A frugal life is an easy life!

Regular readers of this website will know that saving money is something I take an interest in. We all work damned hard for our money, it amazes me how easily people give it away to businesses, in this mass marketing world we live in.
You will also be aware of my obsession in investigating business marketing claims before doing anything.

A major issue I have had for some time, is with the whole "Save energy - save money" marketing con, in particular, the boiler scrappage scheme.

Formerly a government scheme, it has now been adopted by british gas for the month of June.
Don't get me wrong, I'm all for cutting household energy bills, but boiler scrappage schemes I think, are in some cases, a complete waste of money!

The energy saving trust:
They claim to be a "not for profit organisation" and were assigned the task of implementing the last government's boiler scrappage scheme, whereby a home could get £400 off a spanking new boiler to replace their broken or G rated energy efficient boiler, saving them money in the process on their energy bills.

On the face of it, this looks a very good idea, a money saving scheme that will reduce carbon emissions for an initial outlay of your cash, but will pay for itself over the life of the new boiler.
Would the energy saving trust's claims actually save you money?

Here's what the energy saving trust tell people on their website;

- Changing a G rated old boiler for an A rated boiler "can save you upto £225 per year in reduced fuel bills" - marketing's favourite phrase is "upto"
- The current lifespan of a boiler is around 12 years
- The average cost of installing a new boiler costs £2500 (Energy saving trust data from the old boiler scrappage scheme)
The new boiler would have to save £208 per year to break even over the 12 years.

Sounds like a good deal?
It would be ok, if they had included the costs of servicing and maintaining your new boiler on their website, they do not.
At present servicing your boiler will cost you between £8 - £15 per calendar month, with an energy company.
Taking the bare minimum amount with British gas - £8 per month - and add this into the workings out.
- 12 years at £96 per year (£8 per month) equals an extra £1152 you have to pay out.

£2500 for your boiler PLUS £1152 to service and maintain it equals a total cost to you of £3652
Taking the very maximum the energy saving trust say you can save on your heating bills per year of £225 - it would take you more than 16 years to break even!
Subtracting the £400 off you get as part of the scrappage scheme offer, leaves you with a bill for £3252 for your new boiler - again using the maximum you can save according to the energy saving trust £225 - it would take you more than 14 years to break even!

Wait a minute, according to the energy saving trust, the lifespan of a new boiler is "around 12 years" (No mention of the environmental costs of disposing of your old boiler) - Suddenly the energy saving boiler scrappage scheme doesn't look good value does it?
Factor in the extra 2 years to break even, that you won't be running your new boiler (2 yearly energy bill savings of £225) and you are £450 WORSE OFF!
How much is the boiler scrappage scheme supposedly saving you? £400?

Looks suspiciously like a marketing con trick to me.

According to the energy saving trust's twitter profile, they are a "Not for profit organisation, funded by the government [read taxpayer] which offers free and impartial advice on how to stop wasting money and energy at home"
Free? - we pay for them via our taxes so they are not free at all!
Impartial? - a quick look at their wikipedia page (written by their own staff) reveals they are not as impartial as they claim, they are also funded by the following companies;

Baxi (Boiler making company)
Centrica (Owners of British gas - energy company)
EDF energy
E.ON
Firmus energy
National grid transco plc
Northern Ireland electricity
Phoenix natural gas
RWE Npower plc
Scottish and Southern energy
Scottish power plc
Royal Dutch Shell
Worcester, Bosch group (Boiler making company)

Is this what you would consider impartial? I certainly wouldn't!

I asked consistently, over four weeks on our twitter page, how much money Centrica (aka British gas) have paid the energy saving trust during 2010/2011?
For the first two weeks I got no reply, I did get a few replies from people who support saving energy, saying they were "a non profit organisation and did not take funding from private companies"
Eventually, the energy saving trust replied, "British gas are an energy saving trust member, paying a nominal fee equal to other members"
I got no reply at all from British gas on twitter.

