In August the government commissioned the Oxford academic Dieter Helm to conduct an independent review into Britain’s energy market. At the time it was thought by some to be an alternative to the government’s manifesto commitment to impose a price cap on domestic energy bills. But Theresa May unwisely doubled up on that commitment in her Tory conference speech earlier this month. The Cost of Energy Review, Professor Helm’s report, just published, is nonetheless important. It finds that the record of government interventions has been poor, not least because there have been far too many. As he puts it: “The scale of the multiple interventions in the electricity market is now so great that few if any could even list them all and their interactions are poorly understood. Complexity is itself a major cause of rising costs.” Consumers are losing out. For the past three years, in a development unforeseen by either the Department of Energy and Climate Change or the Committee on Climate Change, the prices of oil, gas and coal have fallen significantly. So too has the price of renewables. Yet thanks to policy, regulation and market design, which Professor Helm says are not fit for purpose, energy users are not benefiting. Government interventions in pursuit of climate change targets have not only been done in a way that imposes excessive costs on consumers – officially estimated at 20% of electricity bills or more than £100bn by 2030 – but could almost have been designed to lower public support for a green strategy. It’s of a piece with the government’s support for ever-increasing bills for foreign aid. The poor are made to pay to salve the consciences of the do-gooding rich.
Times 29th Oct 2017 read more »
There was a less than fulsome welcome for Dieter Helm’s compelling review of the cost of UK energy. Greg Clark, the Business and Energy Secretary, would say only that he was “grateful to Professor Helm for his forensic examination. We will now carefully consider his findings.” In Whitehall speak, that’s what’s known as playing it off into the long grass. Privately, some of the central ideas are already being rubbished as unrealistic. That Professor Helm apparently spent only four weeks of his own time on the report is cited as further grounds for scepticism. It should not; Helm has devoted much of his adult life to this stuff. Few know the territory better. His report is one of those plague-on-all-your-houses exercises; he blames just about everyone for the scandal that is the British energy market – the distribution companies for engaging in financial engineering, the regulator, Ofgem, for allowing it, National Grid for the way it operates the system that matches supply and demand, and the suppliers for not properly reflecting the fall since 2014 in the price of oil, gas, coal and renewables. But most of all he blames Government policy. The scale of multiple interventions is now so great, Helm observes, that few, if any, can even list them any longer. Complexity is itself a major cause of rising costs, and tinkering with regulation, as the Government proposes with its planned price cap, will only make things worse. But the biggest curses of all are the Government’s green and nuclear energy interventions, which through feed-in tariffs and contracts for difference unnecessarily lock consumers into what now seem usurious prices.
Telegraph 28th Oct 2017 read more »
Behind the political battles over household bills lurks a far greater energy cost crisis. It risks damaging British industry and undermining attempts to boost productivity after Brexit. Households are paying more for clean power than they should, but official data shows UK bills are still below average compared to the EU. The picture is more worrying for industrial and commercial customers. In this league table UK businesses pay well above the average. The cost burden they bear is second only to Denmark. The issue is under discussion at the Treasury. Officials are clear that for the UK to attract inward investment the country needs to be competitive on energy costs, even while taking action to reduce carbon emissions. “This is why the Government has commissioned an independent review into the cost of energy led by Prof Dieter Helm to deliver the Government’s carbon targets and ensure security of supply at minimum cost to both industry and domestic consumers,” the Department of Business, Energy and Industrial Strategy said earlier this year. The Helm review concluded that bungled policymaking and Governmental tinkering has meant the UK is paying “significantly” more than it should. Andrew Buckley, a director at the Major Energy Users Council (MEUC), agrees. “The report refers to decarbonisation and social policies making up 20pc of bills,” he says. “For our members we calculate that these costs will reach over 40pc by 2020 and this is the main reason why our industrial power bills are the amongst the most expensive in Europe.”
Telegraph 29th Oct 2017 read more »