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UK’s Energy Bills Crisis: What’s Caused It and What Can Government Do

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Net Zero Watch warned Conservative candidates jostling for the party’s leadership that any pledge to continue with a business-as-usual approach to Net Zero will lead to the worst energy cost crisis in British history.

To assess how serious each candidate in the Conservative leadership contest regarded the “cataclysmic” energy cost crisis Britain is facing, two weeks ago Net Zero Watch sent a list of key questions to all candidates to find out where they stand on each of these pressing cost issues. Their questions included:

  • Will you commission a cost-benefit analysis on current Net Zero plans?
  • Will you pause all Net Zero plans that are aggravating the energy crisis?
  • Will you suspend all green levies on energy bills to reduce the energy cost crisis?
  • Will you review all policy initiatives directed toward the 2050 Net Zero target, including the Carbon Budgets, the heat pump targets, and the overly ambitious timetable for the ban on petrol and diesel engines, in light of the energy crisis?

Net Zero Watch aims to highlight and discuss the serious implications of expensive and poorly considered climate change policies. “Increasingly conversations about climate and energy policy are becoming narrow and polarised. Net Zero Watch is here to give you a clear view of the reality of climate and energy policies and what they mean for you,” their website states.  

Net Zero Watch is run by the Global Warming Policy Forum. DeSmog wrote an investigational article on the Forum. Although the article refers to those who challenge the official “climate change” narrative as “climate deniers,” it provides useful information and links to resources for those seeking the truth about climate change – providing you can overlook the author’s obvious and flawed pro-narrative bias.


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Before writing their letter to candidates in the Conservative leadership, Net Zero Watch published a short guide to the UK’s energy bills crisis. It consists of 8 pages of text explaining the pros and cons of the options available to the UK government to solve the crisis and then makes some recommendations. The guide begins:

The energy bill cost crisis is the result of failed policy decisions stretching back decades and presents short-term hardship problems that are extremely difficult to address, as well fundamental problems that require long-term reform of energy policy.

The Net Zero Watch Guide to the Energy Bills Crisis

Below are excerpts taken from Net Zero Watch’s guide. To ensure the excerpts are understood in their correct context please read the full guide HERE.

The Causes of The Present Crisis

The current crisis is the result of several interwoven policy failures that have rendered the UK electricity system fragile and vulnerable to shock, with British energy policy since 2002 focused on the development of renewable energy, particularly wind and solar electricity, almost to the exclusion of all other concerns.

Income support subsidies to renewables now amount to over £10 billion a year, and rising. This is drawn from consumer bills, with approximately one-third of that sum hitting households directly, and the rest increasing the costs of goods and services as industrial and commercial consumers pass on their share of the subsidy costs. VAT of 5% is charged to consumers on these subsidy costs.

Coal stations have closed, nuclear is winding down, and the combined-cycle gas turbines that guarantee security of supply have been offered a smaller and very irregular market from which to recover their fuel and, most importantly, their fixed costs.

System balancing costs in the UK have risen dramatically since the introduction of renewables, from about £350 million a year in 2002 to over £2 billion a year at present, mostly due to the presence of uncontrollable renewables.

Transmission system costs have also risen significantly, from about £2 billion a few years back to about £3 billion a year at present, again largely due to the presence of renewable generators.

Many European states have taken a similar path, meaning not only that electricity costs to consumers have already risen to very high levels, but also that consumers are critically exposed to the cost of natural gas, since this is required to guarantee security of supply. This has created the conditions for the emergence of the current crisis.

What Are the Government’s Options?

1. A VAT holiday for domestic energy

VAT, as noted above, is charged at 5% on the supply of electricity and gas to households, magnifying the cost of subsidies to renewables, system balancing costs, and also the rising price of natural gas. Since so much of the VAT take is comprised of a tax on a tax (green levies in this case) there is a case for zero rating, or at least a significant rate reduction, in the current circumstances.

However, it should be noted that the impact of the VAT holiday, though worthwhile, would not address more than a fraction of the likely increase in domestic bills, and it would have no impact on supplies to industrial and commercial consumers.

