Guest essay by Eric Worrall
h/t John – Faced with mounting voter anger over green policy driven electricity price rises, a precarious, under-resourced energy grid, and with a national election looming June 8th, the British Conservative Government has responded by promising Venezuelan style price caps on domestic electricity bills.
UK Conservatives pledge energy price cap, hitting utility shares
By Kate Holton and Alistair Smout
Mon Apr 24, 2017 | 4:13 PM BST
Britain’s ruling Conservative Party said it would cap domestic energy prices if it retained power in an election in June, targeting an industry it accuses of not working properly and sending shares in the leading providers down sharply.
Shares in British energy suppliers Centrica and SSE fell as much as 5 percent, and were last down around 3 percent, after ministers said the Conservative’s election manifesto would include pledges on controlling energy prices.
Energy bills have doubled in Britain over the past decade to about 1,200 pounds a year, angering consumers who face rising inflation, and drawing the ire of politicians ahead of a June 8 national election. Energy companies say higher prices reflect increased wholesale costs and environmental levies.
…
Centrica condemned the proposal as against consumers’ interests. The proposals made Centrica and SSE the biggest fallers on a FTSE 100 index which was up 2.1 percent.
“Price regulation will result in reduced competition and choice, stifle innovation and potentially impact customer service,” Centrica Chief Executive Iain Conn said in a statement.
Read more: http://uk.reuters.com/article/uk-britain-election-energy-idUKKBN17Q0LR
This is a mess of the British Government’s own making. In 2014, analyst Peter Atherton of Liberum Capital described the British energy market as uninvestable.
In 2015, then British Energy Secretary Amber Rudd admitted;
“We now have an electricity system where no form of power generation, not even gas-fired power stations, can be built without government intervention. And a legacy of ageing, often unreliable plant.
“Perversely, even with the huge growth in renewables, our dependence on coal – the dirtiest fossil fuel – hasn’t been reduced. Indeed a higher proportion of our electricity came from coal in 2014 than in 1999.
“So despite intervention we still haven’t found the right balance.”
Read more: https://www.gov.uk/government/news/new-direction-for-uk-energy-policy
The obvious solution to Britain’s problems is deregulation. Remove the obstacles to fast tracked gas fracking, cancel the green mandates, provide financial guarantees against future government intervention, and do everything possible to restore confidence in a level playing field for all energy investors.
But British politicians are not yet ready to abandon their unrealistic dreams of a green energy future.
Price controls are a direct attack on the profitability of British energy utilities, and badly undermine any remaining shreds of confidence in the British energy market.
Price controls expropriate investors of returns they would otherwise have received, and signal that further expropriation, maybe even complete re-nationalisation of the entire industry may be looming.
Price controls do not guarantee that order will be restored – as the long suffering people of socialist Venezuela have discovered, imposing government mandates that the shelves be filled with food and that electricity be supplied to homes does not guarantee either of these things will actually happen.
Perhaps worst of all, these newly proposed price controls are the brainchild of the British Conservatives, what passes for the mainstream right wing of British politics. If the opposition Labour Party wins the June 8th election, even more extreme policies may be imposed – Jeremy Corbyn, leader of the British Labour Party, is one of the most leftwing politicians to ever head a mainstream British political party.
As a former British resident I understand how difficult life can be in Britain. A lot of people are hurting, caught between soaring prices and a moribund jobs market in many regions and sectors of the economy. But price controls are not the solution, they are a wrecking ball which will do even more damage to an already severely dysfunctional British energy market.
Because Venezuela is such a desirable model to emulate.
check it out on WIKITRIBUNE
https://www.wikitribune.com/
Beware Vikcevic: Jeff Jarvis, I believe, to be a far left AGWist. Consider the following quote about Shell and fracking and who he compares them to: (from his blog)
Government creates a problem. Government declares that the solution is more government. Then when the industry collapses, the government declares that the free market has failed so that government has to take over completely.
I may be miss attributing to mark twain but somewhere it was said that government misdiagnoses the problem and then misapplies the wrong solution.
Tazz, it was Grouch Marx:
Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.
Similar comments have been made regarding religion.
It doesn’t help that so many people in government never had a private sector job, beyond what they (presumably) worked through school in. So, they go from one close-minded, insulated community to another, and in both places, real world economics are rarely allowed to intrude.
Idunno – that sounds way too long and erudite to be a Groucho-ism. Sounds more like Will Rogers to me.
Mark, All.
There has never been a problem, outside Defence of the Realm, where government interference didn’t make matters worse.
And I’m not sure about Defence of the Realm.
[Apologies to one Albert Einstein.]
Auto
In the UK!.
Astonished at socialist ideas from a non-market-believing s e c t i o n of the government [= Tory Party].
And struggling to see how to vote.
I’ve voted straight Tory since 1974, but I dither – a bit – on this one.
Others may dither more.
“And I’m not sure about Defence of the Realm.”
When talking about a country where pretty much the entire law-abiding population has been disarmed and they government have aircraft carriers with no aircraft to fly from them, you might want to reconsider that.
The situation in the UK is different because the power companies are operating a cartel and rigging the prices. Not only are there increase for the green lobby but up to 10% increases purely to line the pockets of the companies. Also to take into consideration it the fact that for most of the utilities in the UK are not UK owned and are seen as a simple way to increase profit margins while lowering prices in home countries. This is the reason for the anger with prices in the UK that has reached such a point that politicians can no longer ignore what is going on but that is normal for any politician in any country, ignore the people until it could affect your own position.
Prices are rising because of renewables. Can’t admit to that so stop the price rises by edict. That should work.
