Government spin is not convincing the experts on energy taxes

In recent months both Liberum Capital and RWE npower have estimated that the Government’s policies – which require around £150 billion in the energy sector – will lead to a roughly 30 per cent above inflation increase in your power bills by 2020 (a 19 per cent increase in dual fuel bills according to RWE npower). By contrast, the Department of Energy and Climate Change and the Committee on Climate Change quango insist that Government’s policies will actually reduce your bills, by 11 per cent in a dual fuel bill.

Who do you think is right? The politicians and bureaucrats insisting that we can get £150 billion in investment essentially for free or the independent analysts who think it will be very expensive indeed?

There is a lot of money at stake. After all, just the 30 per cent increase in electricity bills will roughly double energy taxes from around £200 a year today to £400 a year by 2020. If gas prices rose in line with that, then your overall bill would more than triple.

Liberum Capital carried out a straw poll to see if the Government was succeeding in convincing investors that there was no affordability problem for current British energy policy. They asked 41 fund managers and analysts working in the sector; 5 government employees; 6 utility company employees and 3 others which of the following propositions they thought was the most credible:

A. Liberum Capital / RWE: £150bn of investment to 2020 = circa 30% increase in power bills (or 19% duel fuel according to RWE); or

B. UK Government / Committee on Climate Change: £150bn of investment to 2020 = 11% reduction in duel fuel energy bills.

Every single one of the 55 respondents replied that they found answer “A” more credible. None of them supported the Government’s contention that this policy will not lead to a sharp increase in bills.

Of course this is hardly a scientific poll. But it does show that the Government is wrong to dismiss the common sense intuition that massive investment in expensive source of energy like on and offshore wind turbines will be very, very expensive. They need to acknowledge the price that poor families here in Britain will pay for their vanity project.

If you want to help us keep up the pressure for a more affordable energy policies, please write to your MP at

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