2. Loans for energy suppliers

It has been rumoured that the government is considering providing £20 billion of support to energy suppliers via bank loans so that the immediate costs of supplying gas and electricity need not be passed on to consumers. This would provide short-term relief, preventing the number of defaulting billpayers reaching critical levels, but it is likely to be inefficient, and would also possibly fall foul of international commitments to reduce subsidies on the consumption of fossil fuels.

Taxpayer support to low-income consumers, for example via low prices of gas in Iran and transport fuel in South America, is widely criticised by climate activists as constituting a subsidy to the fossil fuel industry. It is perhaps unlikely that Greenpeace or similar bodies would challenge the £20 billion as a subsidy incompatible with the Climate Change Act, but it is a possibility.

It would be difficult to ensure that the loans were recovered. While this can be done in principle, one wonders whether any government would be able to do it in practice.

Net Zero Watch, therefore, thinks that these loans would in effect be gifts, and would set a shackling precedent for bailouts to the energy sector. They would also be perceived by the public, to a degree correctly, as gifts to energy company fat-cats, and would therefore be extremely unpopular.

3. Direct support to households

As noted above, subsidising prices indirectly through “loans” to energy companies is likely to be both inefficient and unpopular. The Treasury could, therefore, and in spite of the many difficulties involved, consider a mixture of special direct assistance to household consumers via the tax, pension and benefits systems.

Many will consider that there is a strong moral case for direct assistance to those households on low and fixed incomes since the current crisis is largely the result of state policy. However, further increases in public spending are in themselves highly controversial and may not be affordable for the taxpayers onto whom the burden would be transferred.

Major tax reform to ease pressure on consumer budgets would require immense courage in the Treasury and would have to be accompanied by significant cuts in public spending. However, providing £20 billion of support in this way would certainly be more popular than bailing out energy companies. It is also hard to see how it could be challenged in the courts by environmentalists, and it would avoid setting a long-term precedent of support and price fixing in the energy sector.

4. Suspend the green levies subsidising renewables

Consumers have to carry considerable costs as a result of the deployment of renewables. Direct subsidies – via the Renewables Obligation, the Feed-in Tariff and the Contracts for Difference systems – run to £10 billion a year, but there is a further £2 billion from the high system costs renewables bring to the grid. The government could consider suspending the levies on consumers that fund the subsidies, providing relief to households and businesses directly, through their energy bills, and indirectly through reduced pressure on the general cost of living.

Realistically, however, adjustments to the Feed-in Tariff for small-scale generators (currently costing consumers £1.5 billion a year), are too complex and politically controversial for implementation.

The Renewables Obligation (£6.6 billion a year) and the Contracts for Difference (£2.2 billion a year), on the other hand, are fundamental causes of the current crisis and thus prime targets for reform.

5. Prevent further increases in electricity system costs

The presence of wind and solar is a large part of the reason that system balancing and transmission costs have risen so much over the last decade. Government should act immediately to:

  1. ensure that the costs of intermittency are charged to wind and solar generators, and
  2. that no further expensive grid expansions are permitted. Consumers cannot afford them.

6.  Encourage hydraulic fracturing for shale gas

The government should restart the process of fracking for shale gas, acting promptly to lift the unduly restrictive regulations. However, this would not provide immediate relief to consumers. As with nuclear generation, both for high-grade heat and for electricity, fracking for natural gas is now a medium-term policy. It is essential but it will not address the current acute crisis.

Further reading:

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GundelP
GundelP
2 days ago

Sorry for the off, any plan of an article on the Alex Jones’ Sandy Hook case? As youtube can be fast to delete stuff this is the direct link to the laughing father of one of the victims:

https://www.dailymail.co.uk/news/article-11082533/Alex-Jones-pay-4-1m-Sandy-Hook-victims-Texas-case.html?offset=10&max=100&jumpTo=comment-880711199&reply=880711199#comment-880711199

And a sceenshot:
comment image

Who is lying then?