JImmy Carter had the same sort of idea with gasoline price spikes due to his policies. Gas lines, and general shortages. British politics is beyond me, as the only extensive coverage in the US is very sympathetic to the left and greens. Someone should have the idea to point out the emperor is buck naked, and the mole on his butt looks very much like a melanoma. As far as I know, no major politician in the UK is running against the green fantasy.
It was Nixon who actually imposed price controls for a short time, and not just on energy. Happily, the lesson was learned quickly and the misadventure abandoned.
Nixon tried wage-and-price controls on everything, Carter mostly on energy. They both failed, but the gas lines were under Carter.
Nixon did one other thing. Reduced speed limits to 55 miles per hour which stayed in place until Regan was elected. Nixon also took us off the gold standard.
[No. It took Newt Gingrich (elected Speaker of the House as the first republican since the 1930’s) to get the bill passed and signed in early 1995. Until he pushed the issue, the democrats were content to let it stay in effect. .mod]
Tom Halla, I was in lines in 1973. Nixon imposed price cap on gasoline in reaction to newly created OPEC oil pricing.
‘Mr. Sowell says that although the best response would have been to let prices rise, giving oil companies an incentive to produce more and consumers an incentive to conserve, “this basic level of economics is seldom understood by the public, which often demands ‘political’ solutions that turn out to make matters worse.”’
This public ignorance remains. As politicians control the education system, one could ask rhetorically if it is intentional.
“They both failed, but the gas lines were under Carter.”
There were two oil crises in the 1970s. The first was in 1973 (Nixon) caused by an Arab oil embargo of the US and later by OPEC quotas designed to hold oil prices at (as I recall) $12 a barrel.. The second in 1979 (Carter) caused by the Iranian revolution followed by the Iran-Iraq War. There were gas lines during both crises. As I recall, they were worse in 1973. Somewhat less so in 1979 when odd-even license plate rationing meant that only half the cars in the US were in the gas lines on any given day.
Note that unlike what is apparently intended in Britain, Carter’s rationing and oil allocation were intended to be temporary to get past a short term glitch in oil supply. The rationing, and allocation phase out started within a few months. The same sort of thing was done in the NYC metro area after tropical storm Sandy because gasoline deliveries were disrupted. Temporary measures may or may not work, but they don’t cause the sort of disruptions that long term controls/rationing do.
BTW Carter didn’t introduce gasoline price controls. They were introduced by Nixon, retained by Ford, and phased out in starting in 1980 as a result of a deal between Carter — who wanted them gone — presumably because market pricing would tend to decrease petroleum imports — and Congress.
It was Nixon’s price controls and related actions which motivated the birth of the Libertarian Party .
Wage/Price controls is what Nixon should have been impeached for. Compared to Bubba Clinton and Obama, Watergate was child’s play. (By the way, Nixon was never impeached. When impeachment was looming, he resigned to save his family, his party, and his country the embarrassment of impeachment. I will grant you everything negative they say about Nixon, but Clinton was worse.)
Ah, yes, the old odd even thing… when lots of us started to keep the old junker around with the opposite sense plate… Some folks with all one sense trading in for one of the other sense…
I remember filling up the “allowed” vehicles on their appointed days no matter that the tank was still half full. Keeping two cars full instead of one half full accounted for a significant part of the “fuel shortage” IMHO.
We entered that event with 3 vehicles and 4 drivers and exited it with 2 pickup trucks and 4 cars IIRC. The vehicle tanks collectively holding enough for about a week and 1/2 of driving. Each day, any car of the right sense for that day with 3/4 tank or less was dispatched to fill up. That was almost a full tank of gas per day of the week in storage on wheels. If going any distance, you would check that the chosen vehicle had the “right” plate for that day… Trips to L.A. (then about 450 mile away) were planned so as to have matching down and back travel days…
So much wasted effort just to compensate for bad government rules…
FWIW, ever since then I’ve kept a “spare car” in the fleet. Very useful for many things… and as Nixon Redux Insurance.
Oh, and as I recall it, the big flat barge cars were in highest demand as mobile tankers, with some folks having siphon gear to fill their econobox cars. You could put 2 VW tanks of gas in one old Buick… I had a VW and a Chevy Impala… Dad had a Charger and Dodge pickup truck. Being farm country, adding extra tanks to pickups also tookoff. Some FORDs and Chevies came with 2 tanks and you could add 2 more under the bed aftermarket (not to mention the in-bed fuel bunker tanks). Though it could take a while to visit enough stations on “your day” to fill it all inside the 10 gallon limit they sometimes had… yet we always got everthing filled…
Had lots of good laughs at the “stupid useless rules” while grousing about the lines…
“Nixon did one other thing. Reduced speed limits to 55 miles per hour which stayed in place until Regan was elected.”
It was Congress that made the law. Nixon just signed it.
The left hates it whenever someone points out that Nixon was in fact one of the most liberal/socialist Presidents we have ever had. He talked a big game, but every solution he had was always to make the Federal Government Bigger, Stronger, and all-pervasive.
““Nixon did one other thing. Reduced speed limits to 55 miles per hour which stayed in place until Regan was elected.”
I remember it well. Days after the change to 55mph I had a “new” 1965 Chevy pickup truck (I believe the year was 1978) and was driving to work early on a Sunday morning just as the sun was coming up. The road transitioned from a two-lane to a four-lane coming up on the Arkansas river bridge, and I stepped on the accelerator and pushed it up to 65 mph. There was not another car in sight in either direction. And just as I got to the top of the bridge, an Oklahoma Highway Patrol car went by in the opposite direction, and he turned around and came back and pulled me over and gave me a speeding ticket! The first one I ever got in my life.
