Critics Attack ‘Rushed And Unambitious’ Energy Cost Review

  • Date: 14/08/17
  • Jonathan Ford, Financial Times

A five-strong advisory panel assisting Dieter Helm with a UK government-commissioned review into energy costs will only have time to meet a handful of times because of a tight deadline.

One member of the panel said participants had little idea of what the structure of these meetings would be, or how they were expected to contribute to the final report.

“As I understand it, we are a sort of challenge panel,” the individual said. “Dieter writes the report and we’re invited to say ‘have you thought of this or that?’. But it will be his work at the end of the day, and he will say what he wants to.”

The British government announced the widely-trailed review earlier this month, promising that the “ambitious” study would recommend ways to keep energy prices as low as possible while continuing to meet the UK’s climate targets.

It follows commitments made by Theresa May’s government in both last year’s industrial strategy and in this year’s Conservative manifesto to conduct a root and branch investigation of the whole electricity supply chain, from generation to supply.

The review’s stated objective is to “reduce costs in each element and consider the implications of the changing demand of electricity, including the role of innovative technologies such as electric vehicles, storage robotics and artificial intelligence”.

But such claims contrast starkly with the nature of the review reported by insiders. Observers have also questioned whether Prof Helm, an economist at Oxford university, and his team can fulfil such a wide-ranging agenda given its staffing and the limited time the government has allotted to the task. The report is due to be delivered by the end of October, and Prof Helm has been paid for only 30 days’ work.

“A review by one man backed by an unpaid challenge panel and operating against a rushed timetable seems a way of simply finding out what Dieter Helm thinks,” said Doug Parr of Greenpeace. “It is unambitious compared to the review we were expecting.”

The review takes place at a time of rising customer concern about power prices, which are set to increase by 15 per cent following British Gas’s decision to increase electricity prices by 12.5 per cent on average later this year despite falling wholesale prices.

While UK domestic power tariffs remain low relative to other countries in the EU, they are rising, and for industrial users they are the third highest among 15 European countries, according to the UK government. One reason is because of increases in climate-related policy costs, which make up a growing proportion of the average energy bill, according to the energy consultancy Cornwall Insights.

It estimates that renewable subsidies, efficiency initiatives and smart meters will account for approximately 22 per cent of the average UK household bill of £550 this year. “Ironically, the largest driver of electricity costs may turn out to be the charges imposed by government policies,” said Lord Hollick, who chairs the House of Lords economic committee which published a report on UK energy policy earlier this year.

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