Aug 31

· Up to 34% rise as last two big suppliers get into line
· Government urged to act as more face fuel poverty


Photograph: Steve Taylor/Getty Images

This summer’s misery for energy consumers reached a climax yesterday when the last two of the big six suppliers raised prices for millions of household customers.

ScottishPower, which has just over 5 million customers, said gas bills would rise by 34% from the beginning of next month, and electricity by 9%. Npower said it was putting up gas prices by 26% and electricity by 14% for its 6.6 million customers with immediate effect.

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May 31

Analysis: Environment Minister Hilary Benn again rebuffed calls this week for WW2-style energy rationing to return to the UK. He was responding to a Select Committee report urging ministers to issue 45 million Britons with an energy trading “credit card” – a mammoth techno-bureaucratic exercise costing several billions of pounds a year to operate.

What’s interesting is how the normal parliamentary business was turned upside down.

Usually, it’s ministers who propose batty and unworkable legislation, and fail to cost it, while select committees are supposed to scrutinize the proposals: picking apart the logic and bogus cost estimates. But in this case the select committee in question – the “Environmental Audit Committee” – is positively evangelical about a return to rationing. Perhaps not surprisingly, ministers are wary of committing electoral suicide, or at least, not in quite such an obvious fashion.

Benn said his department DEFRA had made its own enquiry, which unlike the watchdog’s investigation, included costs. A rationing scheme would cost between £700m and £2bn to set up, he said, and between £1bn and £2bn a year to operate he said.

“In essence it is ahead of its time,” the minister said Tuesday. “The cost of implementing it would be quite high and there are a lot of practical problems to be overcome.” Front bench Tories are equally wary.

So what are the MPs proposing?

The ration, or “personal carbon allowance” or PCA, is a measure of an individual’s energy usage, either at home or traveling. Such usage is capped, and “further emissions rights will simply not be available,” the Committee says. You may choose between a holiday, and turning on the heating. Points win prizes, however, and frugal individuals would be rewarded financially from the creation of an internal market.

“We could not find or imagine analogues in other fields of human activity for individual carbon trading beyond rationing during and after World War 2,” the authors of the DEFRA-commissioned report “A Rough Guide to Individual Carbon Trading” wrote in 2006. Continue reading »

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Apr 19

The Daily Mail’s Cost of Living Index reveals food prices rising at SIX times official figure

The true, devastating scale of rising prices is revealed today – by the new Daily Mail Cost of Living Index.

It shows that families are having to find more than £100 a month extra this year to cope with increases in the cost of food, heat, light and transport.

According to the Consumer Price Index, inflation is running at only 2.5 per cent.

Yet the Mail’s index finds that food costs alone are rising at 15.5 per cent a year – more than six times the official rate.

And there are double-digit increases in other “must-pay” essentials such as petrol, gas and electricity.

Many families need to find more than £1,200 extra a year just to stand still.

Once higher mortgage costs are added, millions are having to pay out at least another £2,000 a year to keep their heads above water.

The Bank of England’s chief economist Charlie Bean admitted last night that higher food and energy costs are likely to push the Consumer Price Index over 3 per cent this year.

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Apr 12

Today’s update on import prices once again paints a troubling picture on pricing pressures.

Import prices jumped 2.8% last month, the U.S. Labor Department reports. That’s the highest since last December’s unnerving 3.2% spike. More troubling is the fact that the 2.8% rise in March is in the upper range for monthly changes going back to the 1980s. Adding insult to injury, import prices soared 14.8% measured over the 12 months through last month, as our chart below shows. That’s the highest 12-month rate in the Labor Department’s archives, which goes back to 1982 as per the web site.

The “good news,” if we can call it that, is that much of the rise in import prices was due to higher energy costs. And energy prices can’t rise forever–we hope. In any case, the 14.8% surge in import prices over the past year falls to 5.4% after stripping out energy. But the lesser rise in non-petroleum import prices is hollow comfort once you recognize that the 5.4% annual pace is the highest since the 1980s. The basic trend, in short, is not in doubt, no matter how you slice the import-price pie.

How troubling is a 5.4% rise in non-petroleum imports? In search of an answer, consider that inflation generally in the U.S. is climbing by 4.0%, based on the annual rise in consumer prices through February. And the nominal (pre-inflation adjusted) annualized pace of economic expansion in 2007’s fourth quarter was 3.0%. In other words:

* non-petroleum import prices are advancing at a roughly 33% faster rate than general inflation
* non-petroleum import prices are rising 80% faster than the nominal growth of GDP Continue reading »

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