Sunday morning early. No other traffic. Only going 10 mph over the Brand New speed limit. The guy could have just kept on going but no, he had to give me a ticket before he went home.
My uncle was an Oklahoma Highway Patrolman. He pulled me over one time, but he didn’t give me a ticket, he was just educating me. I thought about name-dropping to the patrolman on the bridge, but decided against it. He would probably have given me two tickets if I had. That’s what my uncle would have done in the same situation.
My uncle was old school. He didn’t like law breakers. You obey the law and it doesn’t matter who you are, as far as he was concerned. He even pulled the governor of Oklahoma over one night. The governor asked him if he knew who he was, and my uncle said yes sir, I know who you are, and and I’m still going to give you a speeding ticket. The governor made my uncle pay for that bit of character he showed that day. But I’m sure my uncle would have done it all over again if he were put in the same situation. That’s the way he was.
He took me for a ride in his new patrol car one time. He had a Plymouth 426 hemi and it would fly. I was just a teenager then, full of bravado, and was kidding around with my uncle saying a Chevy Corvette could probably outrun his hemi. And he looked over at me and said, “That may be son, but it won’t outrun this”, and he patted his radio, and smiled real big at me. I had to admit he had me there. 🙂
10-4, TA. You can’t outrun Motorola.
Eric said
‘As a former British resident I understand how difficult life can be in Britain. A lot of people are hurting, caught between soaring prices and a moribund jobs market in many regions and sectors of the economy.’
Really Eric? More people are in work than ever before and jobless totals are at a historic low. Which is why some 3.2 million EU citizens have been drawn here. The Govt set the Bank of England an inflation rate of 2% which it wildly undershot until recent months. Prices are now ‘soaring’ by about 2.6% per annum.
Mind you, currency rates-which affect prices-are unlikely to settle down until the European elections (france and Germany) are out of the way and the British Govt hopefully receives a clear mandate in June which will enable them to negotiate Brexit from a position of strength .
tonyb
Exactly… record employment even with millions of EU workers…
Britain, like most countries, is a multi-speed economy. There are always people doing well somewhere, but a lot of people have it pretty tough. The Tories wouldn’t have pledged price caps if they weren’t worried about voter anger over cost of living.
Eric
Its an election! Lots of things get promised in case of voter reaction!
tonyb
Right wing voters should trust the Tories because they are lying to voters? Um…
Tonyb, I am absolutley amazed that you believe either the Government data on employment or Inflation.
The employment figures bear no relationship with historic values due to all the different schemes and loopholes they have introduced.
Inflation figures have also been changed over the years by the “basket” that they use, but the one area of inflation that is truly hidden is by keeping the price the same but supplying smaller amounts.
Something that the majority of suppliers are doing all the time.
No, it was CARTER that imposed the 55mph limit NOT Nixon. Carter was just like Obama regarding energy policy – preaching austerity in the face of dwindling energy supplies and pushing/subsidizing renewals.
AC Osborn
You are right about hidden inflation by reducing the size of the product. Mind you, there are many special offers and BOGOFF’S that don’t get properly recorded so its swings and roundabouts. Also there are lots of different inflation realities according to your lifestyle, age and what sort of things you consequently need to buy. So, although govt figures are always suspect they are probably somewhere in the ball ark if there is such a thing as an ‘average’ consumer.
The ‘basket’ changes so often I think it is impossible to relate it back to a reliable base line and the same with unemployment
tonyb
British politics does not make sense until you realise that the entire political system has been captured by one and the same ideology, best summarised as “New Labour”. Officially, we elected a New Labour government in 1997 but actually we got one in 1991 after Margaret Thatcher was overthrown in a palace revolution by (officially) her own side. We have had a seamless one-party state with New Labour government ever since. No, I havn’t been asleep – it’s only those who think we do NOT have a New Labour government who have been asleep. Yes, even after the Brexit vote, a huge mistake in the eyes of all professional politicians. Your statement that no major politician is running against the “green fantasy” is correct. UKIP is officially committed to the repeal of the Climate Change Act 2008, the most extreme and uncosted “climate change” legislation anywhere in the world, but whether UKIP qualifies as a “major” political party is questionable. They are back to zero MP’s and have been in self-destruct mode ever since the referendum.
Hope this helps !
The self-destruct started in Scotland before the Euro-elections. They rigged the internal selection, then when members rebelled, they suspended UKIP in Scotland and ran it as a de-facto dictatorship. What was most disturbing was talking to a journalist – from whom I got the message that “all parties are run as dictatorships”. Something is really rotten at the core of our “democracy” – and it’s the anti-democratic political parties
In Europe, a conservative is someone who wants the state to grow at a slower rate than the socialists do.
Far right is someone who believes that government has gotten too big.
Beautifully summed up Old Englander. We don’t have a conservative party so those of us who are conservatives and right wing have nobody to vote for. Ukip could have been our hope but they are a shambles and think trying to win Red Labour votes is their future rather than looking at who wins the election every time and why. Who wins? Those who don’t vote beat the winning party every time.
And sadly those who vote Blue Labour don’t understand what has happened to their party even when Call Me Dave rubbed their noses in it. We need democracy in the UK and we need The Harrogate Agenda.
I never have been able to figure out where British political parties stand. They all look like slightly different versions of American Democrats. I see very little difference between them. The same goes for all the other European political parties. Different degrees of socialism is the only difference.
Remember the utterly irrational concept that “Old Oil” and “New Oil” were separately regulated?