GundelP
GundelP
Reply to  GundelP
2 days ago

The youtube link (sorry, that was the DM articles’ I linked by mistake)

GundelP
GundelP
Reply to  Rhoda Wilson
2 days ago

Sorry, I am not the right person, honestly I didn’t follow the Sandy Hook case back then, I just saw the video above with the smiling, laughing father and made an opinion at once.
In another place someone has written that allegedly the building was empty for years before the shooting.

This is all I know. I only bother because it is a direct attack against the alternative media, they made precedent I guess. Without alternative media we will have only state’ propaganda.

(I am happy to help on another subject what I followed properly if there will be a chance / cause but this is not the one.)

Lancer
Lancer
Reply to  GundelP
2 days ago

Pertaining to AJ, now it appears Jones’ defence “accidentally” sent to the prosecution a link to data when requested that included far more than intended, 300GB apparently (so pretty much ALL of it) inc his medical records and intimate conversations between him and Roger Stone (amongst other things). For whatever reason (not sure of the relevance to Sandy Hook) the prosecution say they have intention to send this data to the Jan 6 committee so what consequences would result once that ends up in their inbox? Whatever anyone thinks of AJ the whole thing stinks to high heaven.

Islander
Islander
Reply to  Lancer
2 days ago

You are right, the whole thing does stink, and without knowing all the facts it is impossible to make any comment/judgment.

As to the video, it certainly doesn’t put the ‘father’ in a good light; but no doubt some quack would be able to explain the ‘father’s’ behaviour?

GundelP
GundelP
Reply to  Islander
2 days ago

Father? Do you mean like these?

GundelP
GundelP
Reply to  GundelP
1 day ago

Those who downvoted, I assume you wish to explain the laughing father of the victim, also his face development to sad expression (on the video) when he thought that that was the start of the recording.

Any explanation? NO, I guess not….

Islander
Islander
Reply to  GundelP
1 day ago

Well said.

Islander
Islander
Reply to  Islander
1 day ago

“All the world’s a stage”
William Shakespeare. I didn’t understand this when at school, but I do now.
Prophetic words!

Carmel
Carmel
2 days ago

The Commission for Regulation of Utilities (CRU) in Ireland forecasts estimates that wind energy companies (renewable junk technology) in the next few months could earn over €330 per Megawatt hour??!!
https://www.breakingnews.ie/ireland/wind-energy-companies-see-prices-sky-rocket-as-electricity-prices-soar-1345965.html

Adrian
Adrian
2 days ago

Fracking is an utter nonsense carrying serious health risks, such as those documented in countries where it takes place. UK is completely different geologically and we’re too densely populated to allow this to take place. Prof Styles, former advisor to David Cameron, has suggested fracking just offshore, yet this dirty industry was hell bent on sticking their sites in the middle of communities.

GundelP
GundelP
Reply to  Adrian
2 days ago

Thank you for this comment, I was about to ask, I saw on the DM that their trusted voices (when too many say the very same thing as it would be a script comment after comment) pushed the fracking.

I don’t know much about the tech but it is true that it can cause earthquakes? And as if I read something about cyan gas is also was involved somehow?

Watcher Seeker
Watcher Seeker
2 days ago

Will this man be proved right?

“Widespread Civil Unrest” Looming In UK Over Cost-Of-Living Crisis”.

https://www.zerohedge.com/personal-finance/widespread-civil-unrest-looming-uk-over-cost-living-crisis

Adrian
Adrian
Reply to  Watcher Seeker
1 day ago

You mean the cost of lockdown crisis.

