Energy Bills: Power Failure? Panorama

As energy bills rise, people are getting desperate. Things are that

bad that you have to staple a sleeping bag to the wall? Yes It's

horrendous. While political leaders have knocked up their own solutions.

Freeze that bill. And found a common enany. The big six clearly have all

produced the rather similar price increases that people have thought

were wholly unreasonable and they were. With hundreds of billions of

pounds needed to renew our power system, energy bosses are warning

there will be a price to pay. Either the Government pays for it, or

consumers have to pay and the reality is it will come through to

bills. What will happen if the politicians don't deal with it? It's

affordability and it's going to recur and recur and recur.

Energy, it light up our lives and shields us from the cold. Here in

Blackpool, the famous light on the Golden Mile power the local economy.

By attracting visitors and the cash. Move from the seafront to the Home

Front and energy is equally vital. Here, the battle is against rising

costs and there are many casualties. Blackpool has all of the factors

that lead to cold homes. Low incomes, high unemployment and old

housing stock, but those together and this place has the heightest

proportion of fuel poverty in the country. Last year, the north-west

saw England's biggest spike in excess winter debts. Staying warm

this winter is top priority for the couple who live here. They've taken

some drastic measures. I'm beginning to get an idea of all the work

you've done. It's an old house and it takes old methods. This is the

number one of the jobs you've done. What else? In here, we have got a

very cold wall there. The insulation is not very good in the cavity, so I

decided I would put some polystyrene up here. Also, I've put a throw up

there. It seems like pretty desperate measures. I'll show you my

bills, even for a small place like this. Last winter, the cold forces

Josh and Helen to retreat from the bedroom and sleep in the

sittingroom. She recently had a triple heart bypass operation. I

have to keep myself warm and to keep myself as a level heat and if I

don't and I take a it on I shiver and I go into shock and the heating

has made it a lot worse. Is keeping warm for you a matter of life and

death? It's very important to keep me alive. Illness forced Josh to

give up a career in forestry and their flat is heated with

electricity and every month they see the cost. How much are you paying? I

keep every slip I get. ?155. Even though you have brought yourselves

down nearly to one room, it's ?155? One room, yeah. Polystyrene isn't

the only thing they've stuck to the ceiling. I covered part of the

ceiling there with a fleece off a bed. Things have got that bad you've

got to staple a sleeping bag to the wall? Yes, because it is

horrendously cold. That is just like a duvet. It's actually a fleece from

under the bed. A mattress cover? Yes. Staple it up. -- staple it up.

Right there. Is that good? That's right. There you go. A couple more,

maybe? Yeah. Do you reckon this could save a few pennies, do you?

Oh, yes, I advise everyone to do it. Average gas and electricity bills

have jumped 30% in the last three years. And the big six energy supply

companies stand accused of profiteering. The resulting

political row has been electric. Many people face a choice this

winter - between heating and eating. These are the ordinary people of

this country, who this Prime Minister will never meet and whose

lives they will never understand. He is acting like a conman. That is

what we are seeing. He is promising something he knows he can't deliver.

A bold and popular pledge repeated in all weathers, was the tipping

point that started a rush to find a quick fix for or rocketing energy

bills. We know what a Labour Government would mean. Freezing

energy bills until 2017. Freeze that bill. What difference would it make?

For families, it would save at least ?120. For businesses, like the small

businesses I've been meeting, it would save thousands of pounds. It's

a key element of Labour's cost of living campaign. Putting squarely in

its sights the energy company profits. The target of much

political and public outrage. You can see it here. Brutish gas and eat

or heat. Energy bosses described as cowards. But is this anger hinding

An Invonvenient Truth? The multi-billion pound truth is in the

hands of the private sector. The head of the most respected and

influential economic organisation thinks freezing bills when you can't

control world prices won't work. If you freeze the price of energy and

the international prices of energy rise it means there's going to be a

very bill difference to pay. Who's going to be paying the difference?

Well, are you going to ask the investors to take the difference?

They'll probably go bankrupt. How will you get people to come in and

invest, to get their money back in 30 or 40 years' time, when you are

saying there's going to be a freeze? I think this is simply not

consistent. It's not economically objective. I put that to the Shadow

Energy Secretary. I don't accept that analysis. The price freeze is

about recognising that the British public, whether it's domestic or in

businesses, have been overcharged and that shouldn't be allowed to

happen. We are going to have a temporary price freeze to reflect

what has been going on. The fact is that wholesale prices dropped

substantially in 2009. That was never reflected in a pars-on to the

consumers and -- pass-on to the consumers and our policies are about

getting back to trust and confidence in this market. Generators of newer

technologies like wind and solar need investment and fear being early

casualties as politicians fight to lower prices. I was surprised that

Ed Miliband came out with such a statement. Because everybody will

ask him how will we fund everything that we want to do, which is energy

efficiency and deliver renewable energy technology and low carbon

futures. There was just no answers in there. How many vestors in energy

told you they think this is a good idea in Well, they've said to us

that they would like to discuss it more with us and how it will work. I

think what they want to be reassured -- So they haven't told you? What

they wanted to be reassured about is that it's a temporary price freeze,

which it is. With customers angry with the companies and Labour on the

front foot, the Government found an answer in their own policies and not

at a cost to profits. Moving heating health for the elderly and vule

rabble and -- rulener rabble -- vulnerable takes ?50 off the bill.