I asked again, how much money did the energy saving trust receive from British gas?
Again I got no reply.
After another week of repeating the same question, I asked if I should have to use a Freedom Of Information request to find out how much british gas paid the energy saving trust in 2010/2011?
The energy saving trust replied, "We are not a public body, so are not subject to Freedom of Information requests"

So if the energy saving trust are not a public body, then they must be a private company!
This explains why they ignore all requests to reveal how much funding they are receiving from companies within the energy and boiler making sectors.
Why don't they want consumers to know how much they are receiving from companies within the industry?
The boiler scrappage scheme was an exercise to generate more business within the industry - not my words, but those of the last government's energy secretary Ed Miliband, who said at the launch, "The boiler scrappage scheme will provide an important boost for the British heating industry!"
The energy saving trust said the same thing in their review of the how the boiler scrappage scheme had done.

Even after all this, surely fitting a new boiler will use less gas than our old back boiler that's 30 years old?
British gas billing department's own words on two occasions this winter, "A new boiler uses the same amount of gas as an old boiler, it will not cut your gas bills!"

Exactly the opposite of what the energy saving trust are telling people to get them to purchase a new boiler (that they'll never break even on because of the inflated costs)

With staggering cheek, British Gas are today launching the boiler scrappage scheme again for the month of June 2011.

The boiler scrappage scheme - nothing more than a marketing exercise to generate more business within the heating/energy sector.

UPDATE:
From some of the feedback I've received since this post (All feedback is welcomed thankyou) that some people are still not convinced that the energy saving trust's new boiler promotion figures don't add up.
This update uses one piece of evidence as its source - The Energy saving trust English boiler scrappage evaluation document (Final) - as published in February 2011.

The scheme had three main objectives;

1. Help sustain work for the 130,000 installers and over 25 UK based boiler manufacturers throughout the economic recovery. (Which is what I said the scheme was about from the start!)
2. Save money. A householder's energy bill "could" be cut by between £200 and £235 a year. (First the EST website lists energy savings of "as much as" £225, in this report they change it to "between" £200 and a higher figure of £235 - so which is it? Hardly an accurate basis for a consumer spending thousands of pounds of their own money is it?)
3. Save carbon. Replacing 125,000 G rated boilers "should" save "in the region of" 140,000 tonnes of CO2 emissions per year. (What, no factual evidence? What is the energy saving trust conclusion based upon? Boiler manufacturer's estimates? Any independant research the public could look at?)

"To evaluate the scheme, a survey of successful claimants was undertaken." - Only more limited research was carried out on unsuccessful applicants.

Reasons for take up of the scheme:
"The environment was not a major driver in the uptake of the scheme, although most people were keenly aware of the environmental rationale of the scheme." - This is stated in the opening summary, further reading reveals that most people were keenly aware, ONLY after prompting! (See page 11)

Identifying the impact of the scheme:
The average time by which boiler replacements were brought forward to coincide with the scheme, was estimated [there's that word again] to be 1.4 years.
In terms of environmental benefit, it is estimated to have saved 240,000 tonnes of CO2.
This is £34 Million of bill savings annually for the scheme overall, or £290 for each household.
- Sadly, the energy saving trust's own figures do not add up!
The energy saving trust's website advises that a new boiler "could save as much as £225 per year" in bill savings by reducing carbon emissions - this is increased to "up to" £235 per year in objective 2 of the boiler scrappage scheme final report - now we are to believe that bill savings per year for each household are on using less gas/being more efficient, are £290.
Simple question, which is it?

Other benefits included that 29% of people "felt" (that's thought to you and me) that they had seen a reduction in their heating bills (even during the spring/summer period).
- That means that 71% of people SAW NO REDUCTION IN THEIR BILLS, during the 6 months after having a new boiler fitted.
The other 29% only felt they had seen a reduction in their heating bills, at no point in the 30 page report does it make reference to a single person, who replaced their boiler, actually having saved any money because of doing so!