peterhalligan
peterhalligan
2 days ago

I would love to see a “zero based budget”, per household, for government enforced energy policies that excludes taxation of fossil fuel energy and subsidies for “green” (not green at all!!!) energy.
My guess is that each household in the UK pays 2,000 a year in taxes levied by energy policies on top of the 2,000 per year per household for “green” subsidies.
Four thousand pounds a year per household for 25 million UK households = 100 billion pounds compared to GDP activity of around 2,000 billion!
GDP measures activity, not income. Household energy and petrol costs an average of around 1,100 pounds EACH =2,200. A household is indirectly paying another 1,800 to 2,200 in alternative energy subsidies?
Average UK disposable household income is around 31,400 pounds, so government interference is taking 12.75% of net income = 15% of gross income = one days work for every household?
These taxes and subsidies are charged directly via council taxes, excise duties, windfall taxes, VAT and levies and are buried in the direct subsidies – via the Renewables Obligation, the Feed-in Tariff and the Contracts for Difference systems – run to £10 billion a year, plus £2 billion from the high system costs renewables bring to the grid.
The “free market” is more than capable of pricing energy alternatives. The government is a collection of village idiots causing poverty and hardship whilst fighting for the pointy hat with the letter D on it.

trackback
2 days ago

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Mark Deacon
Mark Deacon
2 days ago

UK government created the issue and is not the solution too the problem. It is all part and parcel of the Schwab great reset and the next PM will be more of the same being Schwabs WEF puppets. Prep accordingly for survival because complaining about starvation ad hypothermia will change nothing.

Nigel Watson
Nigel Watson
Reply to  Mark Deacon
1 day ago

Exactly the same crap is going down in Finland, because the leaders here also went through the same mind-controlled programming. WEF PUPPETS READING FROM THE SAME SCRIPT? OR IS IT JUST A COINCIDENCE ?? – YouTube

Nigel Watson
Nigel Watson
1 day ago

Strange crap is also going down in Finland where I live. On energy, as in everything else, the politicians are all reading from the same script given to them by the WEF. Electricity prices in Finland are expected to rise this winter, just like in other countries. This strikes me as odd, given that a huge nuclear reactor will increase energy supply by 30% this winter. Meanwhile, Finnish politicians, who just happen to be former WEF Young Global Leaders, are trying to tell the public that the price rises are “Putin’s price rises”. Anybody else think that it’s just a coincidence that (1) all our leaders were WEF Young Global Leaders well before their democratic successes at the ballot box?. and (2) they all coincidentally use the same phrases, e.g. Putin’s price rises, Build Back Better, etc. This can’t be evidence of behind closed doors coordination could it? I guess not, because that would be one of those tin-foil-hat conspiracy theories wouldn’t it? WEF PUPPETS READING FROM THE SAME SCRIPT? OR IS IT JUST A COINCIDENCE ?? – YouTube

GundelP
GundelP
Reply to  Nigel Watson
1 day ago

Of course it is not a coincidence. Klaus Schwab told it openly. ‘You’ll own nothing, have no privacy, will eat the bugs and you’ll be content.’

This is a way to reach that you’ll own nothing. Together with the deliberate food production distribution, energy bills and no the engineered drought on some part of the country. My guess is on that those are the parts who produce the most food.

They blame it on 3 hot days at most, it was cold to July and this drought part is going on since 2020 March-April. People who has just lawn might not noticed or people who live at north but the fact that the days-long slow watering rain disappeared, also the big summer storms with lightning and thunders also disappeared. The summer can be dry here but since that date we have extremely dry springs, too.

So what has changed?

  • 4-5 G mass implementation – how GREEN is that exactly, since when e-smog is green?
  • Musk satellites mass implementation (almost 60 in every 2 weeks)
  • chemtrailing (very visible and openly on the government site as “geo engineering”)

If you would think that the mass implementation of 4-5G and satellites doesn’t matter, read this experiment on plants (and this is not the only one).

https://truthcomestolight.com/would-you-stick-your-head-food-anything-in-a-microwave-oven/

mwaveplants.JPG
GundelP
GundelP
Reply to  GundelP
1 day ago

distribution – disruption, sorry.

GundelP
GundelP
1 day ago

Net Zero Watch is run by the Global Warming Policy Forum….

To everyone who haven’t seen this, an excellent documentary on Global Warming.

By the way, is there a way to know that how much energy is consumed by their new tech, the extra 4G, the 5G, the ‘smart’ motorways (how many use those dangerous self-driving cars)? 10 people, 40 people? Out of..?