Surcharge maths

The price of crude oil has more or less doubled over the last three years. This led to the government introducing a fuel surcharge on electricity bills that increases or decreases according to the world price of oil. Without the surcharge, we would have to meet the increased cost of oil by paying higher taxes. The surcharge system encourages careful use of electricity and is based on the principal that the more you consume the more you pay. Users registered as social cases by the government are exempt from paying the surcharge - quite fair in my opinion.

Despite the expected price of oil increasing from the present rate of around US$90 a barrel to around US$115 in a year's time, the MLP is proposing to halve the surcharge rate. They are now mentioning removing the surcharge altogether and at this rate I would not be surprised if they will soon promise to deduct a rebate from our bills. The MLP have not given us a clear idea of how this system will work, how much it will cost or long it will last. If they wish to keep their electoral promise and not create a further strain on the country's finances, a Labour government may wish to base our new water and electricity bills as follows:

To keep matters simple, the rates used in this example and other items on our existing bills do not appear in these examples. The point is that just as removing VAT in 1996 did not reduce prices or remove cash registers, Labour's key proposal to halve/remove electricity will not reduce the cost of keeping the lights on.