Turning energy pricing on its head

Energy tariffs have been in the news again this week, with the introduction of the new “simpler” tariff structures that the government promised us (watch this clip from BBC news http://www.bbc.co.uk/news/business-25575707).  All very well, and any simplification of an incredibly confusing consumer marketplace has to be welcomed. But what difference will it make to those consumers on low incomes facing the daily dilemma this winter of whether to “heat or eat”.  And how will it encourage people to use less of the stuff in the first place?

Here’s a suggestion for an alternative approach to energy pricing that could both help tackle fuel poverty and encourage greater energy efficiency by those who can potentially make the biggest impact on carbon emissions.

Traditionally, energy has operated under the general market principle that the more you buy, the cheaper it gets.  Although they have now gone, it was fairly common for tariffs to have you paying one rate for the first few hundred kilowatts of energy, and then a second (lower) rate for everything you used on top of that.

How about turning that approach on its head.  Energy is one of those things that, in this day and age, we cannot do without.  Heat and power is an essential part of everyday life, and to an extent, every household in the country, no matter how small, will need to use a certain amount of electricity and possibly gas. Of course the amount each household will need will vary depending on a range of characteristics, but no doubt research could be done to establish what the “average” or even a “target” level of usage should be – lets call that X for now.

My proposal would be that your energy tariff would be made up of three things:- a standing charge (towards the fixed transmission costs), a low basic rate for the first X kilowatts used, and then a higher rate for the rest.  Indeed, the higher rate could itself be stepped up and up, to really encourage the high users to invest in energy efficiency and micro-generation and otherwise reduce their consumption.  The basic rate should be set at below cost, such that energy costs for the average low income household were at an affordable level. This discount would be offset by the income received from the higher rates paid by consumers of larger quantities of energy.

It’s not really a new idea.  Income tax works in the same way. You don’t pay any tax on the first £8k or so of earnings, then 20% on the next £30k or so, 40% on the next chunk and so on.
We already pay higher car tax depending how much CO2 our vehicles produce.  Those band A vehicles that get a free tax disc each year still use the same roads but are effectively being subsidised by the thirstier models.  I’m sure there will be other examples as well.

In a stroke, turning energy pricing on its head in this way would mean that those who use the least energy (who are usually the ones least able to afford it) pay substantially less per unit, but then have a realistic chance of being able to heat their homes to a reasonable level each winter.  Goodbye fuel poverty.

At the same time those people using more energy than they might otherwise need can see immediately the financial benefits in investing in reducing their consumption or in microgeneration technology.  Suddenly the Green Deal might start to make some sense!

I’m sure there will be a lot of arguments put up by energy companies and economists why this idea wouldn’t work.  And maybe they’d be right.  But our energy is not an infinite resource (well, not in the form that we generate and consume it at the moment it isn’t).  We need some radical thinking and approaches to help manage the demand for energy more effectively, because what’s happening right now just doesn’t cut it.

#Space4cycling – the Leeds perspective

The other day I responded to a Twitter campaign set up by the CTC, and emailed my local Councillors to ask what they were doing to encourage cycling in my local area in Leeds, West Yorkshire.  Hats off to Councillors Peter Gruen and Richard Lewis (two of the leading figures in the Labour-led authority) I received an interested and pretty comprehensive response, which I have copied below.  I certainly appreciate the response (and the speed it was provided)!

Further details about the City Connect scheme to which Richard refers can be found at http://www.cyclecityconnect.co.uk/

I have to say I was aware of the City Connect project following its launch a few months ago, but had picked up only that it was going to involve linking up Leeds and Bradford and improvements to the Leeds Liverpool Canal tow path.  It’s good to hear that the A64 out towards east Leeds where I live is also in line for some improvements, but the details on the website about this are so far very thin.

From the comments in Richard’s email it’s good to see that segregated cycle lanes are on the agenda, but so far as I can tell the project is silent on my other two personal suggestions, namely signalling improvements at junctions and education of policy makers and traffic enforcement officials. 