Quire clearly the UK Government hasn’t a clue about what is going on in the electricity non-market. The establishment greenblob of civil “servants” are driving it as can be seen in section 7 of the recent green paper, which has been consulted on. https://www.gov.uk/government/consultations/building-our-industrial-strategy
Politicans who ceated the problem vow to fix it by applying caps on prices, just before an election? Tory vote buying is all it is. You think people are that stupid? Yeah right, what could possibly go wrong there…
Definition of simplism
: the act or an instance of oversimplifying; especially : the reduction of a problem to a false simplicity by ignoring complicating factors.
When any problem is made simplistic enough by eliminating and ignoring any facts and information that lend complexity and confusion then anyone who can now believe that they understand the problem can become true-believer defenders of the naturalized truth.
“When any problem is made simplistic enough by eliminating and ignoring any facts and information that lend complexity and confusion then anyone who can now believe that they understand the problem can become true-believer defenders of the naturalized truth.”
Sounds a lot like Trump’s world view. e.g. Build a wall to keep Mexicans out (How did so many Cubans get in? Right. They boated their way in. Did Trump ever take a glance at a map of the Gulf of Mexico?)
Trebla, you personify your point.
A few thousand Cubans vs. 5 to 10 million Mexicans.
We have reached a point where more than half of voters receive more from government than they pay in taxes. In the US, 35% of tax filers ended up paying nothing in income taxes last year.
Or they could actually apply the ccompetition laws against cartels, which is essentially what the “big six” energy companies are operating. The government are big on encouraging people to switch suppliers but their prices are pretty much identical.
When what you are selling is a commodity, it’s hardly surprising that the prices from all suppliers are similar.
Caps on bills means bigger subsidies from government to fill the gap. We’ll still pay unless the green idiocy is stopped.
Caps on bills means bigger subsidies from taxpayers to fill the gap. We’ll still pay unless the green idiocy is stopped.
They could do as the South Australian Politicians (who created the problem) are doing – build ‘The World’s biggest battery”
/sarc
Not much has been in the news about that recently.
The last I heard was that the battery would be 100 MWh. A typical power plant is 1000 MW, so the battery would be good for 6 minutes. I guess that’s long enough to get the gas turbines spun up when the wind stops blowing at night.
The “Green Blob” is everywhere and difficult to dislodge despite the obvious disasters they impose on the innocent tax and levy payers. Just look at how President Trump is unable to axe the Paris agreement as promised because he is now also swamped by the “Green Blob” right in the White House. They are like a python snake that has got itself round you.
I am a traditional Labour supporter (once a member of the Party) and have voted twice for Ukip (now a member of that Party), but I will be voting Conservative. If the Conservative could just peel themselves away from tradition, they would see that the only real answer is to re-nationalise the entire energy sector. It’s a pity they just can’t see past their instincts.
And go back to 1970’s style rolling black-outs due to “industrial action”?
Or rolling blackouts due to unreliable renewables?
The UK grid is very reliable, even with an increasing percentage of renewables…
Similar here; although not a UKIP member. It’s all very well non-residents having a dig at the Tories, but they’re the only party in the UK that is currently in a state to govern. Labour are unelectable and would bankrupt the country in 6 months, Lib Dem are just a joke, especially with Tim “let’s have as many EU referenda as we need to get the answer I want” Farron in charge, and none of the rest would stand a chance anyway.
I’m not a traditional Conservative voter, but the risk of voting any other party is too high.
Patrick, you’ve perfectly explained how and why you don’t understand the energy situation in the UK. Well done.
I certainly experienced the “energy situation” in the UK right up until 1995 when I emigrated. I understand it is much MUCH worse now and is nothing to do with not being nationalised.
Patrick, I’m afraid you’ve lost touch. The nationalisation of key sectors was all about politics, of course, and each sector has its own set of circumstances, such as the railways (continued subsidy), water (monopoly), etc. Electricity has its own. Why do you think the UK government has struggled so hard to get funding for a single nuclear power station? Why do you think it has had to go to the French and the Chinese for such an unholy collaboration? Short-termism and volatile markets will ensure the British continue to get fluctuating electricity prices that err on the high side. It needs to be capped to be politically acceptable. However, long-term, we Brits would best be served by re-nationalisation.
The problems with nationalised companies in the 1960s and 70s was to do with politics in another era, obviously (and more than a little inference from Russia!). It has no bearing whatsoever on any nationalised company today. You do show that you don’t understand it all. By the way, this is my field.
bazzer 1959
“By the way, this is my field.”
Wow! An expert! Let me see — “Greenie expert climate scientists say exactly the same thing to disparage anyone who disagrees with them. But the world doesn’t seem to be burning up.
Wow! It is so self-inpowering to think of oneself as an expert. And in the mind of the expert it so diminishes those who disagree.with him.
The experiment on nationalizing things has been done many times in many countries — and it never works
What is that old definition of insanity? — Doing the same thing over and over again and expecting a different result.
You need a head check my man.
Eugene WR Gallun.
“bazzer1959 April 25, 2017 at 1:23 am
Patrick, I’m afraid you’ve lost touch. The nationalisation of key sectors was all about politics…”
Lost touch? I think not! However, I was going to make the exact point in my previous post about politics…and left it out wondering if you could realise the reason. You did. And your reply bolsters my response, it’s all politics.
bazzer, you have perfectly explained that you don’t understand anything.
Government creates a problem, so like the well trained lemming that you are, you declare that the only solution is even more government.
Eugene, I’m not an expert, it’s merely my field, as I plainly said. Then you went all silly. Shame. Please try and learn how to discuss an issue, without saying something the original poster didn’t say (this is why I rarely contribute here, now), and please refrain from going all puerile. You bring nothing at all to the debate.
