Weekend press round-up: Consumers don’t understand their energy bills

In our latest review of sector coverage across the national newspapers, a new study has shown energy bills are considered among the most difficult for customers to decipher. Meanwhile, there are reports on trends in electricity switching and demands for universities to go faster on decarbonisation.

Consumers don’t understand their energy bills

Energy bills have been voted the most difficult to decipher of seven different types of household bills.

A study by Energy Helpline, a price comparison website, showed that four in ten energy customers admit they do not understand their energy bills. Almost half fail to check whether their bills are accurate, and more than six in ten do not check they are on their supplier’s best deal.

Not far behind energy bills in the amount of confusion they caused were water bills, which 34 per cent of customers said they couldn’t understand.

Council tax bills were a mystery to 27 per cent of householders, while 24 per cent were baffled by broadband and home phone bills. Credit card statements and mobile phone bills proved slightly easier to decipher, with only one in five households reporting difficulty understanding them, while just 14 per cent had trouble with their bank statements.

Energy Helpline is calling on Ofgem, the energy regulator, to have another look at rules that govern bill design, which were last overhauled in 2014. The aim is to help consumers to control their costs easily, particularly given the increase in domestic energy use since lockdown.

The comparison and switching service has launched a series of new guides, with annotated bills from the big suppliers, to help consumers to make sense of complicated bills.

Energy Helpline’s study highlights the failure of Ofgem’s 2014 reforms to make energy bills easier to work out. At the same time, most consumers are still reluctant to take the initiative and see if they can get a cheaper price for their fuel elsewhere.

Sunday Times

Households ditch Big Six energy firms as recession bites

More than 400,000 people ditched the largest six energy suppliers in June and July in a bid to save money as the economy entered a recession and energy usage went up due to home working.

The figures, from trade association Energy UK and auto-switching company Flipper, revealed a 25pc increase on the same period last year.

In total, nearly one million households switched suppliers to cut costs. The most common switch was from larger to small and mid-sized companies.

“People are now seeing the impact of the increase in home energy usage since lockdown in their bills and are taking action. With pressure on household budgets expected to increase in the coming months as the furlough scheme ends, we expect this trend to continue,” said Mark Gutteridge, of Flipper.

Until 2013, the Big Six energy companies, made up of SSE, EDF Energy, British Gas, Npower, E.on and Scottish Power, supplied 98pc of all British households. As more suppliers have entered the energy market they have lost eight million households to the new entrants over the past five years.

A typical household can save around £330 a year by moving from a standard tariff with a Big Six supplier to a new deal with a mid-size supplier, according to research from Flipper.

Households that remain loyal to their provider are also being hit with an average “loyalty tax” of £250 on average as teaser rates jump up to higher standard variable rates, according to energy provider Bulb.

The energy watchdog Ofgem announced this month that the price cap on variable tariffs will be cut to £1,042 from October 1, its lowest level since it was introduced at the beginning of last year.

This will save more than 15 million households at least £84 a year and help to protect consumers from defaulting to a  higher tariff without realising, but people can still save money by switching.

Daily Telegraph

See Utility Week’s analysis of how the switching trends between big six and challenger firms are measured

Tory MP Andrew Percy lobbied EU to back donor’s energy project

A Conservative MP who had received £10,000 from the former boss of a Russian arms company lobbied the EU in support of an energy project co-run by the donor.

Andrew Percy wrote to the EU’s power network agency asking it to back a request by Aquind, an energy company, for what amounted to special regulatory treatment.

Nine months earlier he had received a donation of £10,000 to his constituency party from Alexander Temerko, who co-runs Aquind. In 2014 Mr Percy received £10,000 from another company linked to Mr Temerko. Since writing the letter in 2018 he has received a further £20,000 from Aquind through his local party. His constituency association also received an additional £6,000 from Aquind last year.

The firm plans to lay an “interconnector” beneath the Channel to connect the UK and French power grids. Its backers say the £1.2 billion project could supply up to 5 per cent of Britain’s electricity.