 

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On 17.04.2014 16:03, Lewis, Cllr Richard wrote:

Dear Martyn,

I am responding to your email as Leeds City Council’s Executive Member for Development who has responsibility for highways and cycling infrastructure in the city.  Leeds City Council supports the “Please create space for cycling” campaign and is already actively putting into practice the advocated measures as illustrated below.

Metro working closely with Leeds and Bradford, sought and won government funding for the £31 million City Connect scheme:   This provides cyclists with their own protected space on the A64 and A647 between east Leeds and Bradford;  Accessibility to Leeds city centre will be enhanced by an  “inner tube” route; The scheme includes substantial 20mph areas surrounding the scheme and links through parks, including to schools; City Connect will provide a major upgrade to the Leeds & Liverpool Canal towpath to become an excellent traffic free route for commuting and leisure from the city centre along a green corridor to beyond the city’s boundary.

This major scheme is not the sole change being made in Leeds, but builds on other areas of work being undertaken to improve conditions for cycling: 

• There is a programme of mainly radial Core Cycle Network Routes being delivered and designed to standards to encourage people to take up cycling.  These routes include paths separated from high volume and speed traffic,  pass through parks and green spaces and connect to local schools, shops and housing;
• There is a programme of 20mph areas  being delivered (separate from the 20mph areas implemented as part of the City Connect scheme).  Where these (or other) schemes involve road closures the normal practice is to exempt cyclists to enhance the ability of cyclists to cycle directly to their destinations;
• There is a large school cycle training programme engaging with over 100 schools annually;
• Many cycle journeys necessarily take place on roads that are not part of specific cycle routes and for this reason the needs of cyclists are taken into account in all highway schemes where road layouts are changed;
• A trial is to be devised to formally allow cycling within a pedestrian area of the city centre;
• Further schemes on the scale  of the City Connect scheme are being identified for possible future funding;
• The Council works with local cyclists and organisations through arrangements such as the longstanding Leeds Cycling Consultation Forum and working groups aimed at enhancing conditions for cycling in Leeds.

Kind Regards,

Councillor Richard Lewis

Executive Member – Development and the Economy

Leeds City Council 

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From: Gruen, Cllr Peter Sent: 16 April 2014

Subject: RE: Please create Space for Cycling

Hello Martyn

Thanks for this very detailed response. I am sending it on to my colleague Cllr Richard Lewis, who has executive responsibility for highways matters. I have heard Richard talk about these issues, so I know he takes them very seriously.

Best Wishes

Peter

Councillor Peter Gruen

Deputy Leader of Leeds City Council

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From: broadest Sent: 15 April 2014 23:03

To: Gruen, Cllr Peter;

Subject: RE: Please create Space for Cycling

Hello Peter and many thanks for your reply. The CTC are far more knowledgeable about these issues than I, but in response to your request I will offer 3 suggestions based on my own personal experience of cycling in Leeds.  I’ll try to keep it brief. 

It’s good to hear that suitable cycle provision is built in to new developments, but this will do nothing to address the far greater problem of our existing infrastructure. 

First of all, cyclists need dedicated separate space along busy routes. We wouldn’t dream of allowing pedestrians to share a busy roadway with cars, separated only by a bit of paint – yet this is exactly what most cycle lanes are.  Pedestrians have the benefit of pavements.  Even buses on some of our busiest routes now have dedicated guided bus lanes.  If we are to encourage more cycling in the city then we need to engineer proper separated cycleways into our routes.  This will make cycling on those routes far more enjoyable and less risky than it currently is. It would also get cyclists away from the gully grates and potholes that line the edges of our roads and represent significant hazards in themselves    

Secondly – signalised junctions. For me, busy road junctions are THE most dangerous places for cyclists.  It is good to see so many junctions now having a band at the lights dedicated for cyclists.  However, because the lights change for all road users at the same time, there is still the inevitable rush to get moving when the lights turn green.  I have personal experience of being cut up by cars as the charge away from the lights as they turn to green.  I would like to see the sequencing of lights changed so that cyclists were given a “head start” to get across the junction before the lights turn green for motor vehicles.  I appreciate this would add cost in terms of additional lights at junctions, and would not be popular with drivers, but after all it only follows the same principle as the courtesy offered to pedestrians at Pelican crossings. 