MarkW. Please see my reply to Eugene. It equally applies to you. I’m not someone who could be interviewed on TV about politics, but I have a broad, and generally good amount, of knowledge on the subject. You try and belittle people, but it clearly doesn’t work, as your comments can so easily be disregarded – as they contain no information that adds to the issue debated. Please try harder.
On the internet, everybody is an expert.
bazzer, you can claim anything you want, but when you make statements that are contrary to basic facts it’s hard to take you seriously.
I think this discussion would be more useful with an examination as to why Nationalization of Industries always goes wrong, whenever its tried. The first problem that happens is that (contrary to what you may think) that industry immediately becomes completely non-responsive to public pressure, because now it is a part of the government. Supporters of the Government will always feel obligated to defend it no matter how badly it is run, and opponents of the Government will always feel obligated to attack it no matter how well it is run.
Second, Nationalization of Energy Industries always creates a huge self-focused power base inside the government that from that point on, exists only to support its own political and financial interests. This has happened with PEMEX in Mexico, PDVSA in Venezuela, and in Saudi ARAMCO. (and there are many other examples) All of these companies are well known for being very badly run compared to other energy companies, but they are untouchable inside their own countries because they are such a fountain of cash to the government and all of its supporters.
Nationalization of the energy sector creates a huge nexus of corruption that reverberates throughout the entire sector, and is almost impossible to get rid of once it is in place. And the people who this is supposed to help are always worst off in the long run.
The only answer that works – allow competition, remove useless and self-destructive mandates, regulate the industry for safety, and tax the profits in a manner commensurate with other sectors. That will always provide the optimal long term solution to the problem.
MarkW, what part of “I’m not an expert, it’s merely my field” did you not get? Just how thick are you?
“wws April 25, 2017 at 4:24 pm”
Well said.
bazzer, perhaps English isn’t your first language.
I got what you said. I just don’t believe it.
MarkW, what you don’t believe that I’m not an expert? You’re even more thick than I thought. By the way, I’m English, and have lived in England all my life. I couldn’t be any more English, and it follows that it’s my first language. I explained that I’m not an ‘expert’ merely that the energy sector is my field. Yet you continue to berate me as claiming that I’m an expert, when I have even stated that I’m not. What are you, 8? No, everyone on the net is not an expert, people don’t claim to be, but gimps like you like to set up a strawman to knock down. For the last time, you twat: I’m not an expert, I never claimed to be, and neither does anyone else here claim that – unless they really are.
I shall be adding this to any future post I might make here:
If you disagree with anything I write, please base your argument on what I actually said, and not what you dreamed I said.
wws/Patrick:
The global energy markets with the least regulation have the highest prices. Much research has shown that governments best leave almost all sectors to the free market. However, that isn’t ALWAYS the case. The rail sector in the UK is one such market that continues to enjoy a huge subsidy, currently over £4 billion. The railways are seen as an ‘essential’ sector. If it were left entirely to the free market here, there would be virtually no long-term investment, prices would rise, and use would inevitably drop off, with a shift over to the road network. The British government therefore see it as an essential service that is to be subsidised to keep it the way it is.
The energy sector, especially electricity was supposed to be the model for privatisation. What started off as many small and new companies out-bidding each other, has now settled to a ‘big six’ with a number of smaller companies. Investment is poor, and profits have been good. However, profits have fallen greatly, and companies are reluctant to even continue. ‘GB Energy’ recently failed (unheard of in the UK energy sector since privatisation). Far from delivering lower prices, privatisation of the energy sector has seen large year on year increases – to the point that energy bills in the UK are now becoming so politically unacceptable that a ‘conservative’ political party are suggesting price caps! This has long been an idea from the UK Left, but now has become a promised election issue with the UK Right! This is simply because privatisation of the energy sector in the UK hasn’t ‘worked’…it has failed to deliver real competition and lower prices – spectacularly failed, actually.
I cannot believe that ‘wws’ lives in the UK, as he/she would not write as they do if they knew the situation here in the UK. You cannot apply a political idea to all countries, that’s absurd. Comparing Britain with Venezuela, Mexico, or Saudi Arabia cannot be carried out – as politics differ so greatly. Saudi, for example, is a totalitarian dictatorship. You cannot make a generalisation on sectors when politics differ so greatly.
The UK’s people would be best served by the energy sector being re-nationalised. Proper and urgently required investment could then take place, and ‘profits’ could be ploughed back into investment, or used to lower prices. As it currently stands, privatisation of the UK energy sector plainly hasn’t worked. And I end with my beginning: the markets with the least regulation have the highest prices.
———
If you disagree with anything I write, please base your argument on what I actually said, and not what you dreamed I said.
“The global energy markets with the least regulation have the highest prices.”
B. S.
That’s a ‘fact’, hanelyp, not an opinion. Do you have trouble deciding which cereal to have in the morning?
Think about it this way – if the writing is on the wall for bird/bat mincers – and there’s no long term profit – AND they are going to have to pay the cleanup costs … what is the obvious solution to prevent them making huge losses? Nationalise all the unreliables sell at a massive over-inflated price and pass the loss making no-future economically bankrupt technonlogy onto the public.
Scottish Sceptic
Wow! Perfectly said! And completely true!
Eugene WR Gallun
Fascinating how people actually believe government is the answer to every problem.
While your at it bazzer, why not go full communist and have the government take over everything, since you believe that the government is so much better.
Yep . Nothing works better than a monopoly backed by guns and prisons .
