Tuesday, February 12, 2013

Bamboozling Britain on Energy Bills

I don't know if anyone's noticed but the government has recently overhauled its many websites into a fairly uniform GOV.UK set-up. They were pretty anarchic before, it must be said. Now, the gov-site I go to most often (DECC) is more difficult to navigate - but it does look a bit cleaner.

At the same time, I detect they have seriously decided to get their presentational act together. In the case of DECC (and, I've no doubt, lots of others too that I am unable to judge) this means systematically dissembling on the impacts of its ridiculous policies. Perhaps, following Galbraith's famous 'bezzle' coinage, we should call it the 'boozle'. And it's a biggie.

Yes, when it comes to lying about the future policy-driven costs of electricity, the government has long ago decided to Tell A Big One, summarised briefly as "OK, your bills will go up a little bit in the early years, but later they will fall (relative to what we say they would have been without our policies, fingers crossed)". It's worth unpicking exactly how they get to the numbers in this jolly chart, which greenies everywhere have really taken to, but which contains several questionable numbers and one massive, entirely fraudulent sleight of hand.
DECC's Boozle
As DECC have admitted in the past, this argument completely falls if gas prices fall. But let's look at some of the detailed components of their asserted 'saving' of £93.

Costs they acknowledge: as a first pass, we can probably assume most of the elements of the '+£280' are tolerably good estimates, but there are some important points to add: (1) 'EMR support' is planned to rise significantly after 2020, as the supposed new nukes start claiming whatever is to be their grotesque subsidy, and the capacity mechanism bites. So +41 is only the start. (2) Personally I don't envisage doing a 'Green Deal' at Schloss Drew, so I can ignore the +20 of loan repayment. (3) Just look at the transfer payment represented by the biggest single number, +70 for ECO support (a scheme "to subsidise energy efficiency measures for low income households") - this is you and me paying for social policy in a way the government hopes we won't notice. (4) Some estimates of the cost of smart metering etc are a lot higher than +3

Savings they claim: this is where the boozle really gets motoring. I don't know enough to challenge the -158 'Products Policy' and -89 'previous efficiency policies', but boy, those are big numbers. And - they are also in the bag already ! Sunk costs, so to speak. Nothing to do with avoidable policy-costs going forward. We could stop now, and these gains (whatever the numbers should be) would still be ours.

Additionally: (1) the Drew family won't qualify for -53 'ECO / Green Deal' or -16 'Warm Home Discount'. (2) -37 'smart meters' sounds pretty optimistic. (3) -20 'wholesale price impact of EMR' etc is flaky to the point of being an outright punt, it could easily be a net cost.

So: I could re-frame these same numbers for my own circumstances and the -93 diminishes to -49. I could - indeed, I do - diskard utterly the -20 as the flake-job it is. I could add 20 (or more) to EMR support for the years after 2020. I could inject another 30 of modest skepticism on smart meters, etc etc. And then I rightfully ignore the already-captured policy-gains of 158+89, because that's in the past. You can do the mournful maths for yourself.

So - going forward, The Current Policies Are Going To Cost Me Much, Much More! You too, I'm guessing. And the government itself acknowledges I'll have been paying more between now and 2020 anyway ...

Damn them and their wretched boozle !

This post first appeared on Capitalists@Work

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