Finally – attitudes of those in authority.  A friend of mine recently had the considerable misfortune to be knocked off his bike by a car turning into a side road directly across his path (he had the right of way and was cycling along a marked cycle path at the side of the road.  He was stunned to be told afterwards by the police that investigated the accident that they were holding him equally to blame because he should have been cycling with more caution (effectively saying he should anticipate that the car driver would cut across him).  This attitude is quite staggering by a person in considerable authority.  My point is that there is clearly some way to go in educating road safety professionals in this area, and changing attitudes all round to give cycling higher profile and support. I hope my comments are helpful, and I’m sure the Council has policies in this area in terms of highways design and engineering.  it would be interesting to see to what extent these issues are covered. Kind regards Martyn      

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On 15.04.2014 09:48, Gruen, Cllr Peter wrote

Hello Martyn> >

Thank you for this timely reminder.

I am not a cyclist myself; however am very supportive of a good network of cycle ways into and around Leeds. I think you will see a lot of 20mph zones spring up as these are being designed in to new schemes and, similarly, within planning, I am very vigilant that major new developments have a distinctive cycling dimension. If there are any specific areas you wish to point me to, I’d be very grateful for your insight.

Regards

Peter

Councillor Peter Gruen

Deputy Leader of Leeds City Council

How lucky am I?

I consider myself fortunate.

I own the house I live in.

Initially, it was purely a financial consideration.  I’ve benefitted from continuous secure well paid employment, which allowed me to realise the stated housing ambition of most people in this country.  I’m now a long way towards paying off the mortgage, and can look forward to the substantial financial security that my home will offer me in future.

But in the last few years I have come to appreciate a far greater value in my home – that of security of tenure.  You see, I’m now the proud father of two young children, and the elder one has just started primary school.  The time and energy we spent “choosing” our shortlist of schools to put on the local authority admissions form was considerable, but like many parents we felt this was a really important decision and we took our responsibilities very seriously.

Now you might just call that middle-class angst – and maybe it is.  But we invested that time and effort in part because we have the confidence of knowing our housing arrangements are within our own control.  For many that is not the case, and the consequences can be profound.

Security used to be available to many families who found themselves homeless, through the allocation of social housing by local authorities and housing associations.  Now local authorities are able to discharge their homelessness duties through making a suitable offer of accommodation through the private rented sector.  Most are using this new flexibility, not because they want to, but because the chronic shortage of social housing is such that they have no other choice.

If you saw the Channel 4 series “How to Get a Council House” last year, like me I’m sure you were horrified by the grotesque spectacle of one London private landlord demanding a £2,500 ‘incentive’ payment from the Council (on top of an already extortionate market rent) to house a homeless family.  At the same time, across the north, we face the very real prospect of perfectly good homes in the social sector standing empty because there aren’t the households of appropriate sizes who can afford to rent them, thanks to this government’s Bedroom Tax.  What kind of society are we becoming where the poor and vulnerable are scapegoated, whilst at the same time the unscrupulous marketeers can line their pockets at the taxpayer’s expense?  Surely, we are pursuing the wrong solutions – we need more homes that people can genuinely afford through their earned income.

The offer of a private-rented property to a homeless family must bring initial relief – to have safe shelter is a fundamental human need.  However, unlike the security offered in social housing, the most they can expect from a private landlord will be a 12 month Assured Shorthold Tenancy.  After that, if it defaults to a periodic tenancy, they will be living under the threat of having to leave with as little as two months’ notice.

Two months to find a new home (and the money to move), find new schools if the current ones are too far away, sort out the Council Tax and utility suppliers, figure out the commute to work, and pack up your possessions (and unpack at the other end), and so on.  At the same time holding down a job, and keeping the family going.  Not long, is it?  Even worse, the prospect of a stay in temporary accommodation, such as a bed and breakfast hostel.  Imagine the stress.

Research by Shelter showed that 40% of children who had been homeless were still suffering mental and developmental problems a year after being re-housed, two thirds of homeless children suffer problems at school, and children living in bad housing are twice as likely to leave school without any GCSEs.

I can only imagine how far the quality of my family life, and my children’s future, would be affected by such uncertainty.

That’s why I consider myself fortunate.