Critics attack 'rushed and unambitious' energy pricing review

Original Post Source

A five-strong advisory panel assisting Dieter Helm with a UK government-commissioned review into energy costs will only have time to meet a handful of times because of a tight deadline.

One member of the panel said participants had little idea of what the structure of these meetings would be, or how they were expected to contribute to the final report.

“As I understand it, we are a sort of challenge panel,” the individual said. “Dieter writes the report and we’re invited to say ‘have you thought of this or that?’. But it will be his work at the end of the day, and he will say what he wants to.”

The British government announced the widely-trailed review earlier this month, promising that the “ambitious” study would recommend ways to keep energy prices as low as possible while continuing to meet the UK’s climate targets.

It follows commitments made by Theresa May’s government in both last year’s industrial strategy and in this year’s Conservative manifesto to conduct a root and branch investigation of the whole electricity supply chain, from generation to supply.

The review’s stated objective is to “reduce costs in each element and consider the implications of the changing demand of electricity, including the role of innovative technologies such as electric vehicles, storage robotics and artificial intelligence”.

But such claims contrast starkly with the nature of the review reported by insiders. Observers have also questioned whether Prof Helm, an economist at Oxford university, and his team can fulfil such a wide-ranging agenda given its staffing and the limited time the government has allotted to the task. The report is due to be delivered by the end of October, and Prof Helm has been paid for only 30 days’ work.

The £20bn cost of Hinkley Point should be part of the review, say some critics © Bloomberg

“A review by one man backed by an unpaid challenge panel and operating against a rushed timetable seems a way of simply finding out what Dieter Helm thinks,” said Doug Parr of Greenpeace. “It is unambitious compared to the review we were expecting.”

The review takes place at a time of rising customer concern about power prices, which are set to increase by 15 per cent following British Gas’s decision to increase electricity prices by 12.5 per cent on average later this year despite falling wholesale prices.

While UK domestic power tariffs remain low relative to other countries in the EU, they are rising, and for industrial users they are the third highest among 15 European countries, according to the UK government. One reason is because of increases in climate-related policy costs, which make up a growing proportion of the average energy bill, according to the energy consultancy Cornwall Insights.

It estimates that renewable subsidies, efficiency initiatives and smart meters will account for approximately 22 per cent of the average UK household bill of £550 this year. “Ironically, the largest driver of electricity costs may turn out to be the charges imposed by government policies,” said Lord Hollick, who chairs the House of Lords economic committee which published a report on UK energy policy earlier this year.

The report comes as the UK is considering how to implement its latest set of climate targets — the so-called “fifth carbon budget” which states that by 2032, the country’s emissions should have shrunk by 57 per cent from the 1990 baseline. A “Clean Growth Plan” setting out the legally binding steps for realising the targets will be published next month.

One of Britain’s leading energy experts, Prof Helm has a reputation as a vocal sceptic of nuclear and renewable energy technologies on grounds of their cost and economics, although he is thought to have moderated his views.

He is backed by a panel including Terry Scuoler, head of the manufacturing organisation EEF, Richard Nourse, managing partner of Greencoat Capital, an investor in renewable technologies, and Laura Sandys, the former MP. Ms Sandys has argued that the parliamentary pension fund should disinvest from fossil fuels.

Mr Parr of Greenpeace questioned why there was no consumer representative on the panel, given the involvement of Mr Scuoler as an apparent industry advocate, and the fact that the review was supposed to consider both household and industrial costs.

“You should definitely have someone from Which? or Citizen’s Advice Bureau in there,” he said.

The government has mandated that the review should consider only “system issues” and should not comment on the status of individual projects. Critics have queried the sense of this, given the technological choices the UK faces over pursuing a new nuclear fleet or enlarging the renewables sector.

“How you can consider the cost issues facing UK energy without looking at the £20bn Hinkley Point reactor project defeats me,” said an energy consultant.

“We didn’t want Prof Helm to spend two months simply arguing against the Hinkley project as that doesn’t meet the task in hand,” said a government spokesperson for BEIS, the business department.

BEIS rejected the idea that the review was too narrowly based on the opinions of Prof Helm and too brief to unearth any valuable new evidence.

“Professor Helm and the panel are renowned experts in the energy sector. The independent review is expected to deliver high quality insight and analysis in order for government to move quickly on driving down the costs of energy to the benefit of homes and businesses,” the spokesperson said.

Prof Helm declined to comment on the review, but said he was looking forward to saying more when he had completed it.

Leave a Reply

Your email address will not be published. Required fields are marked *