Government Slammed for Releasing 'Wildly Optimistic' Predictions on Energy Price Savings

Government Slammed for Releasing 'Wildly Optimistic' Predictions on Energy Price Savings

The average energy bill will be £1,319 by 2020, the Department of Energy and Climate Change (DECC) has predicted. Government officials claimed that green energy subsidies will mean that the bills will be £92 a year lower than they otherwise would have been – but last year they claimed the subsidies would knock £166 a year off the average bill, meaning that by their own figures, households are expected to be £74 worse off than previously thought, the Daily Mail has reported.

But the figures have been slammed as a “cold blooded piece of spin”, and “wishful thinking” by industry insiders.

The figures were released in an audit which had been due for release five months ago. In it, the government claims that green policies have delivered a £90 saving on energy bills this year. The figure includes a £50 saving announced last December.

However, the report also admits that policies aimed at supporting cleaner energy and “keeping the lights on” cost families £62 a year, whilst energy efficiency measures for low income families cost another £40.

Energy and Climate Change Secretary Ed Davey said: “We have the best energy security in Europe – and to stay that way we need to deal with a legacy of underinvestment and build a clean, secure energy system based on home grown supplies. I’m determined that while we tackle these challenges, consumers don’t pay a penny more than they have to for the energy they use.”

But consumer groups disagreed. Richard Lloyd, executive director of Which? said “It’s all very well the Government saying that because of its policies energy bills will be coming down, but these heroic assumptions rely upon hundreds of thousands of households buying new energy-efficient fridges and washing machines.

“The reality right now is that the biggest suppliers are yet to cut prices for the vast majority of customers and, with nearly half worried about the cost of heating their home this winter, it’s clear more needs to be done.”

John Constable of the Renewable Energy Foundation agreed. “DECC has revised its expectations for energy efficiency policies from “wildly optimistic” to “wishful thinking”.

“This is a step in the right direction, but still a long way from realism. It is a deliberately opaque and cold-blooded piece of spin,” he commented.

The government’s policy – begun under Labour but adopted by the coalition in 2010 – of pouring billions into low carbon technologies on the basis that fossil fuel prices would exponentially rise is becoming completely discredited, as gas, oil and coal prices plummet globally.

Last week an Oxford professor, giving evidence to a House of Lords committee told the Lords that the idea that governments could pick winners had been proved incorrect many times before, and this time was no exception.

Oxford Professor Dieter Helm, who is an expert in energy economics, said that the “Miliband-Huhne-Davey” energy policy is based on the assumption of rising fossil fuel prices – something that doesn’t have “any part in energy policy.

“That fossil fuel prices are going to go up. … That’s an outcome of the market, not a policy assumption to make. … If your bet turns out to be dramatically wrong, you’re going to have lots of technologies which are ‘out of the market’ for some considerable period to come. We will have to subsidise those technologies right through the 2020s and beyond.

“This knowledge that politicians have, that politicians know what the winners are, we’ve been there so many times before.  It usually turns out badly and it has done this time.”