Why Grant Shapps doesn’t know what he’s talking about on energy prices

Why energy bills are really sky high and what Grant Shapps and the Tories won't do about it.

Conservative Party chairman Grant Shapps has produced an interesting Buzzfeed post entitled ‘12 Facts: Why Energy Bills Are Sky High, And What We Can Do About It?

According to Shapps, the “Conservative Party will keep you warm this winter”.

The problem is, all but three of Shapps’s ‘facts’ are plainly untrue or miss the point entirely.

Shapps’s ‘facts’ are in bold; the actual facts are underneath.

1. “So your energy bills have probably DOUBLED in the last 10 years. Even if you use less energy.”

This is true. In the last eight years energy bills have risen by £520, and the Committee on Climate Change has blamed this on the rising price of gas.

2. “This is partly because, in the last 10 years, wholesale gas prices are up 240%.”

The Committee on Climate Change indeed blames energy price rises on the rising price of gas. But this doesn’t account for the recent price hikes. As smaller energy supplier OVO recently pointed out on its website, the most expensive price it paid for wholesale gas in the last four years was in May 2011 – since then the wholesale price has come down.

WHolesale graph

3. “AND Labour didn’t build a single new nuclear plant, to shield us from those price-rises.”

Shapps is correct; they didn’t.

4. “AND, Labour destroyed competition. They squeezed 14 energy firms down to just the ‘Big Six’.”

The ‘big six’ energy companies control 98 per cent of the retail market. In 2000, there were three generating companies and 14 suppliers – 17 companies – and by 2010 there was the big six. This can’t be blamed entirely on Labour, however – a similar tendency toward concentration and monopoly has plagued other big privatised utilities too. And Ed Miliband has pledged to break up the Big Six, which is more than the Tories are offering.

5. “AND Labour let the energy market get really confusing, with more than 4,000 different tariffs.”

Considering that the Big Six mysteriously hike their prices by similar amounts and at the same time every year, the biggest problem customers face is not really which tariff to choose – they are being fleeced whichever tariff they go with – but that there is nothing to stop the energy companies raising their prices. That’s what Ed Miliband’s price freeze is for.

Tariffs

6. “The result? Labour left 2 million more households in fuel poverty.”

If you use the measure of fuel poverty that the government intends to adopt – if fuel costs are above the national average, and were the household to spend that money, their costs would leave them below the poverty line – fuel poverty actually went down under Labour. According to Channel 4 FactCheck and the Department of Energy and Climate Change (DECC) figures, fuel poverty fell under Labour from 11.8 per cent of households in 2003 to 11.5 per cent of households in 2009.

7. “So this is how your bill breaks down today.”

Breakdown fuel bill

The graph is accurate. What it doesn’t show, however, is that, as per point two, wholesale gas prices are roughly the same now as they were in 2011. Consumer bills have gone up during that period, however.

8. “The fastest way to save money today is by switching your provider.”

Not according to the graph below it isn’t (there is some discrepency in the final destination of the lines because not all of the Big Six have yet put their prices up this year. As you can see if you look back across the graph, though, they always do).

Electric and gas]

9. “Ed Miliband attacks switching as a con. But that’s exactly what he did himself.”

Trying to make the best of a bad situation does not mean that you cannot propose fundamental change. If I believe that the price of petrol is too high, does that mean that I can’t shop around in the meantime to make a small saving? Don’t. Be. Silly.

10. “Even now, Ed Miliband wants your bills to rise by another £125 a year.”

Npower estimates that bills will increase by £80 (not £125 a year) by 2020 as a result of low carbon policies. This is actually less than the potential savings from energy efficiency measures. The Committee on Climate Change (CCC) says that measures such as boiler replacement, insulation measures and efficient appliances would be “worth around £145 per household in 2020, with more savings potentially available in the 2020s”.

Update——- (HT the Carbon Brief)

In fact, the Tories predict that consumer bills will rise by £125 by 2030, if the power sector is decarbonised by 2030. The figure is sourced to a report by consultancy Poyry, for the Committee on Climate Change. The CCC estimate that a 2030 decarbonisation target will add £20 to bills by 2030 – six times lower than the Conservatives’ figure. It says the Conservatives are misusing Poyry’s figure. http://www.carbonbrief.org/blog/2013/08/conservative-estimate-for-cost-of-decarbonisation-target-six-times-higher/

11. “That’s right. Ed Miliband is demanding your bills must rise by £125 a year. Madness!”

See point 11.

12. “The Conservatives will keep you warm this winter.”

David Cameron does in fact have a number of tips to keep warm this winter, but they don’t involve reducing you energy bill. Here they are:

#1. Baking Bad

David Cameron doesn’t have a clue about the price of a loaf because, he says, he bakes his own.

“You set the timer [of the bread-maker] overnight so when you wake up there is this wonderful smell wafting through your kitchen. It takes 30 seconds to put in the ingredients,” Cam said.

A Panasonic SD2500 Breadmaker costs £100 – pricey when inflation has been rising faster than wages for 39 of the last 40 months.

#2. Put a jumper on

British Gas announced yesterday that bills would go up by an average of 9.2 per cent for 8 million customers. Unwilling to do anything meaningful about rising gas bills, Cameron did have one piece of advice for pensioners feeling the chill this winter: wear a jumper.

“He is not going to prescribe the actions that individuals should take but if people are giving that advice that is something that people may wish to consider,” a spokesperson for David Cameron said.

#3. Let them use i-pads

If you’re finding retirement lonely, Cameron won’t provide you with better publicly funded social care, but instead will give you an i-Pad. This would provide lonely pensioners with a “link to the outside world” by allowing them to hold “video conferences with friends and family”, ministers have said.

A potentially good idea is hamstrung slightly by the fact that very few 90-year-olds know a thing about touch-screen tablets, e-mails and video conferencing.

#4. Fracking

Cameron believes that communities will receive £1 million each “immediately” from fracking. In reality, they will get £100,000 – a tenth of Cam’s estimate – if they allow fracking in their local area.

Don’t worry about the earth tremors, mind.

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