Aquind was seeking a regulatory exemption which would have allowed it to complete the interconnector without having to partner with the French state transmission company RTE. This would also have meant that it could operate outside “cap and floor” regulations, which limit maximum profits but also provide taxpayer guarantees to company earnings.

Last month it emerged that Boris Johnson had been threatened with legal action over delays to a rival project to lay a similar cable through the Channel Tunnel, amid concern that his ministers were focusing on Aquind’s scheme instead.

Ukraine-born Mr Temerko, 54, is the public face of the project. He is a former head of a Russian state arms company and a former senior executive of the oil giant Yukos. He left Moscow in 2004 and became a British citizen in 2011. Companies of which he is director have given a total of £1.3 million to the Conservative Party.

Mr Percy, the MP for Brigg and Goole , also received £10,000 from Offshore Group Newcastle via his local party in 2014. At the time Mr Temerko was a director of the engineering firm, which is now in liquidation.

The owner of Aquind is Viktor Fedotov, 73, formerly a senior executive at the Russian oil and gas giant Lukoil. The Times revealed his identity this month after Mr Fedotov obtained a rare Companies House exemption.

Mr Percy, who backed Brexit, wrote to the EU agency from his parliamentary account in support of the project which will be located more than 200 miles from his constituency .

In response to a call for observations from interested parties he told the EU’s Agency for the Co-operation of Energy Regulators (ACER) that “given the need to continue to significantly grow housing supply in the UK, and to enhance energy supply security, I want to see better grid connectivity built with private investments.

“The opportunity to connect the UK with additional supply, and markets, through cross-channel interconnection should help with both of these concerns and I hope such projects will be successfully delivered.”

The ACER has so far refused to allow Aquind to take this approach, saying there is no reason it could not apply via the regulated route. Aquind has appealed against the decision in the EU courts on the grounds that the regulated route is not open to it in France.

The Times

‘All universities must commit to net-zero by 2030’: tackling the campus climate crisis

Addressing the climate crisis should matter to all organisations – but universities have a bigger role to play than most, according to Fiona Goodwin, a director at the Environmental Association for Universities and Colleges.

“Universities are key in equipping the next generation to have the knowledge, skills, attitudes and values needed to address the climate crisis,” she says. “They cover large expanses of land geographically, and the changes they make on their campuses to reduce their greenhouse gas emissions have an impact on their local vicinity, their country and globally.”

She adds that universities wield considerable power financially, which they can use to support sustainability projects. “Last, but by no means least, they have access to a power bank of academics and research capabilities.”

For these reasons, UK universities have found themselves under increasing pressure to improve their own environmental track record. And much of this pressure comes from their own students. In January, half of UK universities agreed to divest from fossil fuels following student campaigns.

Thanks to this student pressure, universities are increasingly looking at themselves and their operations, says Richard Jackson, head of environmental sustainability at UCL. When UCL developed its new 2019 strategy on sustainability, the support was astounding, he says. e“The drive, or the need for change came from across the whole university. In the nine years I’ve been in this sector there’s been a growing recognition that sustainability is not just an issue of buildings. It has to be woven right through what we do as an institution, whether that’s the courses we teach, the co-curricular activities we put on, or the innovation and enterprise work we support our students in developing.”

There are great examples of universities launching bold sustainability initiatives. The Big Impact programme at Manchester Metropolitan University offers carbon literacy training and paid opportunities for students to become sustainability ambassadors. At the University of Nottingham, student switch-offs encourage halls of residence to save energy. And at the University of Gloucestershire its student-led Live Smart project creates content on how to reduce environmental impact and work with the local community on activities around sustainability.

But organisations such as Students Organising for Sustainability UK (SOS-UK), set up by the National Union of Students (NUS) in 2019, still think universities can go a lot further. Take carbon as an example. “Although some universities have progressive carbon reduction targets, most are still aligned to the old sector target of an 80% reduction of 1990 levels by 2050,” points out Zamzam Ibrahim, president of the NUS and SOS-UK.

