Renewable Energy Foundation

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DECC Conceals Estimates of Energy and Climate Policy Price Impacts

On the 6th of November the Department of Energy and Climate Change (DECC) published the third and much delayed edition of its Estimated Impacts of Energy and Climate Change Policies on Energy Prices and Bills.

REF has previously criticised the methodology used in the previous two issues of Estimated Impacts (2011 and 2013), particularly the tendency to focus on modelled average bills not price effects and so conceal important variations in effects on different types of domestic households. DECC also made use of unreasonably optimistic assumptions with regard to the effects of energy efficiency measures. For further details see our study Shortfall, Rebound, Backfire (2012), and subsequent correspondence with DECC and the UK Statistics Authority.

The latest, 2014, release of Estimated Impacts continues to suffer from many of the faults identified by REF in previous editions, and is rendered still more unsatisfactory because the tables showing the electricity and gas price impacts (£/MWh), rather than modelled average bill effects, have been deliberately withheld, even though they appeared in the three previous editions.

This omission of important data renders the title of DECC’s publication meaningless, since no information is in fact given on the effects of policy impacts on gas and electricity prices.

Furthermore, the overall study is now opaque, since without information on the price effects, the reader cannot form a clear view of the likely effect on any individual consumer, or of the plausibility of the government’s modelled average bill impacts.

In response to this extraordinary state of affairs, REF’s director, John Constable, submitted a Freedom of Information request on 10 November 2014 seeking the missing information. This request is due for response by the 8th of December.

Others are equally interested in this matter, and we note that on the 11 November Lord Ridley tabled two Parliamentary Questions seeking information on the same subject:

HL2833: To ask Her Majesty’s Government why detailed estimates of the impacts of energy and climate policies on the retail prices (pounds per megawatt hour) of gas and electricity are omitted from the 2014 edition of the annual Estimated Impacts of Energy and Climate Change Policies on Energy Prices and Bills when they have been present in all previous editions.

HL2834: To ask Her Majesty’s Government what are the impacts in pounds per megawatt hour of each energy and climate change policy on (1) retail gas prices, and (2) retail electricity prices, for (a) domestic consumers, (b) medium-sized businesses, and (c) energy-intensive users in their low, central, and high fossil-fuel price scenarios.

DECC has now (27.11.14) responded to these questions but has not provided the information requested and has given an unsatisfactory reason for withholding the information. The response is as follows:

The layout of the 2014 Estimated Impacts of Energy and Climate Change Policies on Energy Prices and Bills report [1] was reviewed to focus on overall bill impacts following feedback on the length of Annexes and confusion between the prices and bills tables in previous reports.

The price and consumption effects of each policy on domestic consumers, medium-sized businesses, and energy intensive users are converted into £ impacts and set out in a single set of tables in Annex D.
The results of fossil fuel price sensitivity analysis are summarised in Chapter 6.

[1] This Answer included the following attachment: Est. impact of policies on energy prices & bills (prices_and_bills_report_2014.pdf)

This answer amounts to a straight-forward refusal to reveal the impact of energy and climate policies on gas and electricity prices to consumers. This is clearly unacceptable.

In the Foreword to Estimated Impacts (2014) the Secretary of State for DECC, the Rt Hon Ed Davey MP, states that ‘We are committed to being transparent with the public about the costs of energy policies’. However, neither the study that follows nor DECC’s subsequent behaviour are consistent with Mr Davey’s intentions.

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