Monday, 12 November 2012

Losing Energy

Energy bills are soaring, driving up inflation and contributing to the cost of living crisis afflicting millions of families. The government’s response is to tell consumers they’re to blame for not shopping around enough and to cut back on the support it is offering to help people heat their homes.

Last week the Prime Minister promised to legislate to force energy companies to put everyone on the cheapest tariff. Within 24 hours, this policy had completely unraveled. Now, all the Government is actually promising is to get the energy companies to write to people.

It is clear that nuclear energy will continue to play a key role in a balanced energy strategy, especially when addressing climate change. The UK currently has 10 operational nuclear power stations, but all have scheduled closure dates between 2014 and 2035. Delivering on new nuclear power is a huge task. Investors need certainty and confidence about the Government’s direction of travel and commitment to nuclear power.
Yet the government is all over the place. This is not surprising as the Liberal Democrat Minister for Energy was responsible for launching a ‘Say No to nuclear’ campaign in 2006.

And now the junior Conservative Energy Minister John Hayes declares that building “onshore wind farms is at an end. Enough is enough”, whilst his boss, Liberal Democrat Energy Minister Ed Davey, says “He doesn’t make policy. There’s going to be no change in the government policy on renewable energy. Onshore wind is one of the cheapest renewables. It has an important role to play in our energy future.” What a shambles.

The most sustainable way that people can cut their bills is by reducing energy use, mainly by insulation improvement. However, the government has slashed the Warm Front programme which had secured insulation improvement in more than 2 million homes over the last 10 years and - despite the fact that nearly 30,000 qualifying applications were turned away last year – plans to abolish the scheme next year.

In its place, the government has proposed the Green Deal – basically a pay as you save scheme. . Homeowners install measures such as insulation, lagging and double glazing with no upfront cost. The costs are then paid back over a period of up to 25 years with the savings expected to be made from lower energy bills. In April, the Deputy Prime Minister Nick Clegg said: “We'll ensure customers are never charged more for the home improvements than we expect them to make back in cheaper bills.”

However, the government is now proposing that the interest rate on the loan will be at 7.5%. The typical scheme is estimated to cost about £10,000, which at that rate would require an annual repayment of about £886. As the average annual dual-fuel bill is now £1,335, that would require cutting the typical household energy bill by two thirds just to break even. You’re right, it doesn’t stack up.

Meanwhile, our fuel bills will continue to rise and the energy companies will continue to make super profits.