Do you always reply in such a puerile way? And why do people like you always state something the poster didn’t say? I find this really odd, and I can see why Willis insists on putting a reminder about it at the bottom of his posts. I NEVER SAID that we should go fully communist and nationalise everything. Jesus! However, I believe that the electricity network in the UK would benefit from being state owned. Nothing else should be, though there is a case for looking at the rail sector. The UK government subsidises the rail network with over £4 billion, while the rail companies give over £200 million to their shareholders. I wouldn’t expect you to know any of this, because you don’t actually know anything, do you?
I notice how bazzer gets all upset over something I never said. Do leftists take lessons in how to change the subject, or does it just come naturally to them.
And then he tries to lecture him for saying something that I never said.
Really is sad. And leftists actually consider themselves to be the smart ones.
“While your at it bazzer, why not go full communist and have the government take over everything”
Jesus, you’re such a muppet! Actually, you’re a double muppet, as I’m firmly to the Right in politics. If you had any sense at all, you would have spotted that from the earlier comment that I made, when I said that I had voted Ukip twice, but was now voting Conservative. You read that, muppet. Both political parties are firmly to the Right in the UK. No Leftie votes for the Conservatives! That would be a contradictory position that would suit a muppet like you. If you’re going to mouth off, get your facts right first. Ah, but hold on, you don’t live in the UK, do you? But you thought you’d comment on a British subject…even though you don’t live here…and know absolutely nothing about the UK. Muppet.
Personally I think there are strong arguments in favour of bringing both the energy sector and railways into public ownership. There are certainly some good examples around the EU, and in US states as far as I can see, of how this can be done sensibly compared to how things were prior to the tories in the 80s selling them off.
I find it intriguing, and quite sad, that so many people don’t seem to realise that, just because a government might be planning to do something that sounds similar to something that was done before, it doesn’t necessarily mean the conditions will be the same. Bringing these into public ownership doesn’t necessarily mean reverting to how the industries were run in the past, in the same way that the tory plans for increasing grammar schools doesn’t necessarily mean that the same issues that occurred before will happen again.
Of course, they might, but they might not.
The clear solution to all these self created problems in the Energy Market is to look at some real science, not CAGW propaganda, Forget about Global warming-Climate Change as it is not happening and just let the energy market run itself on supply, demand and safety. It used to work well not so long ago. Politicians need to thinks themselves clear of the pernicious Green Blob that is eating them.
… not to mention taxes. One of my friends is moving to the UK. It seems to be a lot more expensive to live there.
Interesting. I’ve just spent two weeks in Florida and was shocked at the prices of food etc. Walmart wasn’t too bad, but it was still around $3 for a loaf of bread which I’d expect to pay equivalent of around $1.25 for in the UK. Paracetamol (acetaminophen) at CVS an Walgreen’s was $8 for 100. Admittedly Walmart had them for $2.48, which is a lot closer to UK prices. The one thing that was significantly cheaper was petrol at $2.48/US gallon (~$3/UK gallon). Here we pay around $6.50/UK gallon. Then again, having looked at salaries, it appears that someone doing my job, in the same company in USA, earns twice as many $ as I earn in £ which probably explains why so many people can afford to buy and run Ford Mustangs and Chevrolet Camaros compared to the UK!
It’s the exchange rate, the pound lost value in recent months due to Brexit uncertainty. If you look at long term trends and use purchase parity you will see USA prices are more affordable for the average person. You should also consider moving north and stay in Fort Lauderdale, it has better beaches, and you can snorkel at the artificial reef located between the basketball courts and the old Yankee Clipper.
Florida also has higher than average prices due to being a tourist location.
Miami is high compared to the rest of Florida.
You just need to know where to shop. Walmart bread is $1.29 a loaf, and there are stores that sell bread for $1 per loaf. Florida is one of the cheaper places to live in the US, although gasoline prices are higher than most states.
Biggest bargain in Florida is no State income tax.
They get it back in sales taxes.
Is there any chance for Enron to get in on the action, like they did in California? Surely some of the Smartest Guys in the Room must be coming up for parole just in time for this opportunity.
Not to defend Enron, but what they did during the Great Greyout was only possible because of the disaster of price control in Comifornia. Had the free market prevailed, the price of electricity in state would have been higher than out of state, instead of lower under the broken law.
Government intervention in any market doesn’t work. The problem with governments is they do not recognise themselves as the problem… only the solution.
The one true solution is to remove all political intervention and allow the market to take care of itself. There will still be renewable solutions for those willing to pay extra for them. Consumer choice rules.
Privatisation of various UK Service Industries were supposed to make for more competitive prices and more investment.
That cannot possibly work out if you have to decrease Investment by paying Investors dividends.
Which is why the UK Electricity Market and Water are increasing prices and lack in investment in Infrastrucure, only Renewables currently get investment, but not for much longer once the subsidies dry up.
This is an old argument, that because of profits, government will always be able to provide services more cheaply than private industries can.
Unfortunately decades of real world experience has shown this belief to be a complete lie.
UK Conservative Party?
In Name Only !!
Happening in other places too.
So called conservative government cow-towing to FAR-left, anti-science, anti-CO2 ideology.
CO2 is one of the two MOST IMPORTANT atmospheric gases for all life on this CARBON -BASED planet of ours…
… and it is STILL in short supply !!
Conservatives Unless Named ToryieS…
In Europe, a conservative is someone who doesn’t want government to grow as fast as the socialists are demanding.
Be clear: action on/statements about energy prices in the UK are concerning (natural) gas and electricity both -not just electricity.
80% of UK homes use natural gas for heating (and we are a cold country comparatively!). Most of those homes will also use it for cooking.
