energywatch have been in the news a lot in recent days. Castigating electricity companies, Ofgem and anyone else they hold responsible for rising energy prices.
The reason gas prices are going up is complex but, basically, the main issue is this one:
Right now oil production isn't keeping up with rising demand. That doesn't mean we need to go off ranting and raving about peak oil. It just means that right now we don't have enough of the stuff coming out of the ground. The market is sending a signal for everyone to cut down their use of oil but, unfortunately, there aren't many good alternatives so demand for oil is highly inelastic and doesn't fall much when the price goes up. It is also sending a signal to increase production but supply takes a while to respond.
Gas prices are linked to oil prices on the European market. As such, the rising price of oil is pushing up gas prices. Electricity prices rise in turn because our generation is incredibly dependent upon gas as a fuel. No one is really directly to blame for price rises. As Ofgem have shown (PDF) the UK gas price is pretty much the same as the EU average.
There is another factor significantly pushing up energy prices, particularly electricity: climate change policies. The Renewable Energy Foundation sets out the numbers:
- "Climate change policies make up around 14% of the average domestic electricity bill and 3% of the average domestic gas bill.
- Climate change policies also make up 21% of the average business electricity bill and 4% of the average business gas bill (i).
- By 2020 the burden of green policies will have risen to 18% of the average domestic electricity bill and 55% of the average business electricity bill(ii).
Despite this substantial bill the Renewables Obligation will decrease emissions by just 1.6% by 2010, at an exorbitant subsidy cost of around £400 per tonne of carbon (iii)."
So, we have two major causes of energy price rises: the structure of the European gas market and government climate change policies. One isn't really under anyone's immediate control. In the medium term we can invest in coal and nuclear power to reduce our dependence on gas but that's a project that would take years. By contrast, so long as the Government were prepared to ignore lunatic EU targets they could bring down the price of energy by scrapping useless policies tomorrow. That's how hard-pressed consumers of energy could really be given a break.
What are energywatch focussed on then? Bashing energy companies, of course. Mike Denham, writing at the TaxPayers' Alliance blog sets out why:
"Except that energywatch is not independent. It is a tax-funded quango which costs us £15m pa (2006-07 Report and Accounts). Its rants are entirely dependent on us taxpayers for their funding.
It gets better. In 2006-07, Campaign Director Adam Scorer got paid no less than £75,000 (including pension accrual). His boss Allan Assher got paid c £125,000 (including pension). Of our money."
So, the Government forces us all to pay for a quango to bash energy companies and distract from their own complicity in high energy prices. The media don't ask any questions. The cost to ordinary people of massive subsidies to renewable industries that provide little useful capacity needs to be exposed and energywatch should be shut, so that it can be replaced by a campaign that really has the interests of energy consumers, rather than pleasing its political masters, at heart.