Policy costs are not to blame for electricity price hikes in the UK, a study by the UK Energy Research Council has concluded.
Despite being routinely cited as a contributing factor for price rises by the ‘Big Six’ energy suppliers and others, the new report – dubbed ‘What’s in a bill? How UK household electricity prices compare to other countries’ – found that policy costs in the UK were the lowest of European countries analyses and, in actual fact, represented “good value for money”.
The report has set out to perform an in-depth assessment of domestic energy prices, comparing them to those in Germany, France, Sweden and Australia.
And its findings paint a different picture to those often portrayed by energy suppliers.
The UKERC found that while wholesale prices are relatively high in the UK, there is no evidence that policy costs, including those driven by environmental programmes like renewable subsidies, are the primary driver for price hikes.
Amongst the study’s key findings are that domestic energy bills have simply not increased at the same rate as policy costs due to improved energy efficiency, and that support for low carbon generation in the UK provides better value for money than its counterparts, something which the UKERC said runs contrary to claims the country is over-paying for climate action.
However the report also concluded that the complex nature of energy billing, wherein short-term price variations caused by market conditions and fossil fuel costs can sway pricing significantly, opened a window for stakeholders to represent some data differently.
This has led Rob Gross, co-director at the UKERC and one of the report’s authors, to suggest that caution be exercised when comparing energy prices.
Nevertheless, he is adamant that it is a “total myth” that UK consumers pay more for low carbon generation through levies than those in other countries.
“It is hard to understand why, given the high quality of the data, there is continuing disagreement over how policies influence consumer bills. Perhaps the complex data can be manipulated to suit the interests of different stakeholders,” Phil Heptonstall, researcher at UKERC, said.
