Earlier this month, Decc published its latest assessment of the impact of energy and climate change policy on energy bills. With four of these reports now available for comparison, I’d like to highlight a few points.
First, previous reports gave impact assessments both on an energy average bill basis (domestic and various non-domestic) and on a £/MWh basis. Given the uncertainty regarding the energy efficiency improvements that can be expected, the £/MWh assessment was extremely useful and transparent. It is a great shame that Decc decided not to include the £/MWh analysis this time.
Second, perhaps unsurprisingly where direct comparisons between estimates are possible, there is a great deal of variation. The 2010 report estimates that for a medium-sized business, policy costs would increase electricity bills by 29 per cent. In 2011 this rises to 25 per cent, the 2013 report projects 38 per cent, while this year’s says 50 per cent. Much of this is due to the changing policy landscape, but it is nonetheless worrying to see such uncertainty from government on the impact of its policies, particularly when the trend is in an upward revision each year.
Finally, Decc’s analysis should put pay to the idea that increasing low-carbon generation lowers wholesale costs. When we factor in the likelihood of low-carbon generation being the marginal plant at greater frequency in the future and carbon pricing, we actually see a net rise in wholesale costs of 36 per cent by 2030.
Richard Warren, senior energy and environment policy adviser, EEF