The big six have clearly lost some trust over the last few weeks and

prosecution deuced the increases that people have thought were wholly

unreasonable and they were. The Government took action, because we

have not even increases like this before or 8% or 9% and that's why

the Governmented acted. This has nothing to do with Mr Miliband. The

parties are united in blaming the energy companies. How does the one

which announced the biggest price rise respond? The big six companies'

profits are up by one billion and you've been overcharging and failing

to pass on a lot of the discounts. Is that true? No, I think it's

absolutely wrong and part of the problem we have had is that we have

had lots of speculation and quite frankly wild talk without people

looking at the facts. The facts are that we lost money in 2009 and 2010

and 2011 and in 12 we made a 3% margin. The political dialogue means

that with rising bills they want someone to supply and we are the

easiest to shoot at. Energy investment analysts say a tax on

companies and turmoil over policy are already making it harder to

raise money. I recently returned from the US where I met the top 30

or 40 institutional investors who invest in UK energy and utilities

and their questions are around not so much do I provide more capital,

or about do I put my capital out. They are thinking of taking money

out of it because of the political riS snBG Correct -- risk. Correct.

Old power stations are becoming obsolete faster than new capacity is

being built. The amount of spare generation that is around at the

peak of day has been down to 5%. I think next winter it will be even

smaller. Will we get through this winter? Yes, I think so. Next

winter? I don't know. We are only going to face a difficult couple of

winters if nothing is done. Let me assure you, we are doing things.

Decisions are being taken to catch up with the legacy of

underinvestment and to get new-power generation built. We are committed

to more than tripling the amount of renewable energy. How will that

affect the bill? As a guide, we'll open up what currently hits the door

mat. Nearly half of it is made up of the raw cost of energy and it's

production. -- its production. Nearly a quarter in pipes and pylons

to our homes and the remainder is divided between Government levies

and taxes and then there are company costs plus profits of around 5%.

Looking forward, like the imported gas in this tanker, it will remain

the biggest chunk of the bill. It may get dearer or cheap, but it's

beyond our politician' control and then comes the bit they do decide.

The cost of ensuring a low-carbon future, that limits our contribution

to climate change. A transition along with replacing old power

infrastructure, estimated to cost at least ?110 billion by 2020, but more

thereafter. The chief scientific adviser has warned the Government

not to ignore the evidence of global warming and few of our senior

politicians would disagree with that, but do they gloss over the

tough consequences? The real challenge is the most extraordinary.

None of us would be talking about this if we had low carbon forms of

energy that were cheaper than fossil fuels. The Climate Change Act of

2008 set us on an ambitious task and was supported by all sides. Only

five MPs voted against. Five years on, some of the bills are due. Are

the politicians deflecting the blame? If they decide we should

continue to pursue the quay carbonisation strategy as our

primary goal, then they need to engage and convince the public it's

a price worth paying. If they can't do that, then we'll have a

recurrence of the problems we have now. It will reare occur and recur

-- re-occur and re-occur. Here at Hinkley Point, the Government will

guarantee a price of 35 years at nearly twice the cost of today's

electricity. Every time we sign off a windfarm deal or a nuclear deal

with long-term contracts, those are expensive contracts relative to

where we are today. Now, they may be very, very good deals for us, if

prices dramatically increase, but if gas prices stay where they are or

fall, those will be very expensive bets.

While new nuclear reactors are agreed, coal power stations are

being shut down. These mechanical grabbers used to bring in about

10,000 tonnes a day. Now you are lucky to scrape together a handful.

Last year, coal was the UK's largest source of electricity and this year

it is the cheapest. But this coal-fired power station at Tilbury

has burnt its last. After 46 years of power production, the furnaces

are cold and the docks idle. Nigel Staves was the last manager.

And how does it feel to you now? Are you looking at it? It's very sad.