Though there is a green component to electricity charges there is also a social component which subsidises e.g pensioner winter fuel allowance.
The volativity and sudden price hikes in UK energy are often gas related and the capping is as much about what happens when gas price falls and the companies do not pass on savings to consumers (it only ever goes up, not down!)
The UK grid by the way is very reliable and renewables have no impact on it. It is being improved to ensure more Scottish wind power can be shipped south.
Strange that in the USA, natural gas prices went to a standard dollar minimum due to fracking and the free market, according to the energy report of our NG provider. It has been slowly coming up due to increased demand. Crude oil went to levels that was not thought possible since the 70’s OPEC oil price monopoly, and the standard dollar amount is even lower. Yet in Griff’s country it never goes down. There must be a reason.
But it does go down… yet the firms supplying same to consumers don’t drop prices.
also the world gas market is very different from US domestic market, until recently a closed one which was banned from exporting…
Most UK gas comes from offshore UK wells and Norway – but UK offshore fields declining and now we also import LNG. costs change from that too…
Griff, the prices large NG users, and individuals do go down in the United States because the price and renewable penetration are not controlled by regulation.
Oh by the way, in Australia, I found out by personal communication that industry finds it cheaper to have capacity for up to 2 days of fossil fuel generated electricity than to pay for price fluctuations caused by renewables. Another part of the cost is that when electricity is down, the loss of sales really kill the budget plans given to banks in order to secure loans. Add in the desire to avoid increased interest rates from bankers due to failing to meet budget plans, this makes using a less effective, more polluting technology than modern coal, economical. As the plant ages, this will tend to ensure that shutdown costs will be reached sooner, and the industry will have to close or retool than anticipated. Looking at cheap US NG, cheap Chinese energy, and now cheap India electricity, almost all fossil fuel, the economic picture indicates Australia is going to lose even more industry in years to come. But decreases in electric price are not seen. The opposite of what happened in the US. Add that to the problems with renewables.
Funny how that works.
“and renewables have no impact on it”
That’s because it provides so little of the total demand.
In Griff’s world “renewables have no impact on the UK grid” In the US our tranmission cost and distribution cost sits at 4.6 US cent/kwh In the UK it is 3 times that. Why? Things like the Western connector from Scotland because of “renewable targets” Forget the real cost. Here is a piece of utility propaganda feed to the citizens of the UK to make them think their grid is just fine, properly priced. Read it carefully and you will see the whitewash.
https://www.ofgem.gov.uk/sites/default/files/docs/2015/10/reg_charges_final_master_version_23_october_2015.pdf
Since when has any election pledge ever been honoured, or been expected to be honoured?
This is just part of the hustings’ propaganda.
If the pledge isn’t honoured and prices continue to soar, the Conservatives will get annihilated at the following election. The anger won’t go away just because people suffer another four years.
Who’s going to to replace the Conservatives? Labour, who are even more Greenist?
The real problem in the UK is that there’s no sane party left. Probably as a result of most of the smart people leaving in the post-war ‘Brain Drain’.
I an a UK resident and have both business and household electricity supply contracts. It has been apparent to anyone trying to get a good deal that there is effectively no real competition in the market. It really is the regulation that needs attention to get this fixed rather than artificial adjustment via price caps. The PM has hinted about that (making consumer markets more competitive) but to buy votes you need to make the message simple, hence “price caps”. I suspect when the issue is tackled the cap will be “soft” and they will try to make the market more competitive by tweaking the rules. Whether they can do that well enough is doubtful IMO as I think big businesses still have massive influence in these areas.
The issue of grid security and green generation mix is something different. So far I have not seen any real sign that anyone in power is going to U-turn or even slow down the current direction. In the UK we probably have in excess of 500 years worth of coal (at 1970’s consumption rates, mainly electricity generation) which could be extracted economically and relatively safely with modern methods. Nuclear looks very expensive when you take into account the clean up and decomissioning costs, they are spending about £2bn per annum on that right now and the project has a 100-160 year time span !
I remember back when Tory insiders were promising Cameron was a wolf in sheep’s clothes, that he had to say Blairite things to win over the suckers. Turned out the right wingers who believed the secret assurances were the suckers.
The Badger
I agree that there is no real competition between energy companies. There are two main reasons for this, the first being that we allowed foreign companies to purchase our utilities. Which is all very well in a free market but not when WE wouldn’t have been able to buy THEIR utilities and profits are repatriated off shore..
Secondly is that its basically a sellers market in energy as there is so little generating capacity. This is down to governments on all sides hoping the issue would go away over the last 15 years and applying sticking plaster by commissioning renewables. These are all very well but by their nature are expensive and unreliable (solar power in the UK? really?)
tony
You should consider a huge project to connect via undersea cable to the Spanish grid, and finance your own solar plants in sunny Almeria. The site is pretty decent, and will give the UK lots of solar power to make you feel like you are doing good for the planet. And of course you should also consider purchasing several million high quality Asturian woolen blankets you can use after sunset.
Fernando, I note that there are active plans to link to Iceland’s geothermal/hydro power – and the Norway link is already approved…
Only between the different gasoline/petrol and propane providing companies ….. because the people can make a “daily choice” of who to purchase their gasoline/petrol or propane.
But not so for anyone that their home or business is “connected to” ….. an electrical Al/Cu transmission line or a Natural Gas transmission pipe line …… because it is impossible for one to choose a different provider of those services unless they re-locate.
Samuel, the solution there is to make the ownership of the distribution lines themselves a regulated monopoly, and allow people to buy their electricity and gas from whomever they want.
