The dispute over wind power and its cost has spilled into a debate about the amount of and need for subsidies between two green organizations -- RenewableUK and the Renewable Energy Foundation (REF).

RenewableUK believes that the contribution of wind power technology is an important factor in the UK's security of energy supply. REF argues that this is a "simplistic" analysis as government wind power subsidies have distorted the wind market and will ultimately result in strengthening the UK's reliance on natural gas, particularly at times of peak power demand.

REF relies on the work of Paul-Frederick Bach, the author of The Variability of Wind Power that shows there is little wind 'smoothing' across Northern Europe wind fleets. He also demonstrates that prolonged periods of low wind conditions at times of high electrical demand are to be expected as regular occurrences. This has been the pattern of wind energy in Denmark, the leading wind power developer in Europe. The country has been able to ship surplus wind power to Norway and then receive clean energy back when needed. The UK doesn't have this flexibility.

To help counter this argument, RenewableUK has been pointing to data released from UK energy regulator Ofgem in its Renewables Obligation (RO) annual report for 2010/11. It shows that support for onshore wind added just GBP4.68 ($7.40) to household annual energy bills. Supporting all renewables under the RO -- including offshore wind, wave, tidal, biomass and landfill gas – costs consumers GBP15.15 ($23.97) each.

Renewables firm, Ecotricity, pointed out that according to Ofgem's December 2011 Electricity and Gas Supply Market Report the rising cost of imported natural gas added about GBP120 ($189.82) to residential energy bills last year. Ecotricity noted that this increase in the cost of gas added more than 10% to energy bills, while support for onshore wind added less than 0.05%. Because the UK has moved from a gas surplus status to now having to import gas, it is subject to high liquefied natural gas (LNG) prices. Those prices are rising so much, given that most LNG contracts tie their price to that of crude oil, that the UK's big six electricity companies have actually mothballed gas-fired power plants in favor of coal-fired ones. That is obviously not a positive for the country's efforts to reduce carbon emissions.

We found the comments about the impact of rising natural gas prices and the impact of renewables on energy bills very interesting. It is even more so when one understands that only 63% of a homeowner's electricity bill is related to the wholesale price of energy. As reported by Ofgem, the medium annual electricity bill in the UK is GBP424 ($670.70), based on 3,300 kilowatt-hours (kWh) of consumption, or about 0.1285 pounds ($0.20) per kWh. Given the average bill, GBP267.12 ($422.54) represents the fuel component.

The incremental costs for wind and renewables seem reasonable, but we are hard pressed to think that gas prices have contributed nearly half of the electricity fuel bills. If, however, we add the fuel component of electricity to the share of the gas bill, then we are talking about a total fuel component equal to GBP656.24 ($1,038.07), which says that the high cost of gas impacted the bill by nearly 20%. That doesn't fit with the statement from Ecotricity that the impact was 10%.

We conclude that Ecotricity related the gas cost to the combined gross electricity and gas bills, which is the wrong analysis since there are components of customer bills that are unrelated to commodity market forces such as the cost of distribution and transmission (regulated by Ofgem), meter costs and valued added taxes. The environmental component relates to the government programs to save energy, reduce emissions and deal with climate change. According to Exhibit 8, environmental program costs account for 10% of gross electricity bills and 4% of gas bills. Combined the environmental component impact on the consumer's energy bill is 6.5% of the total.

So how does this compare with the Ofgem percentage breakdown that translates into 6.5% of the consumer's gross energy bills and 10.2% of the fuel component? We are at a loss to explain the discrepancy other than to suggest the lower percentage figure makes the environmental impact cost more acceptable to British citizens. The discrepancy, however, makes us skeptical about the claim of the impact of rising natural gas prices on consumer energy bills.

Just to be clear, the Ofgem figures and the Ecotricity claims were reported on an environmental web site, although we have verified the Ofgem figures from their web site. This suggests to us that the web site writer never used a calculator to verify the claims. The ultimate hypocrisy of the web site article is that the writer claims clean-energy subsidy critics are basing their arguments on outdated and inaccurate data. We would caution that one should know your sources and verify their accuracy record before blindly accepting claims.