It's very sad to see the power station closed. Was there actually

anything wrong with the plant? Was it functioning perfectly well? Oh,

no. No, no. Was it functioning? Functioning very well. In fact, it

was one of the lowest cost producers of energy in the UK and for an old

power station very efficient because we'd renewed the turbines. The power

station closed due to an EU environmental directive, demanding

coal generators shut down unless they cut their emissions. For two

years, Tilbury switched to burning wood chip but closed for good in

October this year. At today's prices, coal is the

cheapest form of generation. And if we looked at what was happening on

the grid today, we would see that coal is generating about 40% of our

electricity. So, do you think this shut down was premature? My own

personal view is that it is premature, if we want to keep the

cost down. And we should have been more gradual in the way that we've

approached our investment into renewables. You need at least 1,000

wind turbines to replace what you have at Tilbury, which would cover

all of Thurrock. Coal is a cheap but very high carbon

source of electricity. To make it less attractive, the British

government and the EU introduced carbon taxes. And, by 2020, they'll

be the biggest single addition to your bill - adding ?67. It's a move

supported by the OECD. What we should have er is a very important

price on emissions. The enemy is carbon. We know the enemy and that

is the one we have to fight. We have to put a big fat price on the enemy.

And he has warned the British government not to retreat -

personally. So, you've spoken to George Osborne face-to-face about

this? Oh, yeah. I asked straight, point blank. We should stay the

course, you should stay the course. You should be very proud of the

initiatives. Despite reports of pruning the greenery, the Government

has largely stayed the course. They have just locked in substantial

subsidies for low carbon suppliers, like wind and nuclear, in the Energy

Bill, about to become law. My own numbers suggest that it's going to

lead to around a 30% increase in electricity bills by 2020 and

probably a 100% increase in electricity bills in real terms, by

2030. The operators of offshore turbines

are guaranteed to be paid three times today's electricity price for

the power they produce. But it does decrease over time. Onshore wind and

solar technologies have already got cheaper and their subsidies have

been trimmed back. I think prices will go upfront but, in the long

term, prices will come down, associated with renewable energy. As

more is deployed, the cost of those technologies will come down and

there are views the energy bill will get lower.

Is there a quicker way of cutting the carbon and the bill? The

simplest answer lies in using less energy. That's what they have

achieved in Blackpool, where the lights are now back in the

warehouse. That's a filament lamp that would take five watts and that

will take less than one. It is actually quite squinty, quite bright

to look at, while that is not. And it is a little bit warm, wasting the

energy there, isn't it? Yeah. And that is why we have so few of these

now. We have saved over a megawatt in ten years of the illuminations

doing this, which is like two-thirds of our energy capacity. Over many,

many years, which is what they will last, they will save a lot more in

terms of running costs. It is just how amazing how we are saving. The

Government believes we can pull the same trick in our homes - prices up,

but bills down due to energy saving. They estimate more efficient

appliances and energy saving policies could save households

around ?400 a year by 2020. A big chunk of that saving could

come from changing the fabric of our homes. Oh, hi, Tom. How are you?

