Occupy Green Energy

Scottish Power distribution area

Scottish Power Service Area via Wikipedia

Several things caught my eye over the weekend as I sipped my coffee and read the papers on a sunny Sunday here in the San Francisco Bay Area—and they all seemed to revolve around the strange but galvanizing influence of the occupy movement.

Close to home, Occupy Oakland rebuilt in Oakland City Hall Plaza after an ugly scene last week where the police forcibly removed the “campers” to clean up the mess they were causing.  The protesters protested and got assertive, then aggressive and then they got pepper sprayed by cops obviously tired of the protest after weeks of hassle.  Local business cheered the police.  Politicians stuck their heads up and waited to see if there would be any blowback.  There was, of course, as the usual taunts of police brutality send politicians running for cover.  So now the protesters are back with more materials to rebuild their encampment for the long haul.  The cops have backed off deciding wisely to give the politicians what they want and give it to them hard by letting the protesters overstay their welcome until the politicians demand action.  Petitions have begun circulating to recall Oakland Mayor Jean Quan over her handling of the mess.

In London, the news was oddly similar as the Occupy movement was first welcomed in front of St. Paul’s Cathedral and then as time went by and the mess piled up and it became impossible to get through the mess to the Cathedral conflict broke out—-not in the crowd but in the Cathedral as the Dean and Canons of the church debated what to do.  After the storm passed the Dean of the Cathedral Rev. Graeme Knowles had resigned as had the Canon Giles Fraser at odds over whether to go to court to evict the protesters and their mess.

What does any of this have to do with green energy?

The Occupy movement has targeted the “top 1%” and has argued for more wealth redistribution through higher taxes and other measures.  Well, it appears that in the UK they had got what they wanted before they asked for it.  What, you ask?

Scottish Power, the large UK utility, announced plans to increase natural gas price by 19 percent and electricity rates by 10 per cent.  This represented about £200 ($318) more per year in energy bills for the average customer.  The utility blamed increases in wholesale power prices, which have risen by about 25 percent since last winter.  Occupy London risked being out shouted by the howls of utility customers and the politicians started taking note.  But the more questions asked the more obvious it became that the government was just as responsible as those “top 1%” fat cats in driving up the cost of energy.

Stories started listing the cost impact of government policies on energy bills.  Whether this was a clever move by the utility public relations staff to shift the blame for rising energy bills elsewhere we do not full know.  But it did remind customers that the government was forcing the utility to bear the cost of social policies each of which had an impact on utility bills. Suddenly these hidden costs were exposed:

  • Renewables Obligation, Britain’s version of a renewable portfolio standard requires power companies to buy 11 percent of energy consumed from renewable resources.
  • European Emission Trading Scheme requires energy-intensive companies to buy carbon credits to off-set their emissions.  Next year these carbon credits start costing real money and will be added to utility bills.
  • The Carbon Emissions Reduction Commitment requires energy suppliers to invest in capital equipment to reduce their carbon emissions.
  • The Carbon Floor Price law kicks into effect in 2013. Chancellor George Osborne admitted that the policy is designed to raise the price of carbon emissions to make using fossil fuels more expensive and thus less attractive in order to encourage emissions reduction.  The measure charges power companies and heavy industry £16 per tonne of carbon emissions rising to £30 per tonne in 2020.

Add it all up, critics argued, and the average Brit is facing energy bills of 20-25 per cent higher even without the impact of market price movements of natural gas or inflation.  But the anger does not stop at these hidden taxes on energy they also extend to the subsidies paid for green energy projects.

These subsidies paid out of the UK general fund and add up to about £1.5 ($US2.38) billion a year.  The problem is most of the subsidies are being paid to some of the wealthiest landowners and biggest businesses in Britain including the Crown Estate.  Critics called this one of the biggest wealth transfer schemes going taking millions from average citizens in the form of higher taxes and energy bills and paying it wealthy landowners.

Demands are growing for the government to itemize the impact of all of its green energy policies on customers’ utility bills.  This is sending both utilities and politicians scrambling for cover.

Curiously, the UK Department for Energy and Climate Change Minister Greg Barker said the Government plans to cut the subsidies for new solar panels in half saying that the feed-in tariff subsidies are too high because prices for solar panels has fallen.  Vendors are screaming they will be put out of business when the proposed FiT reductions take effect in December reducing the subsidy for each panel cut from 43.3p per kilowatt hour of solar power to 21p. This will save average energy customers around £23 a year according to the government- or £700m in total because the subsidies are funded through electricity bills.  But the solar industry warns this will increase the payback for installing solar panels to 25 years.

Maybe this Occupy movement isn’t so bad after all, but I doubt these unintended consequences are what its sponsors expected.