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Energy Prices and Profits

Part of Opposition Day — [6th Allotted Day] — Living Standards – in the House of Commons at 5:47 pm on 4th September 2013.

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Photo of Peter Lilley Peter Lilley Conservative, Hitchin and Harpenden 5:47 pm, 4th September 2013

It is a privilege to follow my colleague on the Select Committee, whose passion for the concerns of his constituents about their energy bills I share, both because my constituents also rate this the most important issue in their cost of living and because I had the privilege of visiting his constituency at his invitation and meeting many people there. Their incomes are lower—temperatures are lower too—and so it is even more important for him to get the costs down. That is why we have to address these issues objectively and honestly.

The motion is disgraceful in two respects. First, it does not mention the one item of energy bills that is within the control and discretion of the House—the additional costs that we impose on people through the switch from fossil fuels to renewables. It is the only factor that we directly control, but the Opposition ignore it. We know that the least costly renewable, onshore wind, is at least twice as expensive as fossil fuels in generating electricity. Offshore wind is three times as expensive. I suspect that photovoltaics are a multiple of that. Already, the cost of renewables adds 5% to gas bills, 14% to electricity bills and 9% overall. That is a lot and it is expected to rise, but people might be surprised that it is not even higher still, given that wind is so much more expensive than fossil fuels. The reason for that is that the figures hugely understate the extra costs that every household in the country is bearing because of the switch to renewables. I have a letter from the Secretary of State in which he acknowledges that only a third of the cost of renewables falls directly on households’ energy bills, while two thirds falls on the non-domestic sector. In other words, that two thirds leads to a rise in the cost of all the other products that we consume because of the rise in the cost of electricity.