IEA: Brexit provides real opportunity to bring down electricity bills

Posted: March 23, 2017 by tallbloke in Accountability, Energy, government, greenblob, solar system dynamics

energy -prices-EU

The institute for Economic Affairs has published a report calling for a reduction in electricity bills.

Brexit provides real opportunity to bring down electricity bills for low-income households

Executive Summary:

    • Electricity charges for households in England and Wales have risen by 50 per cent in real terms since 2001, partly as a result of policies designed to reduce greenhouse gas emissions.
    • The decarbonisation policies adopted have been complex and inefficient, and have also been contradicted by other measures such as the reduced rate of VAT imposed on domestic fuel. Emissions reduction objectives could be achieved at much lower cost.
    • The government should phase out the Climate Change Levy, the Energy Company Obligation, the Warm Homes Discount and the Carbon Price Floor.
    • Utility bills should be taxable at the full VAT rate (20 per cent) rather than the reduced rate (5 per cent). Any help to vulnerable households should be in the form of electricity vouchers.
    • If the goal is to reduce emissions, decarbonisation should be undertaken under a single market-based mechanism such as a cap-and-trade scheme or a carbon tax, which would apply to all CO2 emissions.
  • Climate-change policy should be technology-neutral. The government should establish a decarbonisation target and allow energy markets to adjust to it in the most efficient way.

The rising cost of electricity in the UK
Since 2001, electricity charges for households in England and Wales have increased by 50 per cent in real terms, from £352 to £537 (DECC 2016a).
1
This is in stark contrast to the decade prior to 2001, when, following liberalisation and privatisation, bills dropped by 26 per cent (Littlechild 2000). UK domestic electricity prices, on a per kWh basis, today are the ninth highest in the EU, and the highest when VAT and other taxes are excluded (Eurostat 2016).
2
The reversal has been even starker in the case of industrial electricity prices. After a drop of 25 to 34 percent over the 1990s,
3
the average industrial consumer of electricity saw the real price per kWh double
between 2004 and 2015 (Littlechild 2000; BEIS 2016b).
4
Today, Britain has the third highest industrial electricity prices in the EU
The figures are deflated to 2010 GBP, for standard metering and assuming annual consumption of 3,800 kWh. There is some variation in charges depending on the payment method (standard credit, direct debit, or prepaid) and the figures are weighted by the prevalence of each payment method in 2015 (BEIS 2016a).
2
The UK levies no taxes other than VAT on domestic electricity bills, but other EU countries do.
3
The exact measure of the price decline depended on the size of the customer. Medium and large industrial consumers saw the biggest price drops (see Littlechild 2000).
4
Industrial consumption of electricity dropped by 28 per cent during this period, no do
ubt partly in response to rising prices, though consumption had been on a downward trend since 1973 (BEIS 2016c).

 

Comments
  1. A carbon tax isn’t going to be popular either. How about we do everything suggested, drop the carbon tax idea, and don’t care about reducing emissions?

  2. suricat says:

    fenbeagleblog says: March 23, 2017 at 11:44 pm

    I concur! ‘Carbon’, per se, isn’t the problem for atmospheric gas alteration. Its the ‘particulates’ and ‘NOX’ products that pollute our atmosphere where/when ‘some’ ‘carbon products’ are burnt for energy and power!

    Both industrial and household ‘gas consumption’ produces the ‘least’ pollutant residue, but could/would be included with a ‘carbon tax’.

    The petrochemical ‘diesel’ fuel consumption (the most polluting with high levels of ‘particulates’ and ‘NOX’ products in their emission analysis) would be ‘under taxed’ in the same ‘tax bracket’ as gas (either industrial or household).

    IMHO we need a ‘pollution tax’ for ‘methods of use’ of carbon based fuels (and perhaps non-carbon based also).

    Best regards, Ray.

  3. Curious George says:

    Maybe the UK does not consider surcharges for “renewable” sources a tax. Berkeley, California can’t legally raise taxes more than 1% a year, so they issue “special assessments”, which are practically but not legally taxes.

  4. Richard111 says:

    That chart shocked me! I was going to put all my lights on for earth hour tomorrow but now I wonder if it’s worth it.

  5. oldbrew says:

    The UK already has the ‘carbon price floor’.

    ‘This notice contains information about the carbon price floor (CPF), which was introduced on 1 April 2013. The CPF affects the price of carbon in the UK electricity generation market by taxing the fossil fuels that are used to generate electricity’

    https://www.gov.uk/government/publications/excise-notice-ccl16-a-guide-to-carbon-price-floor/excise-notice-ccl16-a-guide-to-carbon-price-floor

    See also: What is the Climate Change Levy (CCL)?
    http://www.gazprom-energy.co.uk/help-and-support/bills-payments/what-is-the-climate-change-levy-ccl/

  6. Stephen Richards says:

    There is no politician in the UK or Europe brave enough to do what’s necessary. They have shown no inclination what so ever to take the bull by the horn and fight the green scammers.

    The figures are a little confusing but if they are industry prices only then I understand

  7. AlecM says:

    There is a solutiob: install 15 GW domestic and small business gas heaters with metal/ceramic fuel cells. By dropping demand, the windmill and solar cell operators have to drop prices dramatically.

    During the day the owners of the micro-generators can act as standby when the windmills aren’t working whilst saving 40% CO2 emissions compared with diesel STOR AND capturing the heat. The cost of the fuel cells is about the same as nuclear power generators.

    Add in fraccing and we have a way forward whilst fully compliant with current Law.

  8. ivan says:

    I can’t help wondering just how much is added to the bill in indirect taxation which does not appear as direct tax.

    Past experience points to it being over 50% when all the green ‘taxes’ are added up.

  9. tom0mason says:

    “IEA: Brexit provides real opportunity to bring down electricity bills”

    Only if the UK government abandons the money-grubbing cronies influencing their energy policy.

  10. oldbrew says:

    Offshore provides 21% of UK infrastructure value
    14 February 2017 by David Weston

    UK: More than 20% of the entire UK’s infrastructure construction contract value in 2016 came from the offshore wind industry, new research from market analyst Barbour API has found.

    “We have also seen a large uptake in the planning pipeline for future offshore wind farms, with £23.2 billion worth of construction planned over the coming years, suggesting this burgeoning sector will continue to expand in 2017 and beyond” [bold added]

    http://www.windpoweroffshore.com/article/1424181/offshore-provides-21-uk-infrastructure-value
    – – –
    Meanwhile getting even one measly gas-fired power station built is an uphill struggle, as various coal-fired and nuclear plants are being ‘retired’.

  11. oldbrew says:

    UK gov. energy bigwig: “Our view now is that decarbonisation has a cost to domestic users and businesses and our focus now is on ‘how much can industry bear before it is too much, and decides to go elsewhere?’”

    In his earlier address to the conference he said: “The key challenge for us all is how do we get costs down and away from the subsidy regime. This is the biggest challenge we face and one that can be tackled by Government and industry working together.”

    http://www.thegwpf.com/energy-policy-will-be-about-cutting-costs-not-emissions-says-government-chief/

    Better late than never 😐

  12. Stephen Richards says:

    oldbrew says:
    March 24, 2017 at 6:25 pm

    That sounds terrible. He sounds like he is say ” we will screw industry and domestic users until they can’t pay anymore and then think what to do.”

    [reply] we’re already going down that road

  13. oldbrew says:

    He says it’s a challenge but things like the carbon price floor are self-inflicted.

  14. stpaulchuck says:

    only if you stop building subsidy farms and taxing plant food (CO2)

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