The government released a report yesterday explaining the impact of public policy on domestic energy bills. It's a bit of a mystery in places. Look at the alleged savings that energy policy is currently making for us:
Blue: wholesale, red, network; green, other supplier costsI'm struggling with the idea that wholesale prices (in dark blue) are lower than they would otherwise have been because energy companies are forced to buy renewable energy. Similarly, how can network costs (green) and other supplier costs (red) be lower than they would have been?
I smell a rat.
There is precious little by way of explanation, but if you delve into the appendices you can find a table (table D1, page 72) that breaks down the alleged savings.
The main public policy measures from which the consumer is said to have benefited are:
- Historic energy efficiency regulations £67
- Building regulations £61
- Products policy £41
It is noticeable that these are not the ones we usually hear about, and not the ones that are generally debated. Indeed, much of the benefit is from measures taken in the dim and distant past. Meanwhile, the more recent and more high-profile public policy measures are generating much smaller benefits for the man in the street:
- Green Deal £6
- Smart meters £1
On the other hand, current policy measures are generating a lot of cost:
- ECO £36
- Renewables Obligation £36
- ETS and carbon price floor £23
I think this confirms the general impression of BH readers that current public policy measures are a shambles.
One last point. The thing I'd really like to understand is the maths behind DECC's claim that consumer bills would have been £1459 without public policy. At the moment I can't see an explanation in the report, so that question will have to remain unanswered for the moment.
Bishop Hill