“We need all universities to be committing to net-zero by 2030 right now. Sadly, many vice-chancellors still see sustainability as a nice-to-have, not core business,” she adds.

The Guardian

Green ambition has short-circuited California’s power supply

Five years ago, Elon Musk gave a speech before an admiring crowd in California in which he outlined his big idea for “a fundamental transformation of the way we deliver energy here on earth”.

Generation wasn’t the issue, explained the solar entrepreneur. There already existed technology that could generate power without producing carbon emissions. “We have this handy fusion reactor in the sky called the sun,” Mr Musk quipped. “You don’t have to do anything, it just works. It shows up every day and produces ridiculous amounts of power.”

The key challenge was to get round the next obvious problem — how to make power at night or on dull days when the sun wasn’t shining. But Mr Musk had the answer to that too: battery storage. And with that he unveiled his new product, the Tesla Powerwall, an electricity storage system that hangs on the wall of a garage.

“You can basically make all electricity generation in the world renewable and primarily solar,” Mr Musk said, before adding: “I think it’s something that we must do and that we can do and that we will do.”

The speech, recounted in a new book, Apocalypse Never, by the environmental activist and pro-nuclear campaigner, Michael Shellenberger, goes some way to explaining why California has just experienced its first electricity blackouts for two decades.

The US state has followed at least part of Mr Musk’s prescription, building plenty of renewable capacity. It now generates a third of its electricity from renewables such as solar and wind. What it hasn’t done so much is to commission lots of new back-up, whether non-intermittent generation or batteries such as scaled-up versions of Mr Musk’s Powerwalls. California has only about 500 megawatts (MW) of battery storage capacity.

Instead, it has relied on other states selling it their power surpluses to fill in gaps in its increasingly intermittent system, creating a wider network called the “Western Energy Imbalance Market”. This innovation has allowed the state to claim it has shaved some costs by exploiting generation synergies. In the five years to 2018, California’s independent systems operator claimed gross consumer benefits of $122m.

These rather trivial gains must now be weighed in the balance against the outages Californian consumers have experienced in the recent “heat storm” — events that, the last time they happened in 2001, cost the then governor Gray Davis his job.

Solar might seem well designed to meet the greater demands for power hungry air conditioning in a heatwave. But the problem comes when the sun starts setting, solar output plummets and yet evening demand remains stubbornly high. It becomes even worse if the wind doesn’t blow when it is most needed. Then the essential fragility of the system is revealed, with its dependence on gas back-up or external supplies.

Of course, California is not alone in finding hidden pitfalls in energy transition. Germany too has installed heaps of renewables, only to find costs rising and emissions stalling because of the need to deploy fossil fuel generation to back up that green capacity. (California faces higher prices also: since 2011, they have increased six times faster than in the rest of the US).

It is a problem that is compounded by the perverse decision of both Berlin and Sacramento to retire fully-depreciated existing nuclear plants early, knocking out reliable and cheap carbon-free capacity and making the system more fragile. Germany’s policy is well-known, but California has also already closed one of its last two plants, at San Onofre, early. It plans to shut the last one, Diablo Canyon, in just four years’ time.

Michael Liebreich, of Bloomberg New Energy Finance, a strong advocate of renewables, has said that keeping such plants open is an “overwhelming priority”.

Nor does battery storage yet provide a practicable solution. As Shellenberger points out, California’s biggest facility, the lithium ion battery plant at Escondido, has the capacity to power 24,000 homes for four hours. California alone has 13m households, and there are 8,760 hours in a year.

Even assuming anticipated savings in battery costs estimated by the US Department of Energy by 2025, a single Escondido would still cost $43m. That’s better news for vendors such as Mr Musk than for energy consumers. Meanwhile, as Californians are discovering, buying from out of state only works if they have surpluses to sell.

The Financial Times

Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.