Energy Price Rises

'... And then came the best bit. Our spokesman said how sorry we were about the huge price hike and managed to keep a straight face!'

‘… And then came the best bit. Our spokesman said how sorry we were about the huge price hike and managed to keep a straight face!’

For the full story see the Daily Mail

As many are aware I have no particular love for SSE as we have the Beauly-Denny line, the noise problems at Wester Balblair and the circle of windfarms in the Inverness area from Fairburn with it’s proposed extension to Stronelairg and all the other local developments too numerous to mention. However this is little more than a pissing contest. Sorry for the crudities. SSE promise an 8.2% rise in prices but point to the 8% cost of Government environmental and social charges. One suspects the ROCs subsidies that they don’t want to lose are hidden in their buying energy costs. After all the windfarms and hydro are now held within the SSE Renewables Holdings portfolio which is based in Ireland. So as usual we have obfuscation of the truth. The challenge though is to blackmail the government to remove the carbon costs of the SSE charges and replace with subsidy from tax. In other words SSE get the same amount or possibly more from the exchequer, which we all pay, still get a big price hike and blame it on everyone but themselves. They blame the costs of upgrading the lines for part of the price rise but, correct me if I am wrong, the National Grid picks up that bill plus a fixed profit to SSE. And why is the upgrade necessary. To connect the wind farms of which SSE has a considerable number. If they are so efficient SSE should be cutting bills, not raising them. But then we won’t know as SSE Renewable Holdings is now in Ireland. SSE is the largest privately owned UK company and its woes and tribulations are no different from any other of the big six. Problem is that when the UK Government introduced a subsidy for wind it opened pandora’s box and every energy company has striven to make the best advantage of it ever since.

However, there is a but. SSE have a justified gripe. Why should they carry the can for the inane carbon taxes, way ahead of inflation, that Tony Blair and ED Milliband lumbered us with. They were plain wrong and Cameron is still dining in that saloon. For him though it may be the last chance saloon and he must ditch Davey and the Climate munchkins and create a level energy market providing affordable plentiful electricity and gas. For that some hard choices have to be made and SSE may be in for a big fall as wind is ditched. I, for one, won’t lose any sleep over it.

One area SSE, Iberdrola(Scottish Power) and the other big four are complaining about is the Energy Company Obligations (ECOs) which account actually for some 4% of surcharges. The other 4% in SSE’s criticism possibly related to Feed in tariffs.  To you and I, ECO is the free loft insulation for some and energy meters for all. A variety of support from free light bulbs upward. Originally expected to be supported by profits, the levels have increased year on year, resulting in those costs being past on to consumers as what are described on your bill as Environment and Social Schemes.

To further quantify energy costs we have statistics from the DECC from 2012  A breakdown of all costs is available here but abbreviated in this graphic.

energy costs 2012

ECO = Energy Company Obligations

RO = Renewable Obligations, subsidies paid to large scale wind farms, marine and some other renewables through the Renewable Obligation Certificate (ROCs) system

EU/ETS = European Emissions Trading System

CPF= Carbon Partnership Facility

FIT = Feed in Tariffs, subsidies paid to small scale(on farm) and domestic wind and solar

Warm Home Discount = Support for the over 75s

Smart Meters = Smart Meters are planned for every home by 2020 (not to be confused with the simple home energy monitors that many people have been supplied with)

As the ‘average’ larger home bill is around £1200 pa this would suggest that the subsidy and social costs on those average household bills amount to about £166, far larger than commonly quoted by politicians and the renewables industry. This would amount to 14% which is in line with Scottish Power(15%) and RWE n-Power(14%). Last year British gas quoted as high as 19%. However updated records for 2013 suggest that ROCs may average £63 per annum and FITs £24 pa which suggests that the true cost of subsidy and social costs significantly higher.

British Gas breakdown of electricity costs

British Gas breakdown of electricity costs


Funnily enough, pulling out of ECOs (Energy Company Obligations) would actually cost a large number of UK jobs. Whereas pulling out of ROCs, which would remove a lions share of the surcharges, would be relatively painless. For every renewable job, three others are lost(Verso Report – Worth the Candle? – 2011). What we need to do is become more energy efficient and the ECO scheme directs effort to that. Here I am not worried about carbon but as a nation we are too profligate with our resources. Like a good housewife we should aim to stretch them out. That way we can all benefit economically.
t the total subsidy and social cost is c. £166 per annum. Somewhat larger than those normally quoted and at 14% is about right. British Gas last year quoted 19%.

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About Dougal Quixote

Slightly mad. Always believes a cup is half full so continues to tilt at Wind Turbines and the politicians that seem to believe it is their god given right to ruin Scotland for a pot of fool's gold.
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One Response to Energy Price Rises

  1. cornwallwindwatch says:

    Reblogged this on Cornwall Wind Watch.

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