Very well thank you very much. And nice and toasty. Donnachadh McCarthy

is an energy saving adviser who brings his work home. My annual gas

bill's around ?18 a year. ?18? A year. Right. Yeah. You've got some

proof of that here, haven't you? There. ?4.29. That was over the

summer. Yeah. ?8.85 over a quarter in the winter. So, how does he do

it? He showed me. The most important thing I have done is solid wall

insulation. So, there is a layer of that on most of these walls. Yeah,

exactly. And I have put it natural wood fibre insulation two layers of

this under the floorboards and then for the window I have put in triple

glazing. And are you able to really see the difference of what you have

done. Well, nearly all the house is insulated but there is a gap over

there and the window that hasn't been insulated. So, compare that

with this and I bet you will see what I'm talking about. So, I use

this heat sensing gun. It gives me a temperature reading of 16.5

Centigrade and a bit. You have insulated up there. Wow, 19.5! So,

that is basically nearly over three degrees. That is the difference

between having to have the heating on and the heating off. So, how much

do you think this is all cost you? For the insulation and the wood

burner and stuff like that, it has cost around ?10,000 to ?15,000. The

Government's flagship energy saving policy - the Green Deal - takes the

same logic. I think over the next two, three years, next five years,

the next ten years, we are going to dramatically transform Britain's

housing stock. The cost of work upfront offset by savings in the

bill and a loan scheme to finance them. But the Government admits only

219 households have so far had all the work done. The green deal's been

a nightmare, a complete disaster. We've gone from hundreds of

thousands of homes to almost no homes being insulated. Now I have to

actually get a guy to come and inspect my house, produce a report,

say what measures will pay money, say what won't. I then have to go to

a different supplier to install those and then have to go to my

electricity company and then that cost will go on my bill to be paid

off over ten or 15 years. That's incredibly complex and it's

expensive. The Green Deal has been a failure, hasn't it? Time to put it

out of its misery. Well, the Green Deal finance take-up hasn't been as

strong as we'd hoped and an awful lot. Understatement of the week that

one. Ah, but that's for the finance plans. An awful lot of assessments

have been done and an awful lot of people have realised now what

improvements they could make to their homes. Quite a lot of them

have got on with it anyway, spending their own money on it. The

Government is revamping the Green Deal but what about the option of

not just insulating our homes but ourselves. When it gets a little

cold in your house, do you put a vest on or do you turn the

thermostat up? Well, this is a subject of active policy debate in

the Walport household, where my wife likes me to put a vest on and wear a

jumper. I confess I sometimes crack and do turn the thermostat up. Oh,

dear. Is that practising what you preach though, if you're turning the

thermostat up? Shouldn't you...? No, I think what it shows is to be

serious for a moment it shows the very serious behavioural issues,

which is how do we persuade not only Walport household but all households

that actually we have got to adopt the tactics that will reduce our

energy demand. But the Government senses a game-changer. The new buzz

is not about using less energy, it is about finding more. On this site,

they are preparing the ground for what some see as the great hope for

the future of Britain's energy supply. Others though, as you can

tell by this security, are not so keen. What lies beneath here is

gas-bearing shale rock. The idea is to fracture it using high pressure

liquid - that's fracking. And near Salford, IGas have just drilled an

exploratory well. If the geology's right, and permits are granted,

fracking could well follow. What depth do you actually hope to

hit the shale? We should be encountering shales and some coals

on the way through from about 4,000 feet onwards down to 10,000 feet.

There could be a significant amount of shale, what it means is that you

can potentially recover an awful lot of gas from a single site like this

if that shale section is that thick and you can make it flow. A 100

sites across the country of this kind of size with ten wells on each

could supply half of the gas that the country requires. But that comes

at the price of thousands of lorry movements and fears over gas, water

and chemical leakage. We are very confident and the Environment Agency

and the Health and Safety Executive with independent examiners that come

and check that we are doing what we say we are doing in our plans. So,

are you confident that fracking fluid and methane aren't going to

seep out into surrounding waters? Absolutely. It is definitely not

going to happen? It is definitely not going to happen. Frack free

planet, frack free planet. But many people don't share that confidence

and fury greeted the start of drilling here. Do not talk to me. A

few days later, the mood was quiet but the conviction still strong. It

is incredibly dangerous and it is driven by greed. There is no

regulation. Forget it. No jobs, no cheap energy, this is not coming

from fracking. We have to bring down this whole society living on an

addiction to fossil fuels and change to an addiction to renewables and it

can be done, because we are British and can do anything if we try. But

the Government's top scientific adviser, who passionately believes

we should be fighting climate change, thinks shale gas could help.

Shale gas is a fossil fuel but it's a fossil fuel and omits much less

carbon dioxide than coal. It's a better fuel. So, yes, on the way, as

part of a fuel mix to a low carbon future, it's a sensible thing to do.

Some environmentalists would be a little bit horrified by hearing you

say that. They'd say we've got to keep all that carbon locked up in

the ground? But you have to look at the evidence and the answer is that

it is a journey that we're on, we can't switch overnight from our

dependents on fossil fuel to renewable energies. While the

environmental impact of shale gas is disputed one economic effect is

clear, in America energy costs have fallen after a fracking bonanza.

Could that happen here with the help of recent tax breaks? The Government

is keen. We could see prices fall quite dramatically if it can be

extracted as easily as it's been extracted in the US. We now know

there is a lot more shale underneath us than we thought. But, unlike

America, gas used here follows the world price and few experts believe

our discoveries would be big enough to force down prices. And certainly

not a local opponent who also works in the oil and gas business. The

price of gas is not going to fall because the demand will still be

outstripping supply in any one year that shale gas is operating. So it's

a false economy, it's a false hope that you're giving people, it's

wrong to do that. It's a massive diversion from renewables, at the

end of the day the only long term solution in the UK will be renewable

energy. Back in Blackpool, it is all change as Josh Leyden's home and his

DIY insulation will soon be demolished and replaced with an

energy efficient flat. The big energy suppliers want to

shift the debate from their profits to government-imposed levies that

pay for the costs of combating climate change. They want more of

them to come off bills and into taxes. But we face conflicting

priorities. Until now, we've maybe been too focused on security of

supply and CO2 reduction without really thinking about the impact on

consumers. So look I think we need to move to a lower carbon economy

but we have to do it in a way that consumers can afford. Does that mean

we have to slow it down? I think ultimately we may have to slow it

down. In order to make a better future in 50 years' time, we need to

act today. We have no excuse. We have the science, we have the

economics, and we know that the consequences are not in 50 years

time. By 50 years' time, the consequences will be irreversible.

So, is there