By Paul Homewood
Ed Miliband has been doing the rounds again this week.
When challenged on the BBC Today programme about Labour’s promised £300 cut in energy bills, he doubled down.
Apparently, he said, they did not really mean £300, the key word was “up to”! So maybe just a pound then Ed!
He went to say that NESO, the National Energy System Operator, confirmed Labour’s Clean Energy plan would reduce electricity bills, even though NESO chairman had already told Parliament they could not guarantee it.
In fact, as I pointed out at the time, NESO’s costings clearly pointed to bills going up as a result of Labour’s policies.
So, to recap:
In their report to Ed Miliband last month, Clean Power 2030, they estimated that costs would INCREASE by £10/MWh:
.
https://www.neso.energy/publications/clean-power-2030
However, this is not the whole story. They say that the cost of generation would drop by £15/MWh, but this is simply not true, as they themselves admit:
Note the reference to CARBON PRICES.
Their report goes on to confirm they have assumed a Carbon Price of around £60/MWh, the figure used by BEIS in their Electricity Generation Costs report published last year.
However, the Carbon Price is not a cost – it is effectively a tax. As BEIS noted in that report, this is valued arbitrarily, and is designed to artificially increase fossil fuel prices, so as to make them uncompetitive.
https://www.gov.uk/government/publications/electricity-generation-costs-2023
Furthermore, NESO have assumed a carbon price of £172/tonne CO2, which is way above the current market price of around £40/tonne. Based on gas generation of 100 TWh, the level last year, that extra £132/tonne equates to an extra cost on gas generators of £4.6 billion, which amounts to £15/MWh averaged over all electricity generation.
In other words, NESO have assume government policy will artificially increase the cost of gas generation, and thus wholesale market prices. This enables them to claim that renewables will reduce them!.
Increase a household bill from £1000 to £1500, and reduce it back to £1000 – but only claim credit for the reduction!!!!
So if we return to that first table, the claimed cost of generation reduction of £15/MWh is simply smoke and mirrors. It does not exist. Exclude the Carbon Price con trick, and costs remain around the same. This is not surprising, because we know that the AR6 strike prices are similar to or slightly above current market rates.
But the table also tells us that Miliband’s plan will INCREASE other costs by £25/MWh. This means an extra bill of £7.5 billion in 2030. While not all of this will go on to household bills, about half will, about £140 per home.
The BBC did not challenge Miliband on this, nor have I come across anybody else in the media who is even aware of this sleight of hand.
It goes without saying that these are all the official costings from NESO. I don’t think anybody seriously believes that decarbonisation will be anything like as easy or cheap as they make out.