Commentary
Fine words won't heat homes
The PM’s pledge to “bring down bills” is naïve when energy prices will inevitably continue to rise and margins in the industry are, on average over time, low compared with other industries.
Caroline Flint, new into the job of shadow energy secretary had a good line - the Government's "warm words" wouldn't "heat homes during a bitter winter" – and wanted the Government to take on vested interests, tackle the spiralling prices imposed by the energy giants, investigate the mis-selling of energy, and help the pensioners whose winter fuel payments have been cut. But it’s not clear how she thought they would do this and what it would achieve. Fine words won’t heat homes either.
Smart metering was seen as a silver bullet by both Labour and the Coalition. But it won’t deliver soon enough for this winter or the next. Indeed for many people it won’t deliver until the end of this decade. Some sceptics would say that at a cost of £10bn it won’t ever deliver enough.
Here’s my 3 point plan:
- Mandate the provision of information on energy use to the customer. Each energy company, 1m customers a year for 5 years, starting now. The customer to choose between an energy display, the web, an emailed report, or a printed report. The cost of this to be passed on to the customer because the savings attributable to these methods are between 2.5% and 8.5% or £25 to £85 of an average dual fuel bill of £1,000 per annum i.e. it is likely to pay for itself in year 1.
- Heating optimisation and Insulation. Put in place a mandatory programme to insulate all homes to a minimum standard and install optimised heating control. Heating accounts for the vast proportion of domestic energy use but is poorly controlled. UK housing stock is poorly insulated. This programme should be part government funded as a stimulus.
- Change the industry structure, as Onzo has argued before, so that generation is pooled like it is in the Nordics (going further than SSE’s interesting and useful suggestion last week); metering becomes the responsibility of the network operator; obligations to reduce usage are imposed on suppliers as an output measure rather than inputs as with schemes like CERT.
All of which would reduce usage, improve comfort, and be a boost for the economy.
Just what’s needed.
