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Saturday 11 February 2012
Letters: The rising cost of energy
Ways to curb the rising cost of energy
Political pressure is growing on the Government over the public's number one financial concern – the rising cost of energy bills.
As the campaign launched by Compass in The Independent yesterday argues, with the average dual fuel energy bill having increased by 75 per cent since 2004, more action needs to be taken at a time when incomes are squeezed.
However we have to ask whether the quick fixes called for by the campaign are the answer. It is not clear what a windfall tax will do to stop underlying problems in the market, such as the overcharging of consumers who won't switch to a cheaper supplier. It is also misleading to blame the huge rise in prices solely on the Big Six's profits, when we know that wholesale and distribution and policy costs have driven over 87 per cent of the price increase since 2004.
The real issue is where the profits are being made. Ofgem's research shows that between 2005 and 2008 the Big Six's total net profits came from 48 per cent of their customer base – largely those still with the same supplier since before market liberalisation. These customers are being overcharged to subsidise cheap offers for customers who switch suppliers. Though some suppliers have stopped this practice, others continue.
We need to remove some of the more inequitable and anti-competitive practices to remove barriers to new entrants to the market and extend competition. This will help improve market efficiency and exert downward pressure on prices. If after this the market is still failing to deliver any benefits of competition to the vast majority of consumers, then there would be a strong case for more fundamental review of the market.
Senior Research Fellow, Institute for Public Policy Research, London WC2
The cost of energy is an important matter, and energy companies recognise that it is a pressing concern for many households in these difficult financial times. There is a need for intelligent and informed debate. It is disappointing therefore to note how your newspaper appears to have selected out-of-date and misleading figures for the front page article on energy profits.
The latest data, published just last week by Ofgem, found that the rolling average annual industry profit from supplying gas and electricity to the home was £80 a year, on an average bill in the region of more than £1,300. An independent analysis, from NERA Economic Consulting, which looks at the costs in more detail, puts the figure at £50 per dual fuel customer, which is 4 per cent of the household bill.
Close scrutiny of company profits is understandable at a time when global energy prices have been rising – as supply struggles to keep up with growing demand – and consumers want reassurance that prices are fair. Just under half of the average household bill at the moment is made up of the costs of the energy used. The remainder consists mainly of costs imposed by energy regulations and government policy, such as investments in energy infrastructure, social initiatives and environmental obligations.
There are pressing challenges ahead for Britain, with the need to attract some £200bn of investment to this country to replace ageing power stations and to ensure we have reliable, low-carbon energy supplies for the future, while keeping bills affordable. Readers of The Independent will expect a fair and balanced assessment of the challenges and the solutions.
Chief Executive, Association of Electricity Producers
Chief Operating Officer, Energy Retail Association, London SW1
Is there really fuel poverty? For the majority of people, heating and lighting are easily affordable. We have patio heaters, tumble driers, and widescreen TVs.
People who can't afford to heat their homes do not need cheaper energy; they need more money. And some of that money should be in the form of grants for insulation and new doors and windows; the energy wasted from our houses, particularly those occupied by poorer people, is unacceptable.
The result would not be just warmer houses, but a slower growth of national power consumption, saving generating and infrastructure costs. But the energy producers and energy suppliers are separate companies so there is no strong incentive for conservation.
If the Government gave as much priority to restructuring the energy industry as it does to culling badgers and building high-speed railways, the suffering you describe could be cured.
Your eminent contributors to the energy debate could, perhaps, also have considered the tariff system operated by the energy suppliers. The unit charge rate up to a certain level of consumption is higher than subsequent usage. Reversing this would help the poorer and lower-usage customer, while those of us who can better afford it pay more, not less, And is it really ethical to encourage consumption of energy in these times?
National game or national blight?
Mary Dejevsky asks a number of questions about football that deserve a response. ("The cult of football is a blight on our national life," 10 February).
Her chief concern seems to be that football now takes a central place in English life and that she is excluded from conversations on the subject. These points are easily explained: many other people like football and unfortunately Mary does not. I feel excluded from conversations about shoes and shopping but I do not resent those who like them.
Mary also complains that local authorities encourage the building of expensive football stadiums. Football is a highly successful industry that is thriving even in the face of recession. The building of stadia provides badly needed job opportunities and boosts local economies.
Ms Dejevsky may not like the fact that footballers can be "paid even more than bankers", but they do a lot less harm than bankers and are simply being rewarded for their immense talent in a popular area of entertainment. However much footballers earn, their employers will be making even more money out of them.
There always seems to be resentment towards talented but uneducated footballers who earn large amounts of money. They no doubt make what seem to Mary Dejevsky tragically tasteless choices when spending their money.
My thanks to your excellent writer Mary Dejevsky for her salutary corrective to a national obsession.
It is one of the most depressing aspects of this country, admirable in so many ways, that the code in its modern manifestation should so dominate not merely sport, but also life, the universe and everything.
A well-respected columnist in my home town of Melbourne many years ago was so tired of that city's preoccupation with Aussie Rules that he set up "The Anti-Football League". Perhaps Ms Dejevsky would care to lead a similar initiative.
Mary Dejevsky wants to know when England became so obsessed about football that it became a "blight on our national life". The short answer is, when it became a business and not a pastime.
For a fortunate few (perhaps) football is a way of earning a living. For most of the rest of us it is a mirror revealing the pitfalls of what may happen when the pursuit of money overtakes the desire to pursue happiness.
Don't betray Afghan women
The murder of a woman for giving birth to a girl in Afghanistan is a reminder that despite significant gains in the last 10 years of our engagement, most Afghan women still do not enjoy their most basic human rights (report, 31 January).
At a conference in December, the international community promised again to uphold women's rights, but it did not make a single commitment on how it planned to keep women safe from violence as our troops withdraw. David Cameron has signed a new partnership agreement with the Afghan president. We fear once again that women's rights will be absent.
The UK first intervened in Afghanistan partly to help Afghan women; we must not now be so eager to pull out that we fail to deliver all we have been fighting for. The Government must stand up for women by ensuring their rights are at the heart of rebuilding Afghanistan. A peace that does not protect women from violence is no peace at all.
Executive Director, ActionAid UK
Director, Amnesty UK
and six others
Leave family life to families
I find deeply puzzling Alan Stedall's advocacy of population control as the only humane way forward (letter, 3 February). There is nothing at all "considered" or "humane" in treating human populations as herds, and nothing crueller, more mindless or more barbaric than the kind of state interference in family life which results from the Chinese one-child policy.
A truly civilised country recognises its citizens as human beings, as rational individuals; in such a country it is parents, not politicians, who are to determine family size.
Wouldn't it be splendid if, instead of quantitative easing, Sir Mervyn King sent each of us on the electoral roll a £1,000 packet of his nice new notes, with the exhortation to spend them on British goods or services within, say, the next six months?
Skipton, North Yorkshire
Ill or just crazy?
With reference to your story about the new edition of the Diagnostic and Statistical Manual of Mental Disorders ("Lonely? Shy? Sad? Well now you're 'mentally ill' too", 10 February), perhaps we should all join in with naming new mental health disorders. My own contribution would be Leeds United Lifetime Supporter Disorder (LULSD). I so wish there was a cure.
We are very pleased to have Prince Harry training at RAF Wattisham, just down the road from us. We were surprised though to find in your news report of 9 February that Norfolk's boundary with Suffolk has been moved to include Wattisham in Norfolk. Perhaps to make it easier to visit the Queen at Sandringham?
Just about all politicians now preface their remarks with "I am clear..." or "I am very clear...". Presumably they mean that they are convinced or certain about something. If they were clear we would be able to see right through them.
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