Why this election matters - energy policy

 

One issue that has received very little attention in this election is energy policy. While there are some devolved aspects, the generation, transmission, distribution and supply of electricity and gas is reserved along with nuclear and coal policy.

Energy matters to consumers. The average household spends 6% of household income on energy. That’s £1657 per household, from an average wage of £26,500.

At least 40% of Scottish households are living in fuel poverty. The latest figures show that in 2013 in Scotland there were 940,000 households in fuel poverty, compared with 647,000 households in 2012. Given that energy prices have largely gone up since then, and household incomes have stagnated, then it is likely that over a million Scottish households are in fuel poverty, with more at risk.

Millions of people have been ripped off by the big energy firms who never seem to pass on savings to customers. In the last year, wholesale energy costs have fallen by between 9% and 20%, but only now are suppliers reducing the price of their standard tariff.

The Carbon Brief’s election tracker provides an ‘at a glance’ look at the main party manifesto pledges.

So what are the dividing lines? All the main parties have given a strong commitment to continued emissions reductions, even if they are sometimes less than clear on specifics. Cameron’s green credentials have looked less credible as this government has gone along. If the Conservatives win, they are likely to place less priority on funding for some low carbon technologies. If Labour wins, this would mean a big regulatory upheaval and a more interventionist policy.

There is little doubt that the prospects of a Labour government makes the industry most nervous. The Tories and LibDems favour a market based approach – everything can be cured by switching supplier. Labour’s interventionist approach, while still market based, includes an energy price freeze along with new powers for the energy regulator to force firms to cut gas and electricity bills. This is just the first step towards making the energy market work better for consumers rather than producers.

We should also not forget the the influence of the Big Six energy companies in Whitehall. As Sir Jonathon Porritt has highlighted, it is so strong that they are dictating policy and preventing the electricity system from getting the radical overhaul it desperately needs. One of Ed Miliband's greatest strengths is his willingness to take on powerful interests like Rupert Murdoch or the power companies, even when the easy option would be to fudge.

On generation policy in Scotland, the biggest difference is an over reliance on renewables, mostly onshore wind from the SNP, while Scottish Labour favours a more balance energy policy. This election is unlikely to make much difference to that dividing line, although Energy Market Reform mechanisms could be used to incentivise different approaches.

Of course the cheapest unit of energy is one you don’t use. Cutting energy waste should be the first move in any programme to reduce emissions – not least because it also reduces bills and improves energy security. Scottish Labour's plan is to work with local authorities, housing associations and installers to support local area based energy efficiency schemes, retrofit existing properties as well as building more than 20,000 energy efficient new homes per year by 2020. They will regulate to drive up energy efficiency in the private rented sector and further develop micro-generation schemes, so that alternative energy supplies are more accessible. The SNP’s idea of funding the ECO scheme, which helps some of the poorest households, from taxation rather than energy bills, has public spending consequentials, but probably isn't a big political dividing line.

Energy Action Scotland supported by UNISON Scotland have asked all the parties a series of questions about fuel poverty. While there is a degree of fudge in some of the answers, there is also a welcome consensus on some strategies.

There is a certain irony in Tory energy policy during the coalition years. Energy Market Reform has been highly interventionist and will be for many years to come. Even the Tories recognise that the market simply hasn't delivered the power generation we need. Labour recognises market failure and is planning to intervene through direct measures like the price cap and indirectly through a stronger regulator. It's still too reliant on the market in my view, but an important step in the right direction.