Cost of works:
Average cost of works was £2450, of which the boiler replacement cost was £2050.
- I have yet to see an A rated wall fitted boiler like the vast majority of homes have, that even comes within £500 of the £2050 quoted in this report. Remember that a central heating engineer will be buying the boiler at cost price, so will be even cheaper than is available to the public through a retail price.
All this shows, is that the prices of boilers were grossly over inflated as a result of the scheme, generating more profit for the installation companies.

Value for money:
When calculating/estimating savings in other sections, the per household figure is given (albeit different ones) for some bizarre reason, the energy saving trust's final report explains value for money in terms of per tonne of CO2 saved?
The cost to the taxpayer for this scheme is estimated at £204 per tonne of CO2 saved.
Other data is used and compared, revealing that it costs a mere £6.20 to save 1 tonne of CO2, if people insulate their homes properly.

Insulation I have no argument with at all, lofts, cavity wall insulation, etc, are far more beneficial to saving money on your heating bills.
Remember though, we are questioning the so called advice given that says installing a new boiler will save you money. As I have tried to explain here, it does not.
The figures just don't add up.

One final nail in the coffin...

In objective 3, the energy saving trust state, "Replacing 125,000 G rated boilers, should save in the region of 140,000 tonnes of CO2 per year"
Yet with a maximum of 118,618 vouchers claimed for boiler replacements - over 6300 LESS boilers replaced than quoted in objective 3 - by page 4 of the report, the amount of CO2 saved has shot up to 240,000 tonnes.
This allows the energy saving trust to headline a saving in money to each household of £290 annually on their heating bills, or £34 million annually for those taking part in the scheme.

Replacing a boiler to save money on your heating bills is just a marketing gimmick, designed to generate more business for the industry at the public's expense.
The costs of installing/buying a new boiler does not pay for itself with savings over the life of that new boiler, even without factoring in your insurance/repair costs to keep it going and have it serviced.

UPDATE 2:
With today's news that British gas are INCREASING energy prices by an average of 18% - the energy saving trust's own figures fall down even more!

This means a British gas customer will now be paying, on average (so some will be paying more), another £18 per £100 of their bill.
For a pre payment customer, with a bill of more than £800 per year - that's an extra £144 to find out of already overstretched household budgets.
What happened to inflation? At 4.5% it's really difficult to manage things, when facing an 18% rise in energy costs, it's impossible.

One of the most disturbing things about british gas bringing this in is the statement the boss of centrica gave to the daily mail last week.
One of the three reasons given about possible future price increases, was said to be, "because of lower consumption" - so the less energy we use, the more the energy companies charge us.
What chance have we, the consumers, got?

For days now, over on our twitter feed, we have been asking the energy saving trust to condemn energy companies which increase their prices because of people "saving energy" - which has been answered by a wall of silence. That's right, not one single word from them about it.
We have also been asking british gas (via twitter) how can they promote (using customer's money) saving energy at the same time as punishing customers with higher prices for their energy, when they use less - again, not a single answer or word back has been received.

The energy saving trust state that fitting a new boiler could save a household "upto" £225 per year in lower fuel bills - when replacing a G rated boiler with an A rated energy efficient boiler - not only is this an estimate, but now on average £144 of those maximum estimated savings is swallowed up by british gas' energy price increases.
Factor in service contracts/insurance for the new boiler, which they say will last around 12 years, and the length of time for the boiler to pay for itself (if energy saving trust's guess that maximum fuel savings of £225 per year apply) and you are looking at more than 16 years!

I say again, the energy saving trust are NOT impartial, they receive funding from the energy companies and boiler makers, savings for updating equipment are complete estimates and disputed by british gas senior billing staff.
Their silence on british gas price rises from August 2011 shows them for what they really are - a marketing tool for the industry, nothing more!