Wednesday, 30 May 2012

Fiddling the numbers

The Coalition inherited a scheme under which energy companies were obliged to pay a 'feed-in tariff' (FIT) to anyone who installed solar photovoltaic panels (PV). For most of 2011 it was paid at 43.2p/kWh provided they didn't have more than 4kW of panels installed. However, and this made the scheme really attractive, the rate is indexed so it will rise each year in line with inflation. The money to pay the FIT is raised from energy consumers generally. It is not paid by government.

Last year the government started a consultation on reducing the FIT but cut the FIT before the consultation period had ended. This produced a great rush to install solar panels with 30,000 installations in the last week of the old tariff. That's six times as many as the previous rate.

The Court of Appeal held this hastiness to be wrong in law. The government appealed to the Supreme Court. It said it had made the appeal because delay would have cost energy consumers £1.5 billion over 25 years.

The first nonsense
£1.5 billion over 25 years is £60 million per year. That's a small sum by government standards. It's also only £1 per person per year - which is clearly trivial. So this cannot be the reason for cutting the FIT - particularly with such unseemly haste.

The second nonsense
Because the FIT is both paid by and paid to energy consumers this cannot be the net cost to consumers. There are administration costs which are a net burden on consumers but these should not be more than a few percent of the money that is collected and paid out.

Current episode
In February Caroline Lucas asked the government to state the assumptions used to create that figure. She got a reply from Gregory Barker, minister for climate change in the Department for Energy and Climate Change, on February 20th.

I wrote immediately to Barker challenging his figures and pointing out the second nonsense. In replying the Department for Energy and Climate Change addressed the detail inadequately but ignored the second point.

A further challenge by me under the Freedom of Information Act (the date was now April 13th) produced the reply that they would have to “extend the time limit for responding by 10 days because of the complexity of the request”. So, a calculation that was sufficiently solid to justify a ministerial reply to Caroline Lucas in February was not fit to show me in May.

Why am I not surprised?

Watch this space for more.

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