From the TUC

Big Ask for the Big Six: pay consumers to cut energy use

03 Oct 2012, by in Economics, Environment, Uncategorized

With Labour and LibDems showing a new found enthusiasm to cut consumers’ energy bills, what’s needed is a new green tariff in the Government’s Energy Bill that does just that: a consumers’ incentive not to use electricity.  A new study from the Green Alliance shows that persuading consumers to reduce their energy demand is cheaper than building new power stations or windfarms. Consumers would benefit from significantly lower energy bills. And we could avoid needing to build up to six new power stations or around 5,000 new wind turbines.

The Government’s Energy Bill, due back in Parliament in November, is all about renewing our energy supply. The Bill aims to stimulate £200bn of new investment in power stations, carbon capture, renewables and new grid by 2020. As Ed Miliband argues today, “the potential for a green industrial revolution is huge.” But there’s no matching consumer incentive to cut demand – except the rising price of electricity itself. And unfortunately, consumers don’t respond by cutting their energy bills anything like as fast as prices rise. Why?

  • One reason is revealed in a US study of consumer demand in response to energy price rises. A ten per cent increase in electricity prices only decreased demand by around one per cent. On this evidence, if we relied simply on price rises to reduce demand to the level government projections require, electricity prices would need to rise to two and a half times by 2025.
  • And then there’s the dotty way the UK power market incentivises increasing electricity use. Power companies earn more as they generate more. Consumers pay less per unit as their electricity use rises. There is currently no benefit to energy companies in reducing consumer demand as this reduces their sales and profits.

The answer? A new green energy tariff. There’s some technical work to be done to make sure the new incentive uses real, measured savings. Meter readings will be needed from both before and after the new green tariff. This data is already collected by energy companies, but a requirement to collect actual meter readings on a monthly or quarterly basis could improve the measurement of electricity savings.

Environmental groups are going to focus hard on the idea of a green tariff when the Energy Bill comes under parliamentary scrutiny. More effective demand reduction policies could avoid the need to spend £125 billion on low carbon power compared to business as usual. Consumers could save at least £35 billion through a well designed electricity efficiency feed-in tariff.

One Response to Big Ask for the Big Six: pay consumers to cut energy use

  1. James
    Oct 18th 2012, 3:41 pm

    What I wonder is why we simply all don’t just switch all our gas and electric off then come winter at least we could all simply freeze to death or die of food poisoning! Surely a better way of saving energy? After all there is only one sure way of really saving energy and that is for people to die and maybe that is the plan who knows?

    The poorest amongst the elderly can now barely afford to put their heating on, yet are going to have to suffer another winter with even less! This current Government is simply sick and disgusting and fiddles its way through with its meddling but whimpering hypocrisy and propaganda! All whilst the consumer is being blackmailed or held to ransom by the major electricity suppliers of this country! It is long gone time this industry was nationalized!

    Mind you, I could actually see the people who write these articles being extremely happy with the death of the elderly from hypothermia, after all how much energy would it save? As that seems to be the only intent on their minds, save energy, never mind the cost and that applies not just to the elderly either, but those on low or minimum wage and those who are unemployed also. We had come a long way since the beginning of the last century, with the improvement of living standards. Now, though, slowly but surely the clock is ticking backwards and all whilst the stiff necked, ignorant and inept politicians and energy companies pile on the pressure!

    It would not be untrue to say that people can only reduce their energy bills so much before it will affect their health, which will then affect the overall health of the Nation! Something which both the mind numbing, witless wonders and numbskulls, who run this country and the electricity companies, with their penny grabbing machinations, have completely overlooked! Greed comes first, people come later! Cutting energy usage can and will result in deaths. But as long as the electric companies along with the incredibly dumb, inept and ultimately idiotic politicians, who seem to worship them, allow people to be sacrificed to the wealth of the conglomerates then everyone else can go to Hell!

    What a sick, meandering and socially impoverished country we are rapidly becoming!