Occupy your mind #6

Of course, the Conservative component of the Coalition Government of the UK concerns itself with the cost of power and fuel for trade and industry. The Daily Mail stirs the murky river bed : “George Osborne is preparing to offer tax breaks to firms hit by Britain’s ‘absurd’ climate change policies after being warned they threaten to drive business abroad. In a major U-turn, the Chancellor will try to help companies that use large amounts of energy. His move comes amid growing concern that companies and households are being hit heavily by Britain’s commitment to cut carbon emissions faster than other countries […] Mr Osborne’s plans are sure to set him on collision course with his Liberal Democrat coalition colleagues. Last night Whitehall sources told the Mail the Chancellor is working on radical proposals to mitigate the effects on companies that use large amounts of energy, such as cement, aluminium and steel makers. Tax breaks and exemptions from new carbon levies are expected to be included in a mini-Budget due next month […]”

This business protectionism is more than a small chink through which Ed Miliband, the leader of the opposition Labour Party could elbow his way through to the hearts and minds of the dear electorate. So far, Mr Miliband has laid the blame for energy price rises at the door of the energy supply companies, but he will need to do a more in-depth analysis in order to tease out all the strands of this problem for the voters. First and foremost, he will need to counter the Daily Mail argument that green policies and green investment are the major factor in rising home energy bills : ” […] how the climate change ‘obsession’ drives up your bills : Ministers’ obsession with green taxes is driving up energy bills, bringing financial pain to millions of families, it was claimed last night. Business groups demanded cuts in fuel prices be given a higher priority than meeting EU targets to reduce carbon emissions […]”

If Ed Miliband can get through this quagmire, he might be able to rally the support of Daily Mail readers : ” […] the Government energy summit yesterday offered no hope that struggling families and businesses will be offered lower energy bills this winter. The ‘big six’ energy giants have increased tariffs by 15 per cent-plus in recent weeks, raising the average annual dual fuel bill by around £175 to £1,345. This figure is inflated by around £100 to cover a raft of green taxes and associated charges, which are set to soar in the next decade. Mr Huhne is the chief cheerleader for the charges, which are being used to fund a £200billion shift to wind, wave, solar and nuclear power […]”

Once again, that Daily Mail gets things warped : the Ofgem report that gives a scenario for energy policy where spending would need to be 200 billion Pounds Sterling shows that the vast majority of that budget is for investment to replace current power systems, not providing green energy. Making energy investment “green” adds a certain amount to the final bill, but doesn’t represent the majority of the money required to replace ageing plant and grid infrastructure. Measures in the Coalition’s proposed “Electricity Market Reform” relate mostly to Government subsidies to low carbon generators and not to new energy system investment, which would need to be paid for by energy companies – something that the Daily Mail does not appear to understand. It’s true that the cost of investment in new energy by companies will be passed on to the energy consumers – but that’s regardless of whether it’s green energy or dirty.

Ed Miliband’s call for cheaper energy bills for customers will not be answered – to keep up energy supplies, energy companies will need to do new investment, and that means they will put up the bills to pay for that investment. Mr Miliband’s best tactic could be to call for universal insulation and energy-efficient appliances. Conservation of energy will keep customer energy bills lower; and also prevent the need for so much new investment in new power stations, which will stave off extra increases in customer bills.