his "study", and get into the actual survey he had carried out for him by Ipsos MORI, you find some very interesting things.
For instance, only 24 per cent of the respondents said they were very concerned about climate change. Most people thought climate change is happening - unsurprising, even the most rabid carbon denier would be unlikely to claim the climate is static - but there was overwhelming agreement with the statement "it is uncertain what the effects of climate change will be". Only 28 per cent thought that climate change is mainly caused by human activity. The majority did not disagree at all with the statement "the seriousness of climate change is exaggerated".
Despite this rather lukewarm attitude on the menace of human-powered climate change, the respondents were strongly in favour of old Blighty reducing use of fossil fuels. This might have had something to do with the fact that the two issues they were most worried about in coming decades were a) that the UK might become too dependent on imported energy, and b) that gas and oil might run out.
It's not so much that they didn't like fossil fuels, they were just afraid we won't be able to get hold of them.
The pollsters also asked their respondents to arrange the following three things in order of importance as priorities for the government:
1) "Keeping energy bills affordable for ordinary households"
2) "Making sure the UK has enough energy (preventing blackouts and fuel shortages)"
3) "Tackling climate change by using low-carbon energy sources"
Overwhelmingly, the public said the first priority was affordability and the second was preventing shortages or blackouts. Climate change and low-carbon energy came a distant third.
As to what should be done, just 9 per cent thought that most UK electricity supplies should come from wind power - and wind is far and away the most productive and scalable form of renewable power in the British climate. If most UK energy is to be renewable, most of that will have to be wind - just ask Professor J C MacKay of Cambridge University, who unlike Pidgeon is a real scientist - but the British people reject this. (Tellingly, the researchers didn't even bother asking what people thought about solar power - the government is well aware that it's not a goer here.) The majority agreed with the statement "We need nuclear power because renewable energy sources alone are not able to meet our electricity needs", and just 15 per cent disagreed.
It's hardly an "overwhelming commitment" to renewables, really.
Funnily enough, Professor Pidgeon's pollsters didn't ask any inconvenient questions like: "Are you happy to be paying £200+ extra on your energy bills to achieve today's Britain, which meets less than 1 per cent of its energy requirements with renewable electricity?"** or "Are you glad that you'll soon be paying £500+ extra on your bills to achieve a UK which is at best a few per cent renewable-'leccy powered in 2020?"**
As the great British public was quite clear that affordability was its main concern, the good prof would probably have got some unwelcome answers if he'd tried that.
But the fact is, Professor Pidgeon wasn't trying to find out what the British public thinks here: he was trying to tell it what to think, using the time-honoured tactic of claiming that "everyone else already thinks this". The good prof - a psychologist, remember, not a statistician - has already said on the record a couple of years back that the government should engage in major social engineering programmes, conducted by social "scientists" like him, to convince people of the need for massive action against climate change. It would seem that he's since put his plans into action.
As a would-be Isaac Asimov style psychohistory*** practitioner aiming to manipulate public opinion, Professor Pidgeon doesn't seem very effective. His brilliant "consultation" propaganda push, despite wholesale use of loaded questions and selected quotes, was deeply unconvincing and sank largely without trace when it splashed into the news stream this week.
But there are far better operators than the bumbling prof at work out there, all the more effective for being largely unseen or presenting the appearance of being something other than activist green-hardliner psychohistory practitioners. It is them we have to thank for the enduring impression that our energy bills are going up relentlessly due to market forces or profiteering suppliers - when in fact they are going up to pay for wind farms and solar panels ... and the tiny carbon reductions they produce.
What all this secrecy illustrates very well is just how strongly the people behind the green.gov machine disbelieve Professor Pidgeon on the matter of the public being overwhelmingly on their side. If they thought he was telling the truth, they would abandon concealment and offer people an individual choice whether they wanted to pay a lot more for (somewhat) greener energy.
But they know full well they'd get very few takers, so they're doing it by stealth and by compulsion - and with an amazing degree of success given that this is supposed to be a democracy, watched over by a free and vigilant press.
Even quite a few greens might wonder whether these limited ends really justify the use of such sinister and underhanded means. ®
*There is also "Introduction of smart meters": This is a minor heading, expected to amount to £24 of the bill in 2020. However the appearance of smart meters will have enabled RWE npower to save £21 on meter reading personnel and other operating costs they have today, so it will only have cost the average consumer a trifling amount overall (apart from the possible annoyance he or she may feel at handing over even more personal information to large corporations and almost certainly the government too).
**At the moment the Department for Energy and Climate Change proudly says that old Blighty is no less than 4 per cent renewables powered: however nearly all of this is not proper squeaky-clean renewable 'leccy but dubious biofuels. The target is for 15 per cent renewable energy in 2020, but this is liable to be mainly "achieved" - if it is at all - mainly by similarly optimistic bioenergy accounting.
***In Asimov's epic Foundation stories, psychohistory was a scientific discipline that allowed its adepts to manipulate huge galactic populations in which people were as numerous as gas molecules are in a machine or container today. Despite being individually just as unpredictable as gas molecules are, in such numbers people were similarly predictable and controllable as a whole. However, in the books at least, the techniques only worked if the people being manipulated for their own good were unaware that the science of Psychohistory existed.
We're well aware here at the Reg that some of you green psychohistory operators would love to be able to add a footnote below this article to the effect that it's all rubbish and the author of it is a very evil person. We're not offering that today, but if you're willing to do us a favour by getting our Forums section buzzing a bit more, we will let you vent your spleen on that part of the website.
Don't worry though, commentards, this is just a temporary and occasional thing: expect normal service to resume some time next month.