So we can treble prices reduce security and end up worse than ever?
Thanks Fernandfo Leanme Griff.
You cab be our sexual directors.
MarkW, the following graphic represents the large diameter pipes of the NG distribution network. It does not depict the small diameter NG pipes (<4”) (that are also part of that distribution network) that connect individually via a “metering” device to homes and businesses.
Samuel, I was talking about the wires and pipes leading to your home or business.
MarkW, I know what you were talking about, …. and it’s obvious that you don’t understand that there is no way in hell you can install new electric wires or new NG pipes leading into your home or business for connection to a different “supplier” of electricity or NG ….. because there is only one “supplier” for each.
Guys like Tesla should be rewarded in a reasonable way but he has gone and electricity generation and “transport” is understood. Electricity in the home is now a utility which a society can provide for itself.
The people who keep a nuclear power station operating do not own the company but work for a wage.
It is nonsense to suggest private enterprise is required to create understood technology..
It is nonsense to believe that government is capable of doing anything efficiently.
Which is the reason many people believe the smallest government is the best government. Government needs to get out of people’s way. They are holding up the free market show. This entire problem was caused by politicians manipulating the energy markets. Price controls are just another form of government manipulation.
What happened..
My example= 30 years ago I bought/installed an oil fired range cooker. I could get kerosene for it for 10 pence per litre, next day delivery. The price of a a barrel of crude is about the same now as then yet the kerosene now costs 40 pence per litre delivered inside 7 days or 53 pence for next day.
The same again for lumber and building materials – as a one-man-band peasant I got through moderate amounts of those. Of course a lot of wood is being burned, under governmental mandate, by well intentioned folks who really haven’t a clue about wood-stoves. Then when London disappears into a cloud of smog, its the drivers of diesel vehicles who are to blame.
Conveniently forgetting the 11,000 strong fleet of red buses, dragging themselves around with the dirtiest engines ever built. But London wanted a decent Public Transport System so the buses were given an exemption from emissions tests that (apply to all other vehicles) would have seen all them buses scrapped.
Now the architect of the ‘diesel is good’ policy from 2001 tells us that “They got it wrong. Diesel is now bad”
So what if they mandate that Cadmium mercuric arsenate be added to all drinking water, effective tomorrow, because it has a curative effect on, say, diabetes.
Just watch, it would be Everybody Else’s Fault when no-one turns up for their pathetic populist election in a few weeks. Of course the remains of the bureaucracy would busy itself creating new taxes and ramping up the rates of old ones.
See just now creating a new death tax (a sliding scale for probate charges, as if the cronyfied legal system didn’t milk that enough already) and stricter & increased fines on speeding motorists.
New and rising taxes are a clear signal of a system in decline.
Re: loads of jobs in UK. Maybe, but one he11 of a lot of them are hairdressers, window cleaners and ‘hand’ car washes plus unknown numbers on zero hours. Not real jobs.
But then, you really could wonder. Cars queue up to get into these hand washes, at £5 per time and operated by characters most folks would cross the street to avoid, not least as they don’t speak a word of English.
Meanwhile the machine car washes advertise themselves at 99 pence.
In my experience its even worse. The hand washes invariably use ‘pressure washers’ and I know from keeping my ATV ‘clean on the (old) farm. Those high pressure jet-washers push sh1t into all sorts of places where it does real actual harm, into bushes, bearing, seals, electrics etc etc. They are paying well over the odds to get their cars wasted.
The world is going mad, (am not alone here am I?) so I wonder why. What could cause such an epidemic of stupidity (for lack of a better word)
Not by any chance their diet?
“Conveniently forgetting the 11,000 strong fleet of red buses, dragging themselves around with the dirtiest engines ever built”
Low emission and electric busses are already being rolled out…http://www.standard.co.uk/news/transport/sadiq-khan-creates-new-green-bus-zones-as-part-of-plan-to-clean-up-londons-air-a3433976.html
your comment is out of date!
Griff ur article sez beginning in 2018 …. who has the dates buggered?
What! Are you implying that Griff hasn’t read the article that he is using as proof?
ROFLMAO!
Space cadet from Planet Zonk.
They are diesel electric.
Space cadets are now diesel electric?
I shall never forget Ronald Reagan’s tongue-in-cheek assessment of government intervention:
Quote: ‘I’m from the government and I’m here to help…’
Ahh, the 9 most frightening words in the English language!
The shares in Centrica and SSE have bombed in the last few years
Centrica down 50% in the last 4 years (400p to 200p)
SSE down from 1700p to 1400p in the last 2 years.
So instead of these companies making vast profits they are destroying shareholder value and are virtually uninvestible.
The regulator insists that they shut down fossil fuel power stations and install windmills and other green nonsense.
Customers get inflated fuel bills to pay for the green levies and the government blames the ‘greedy’ Power Companies .
Its an irrational disaster
These artificial price solutions have been tried many many times before and failed. Don’t these idiots read history at school.?
Communists and socialists are always convinced that this time it will work because this time I’m going to be in charge, and I’m so much smarter than those other guys.
What is being proposed by the UK Conservative Party is NOT a Venezuelan option. As I understand it, it will have little to no affect on pricing – it is a political gimmick (as I am sure it is intended to be). Anyone with any sense in the UK does not take energy at standard tariff rates, but achieves significantly reduced rates through alternative and varied contracts. The proposal as I understand it will apply to ‘standard tariffs’ and will not be fixed, they will be variable to reflect market conditions, as evaluated by the energy regulator. The effect would likely be to slightly reduce the unreal ‘standard tariffs’ (government claims success) whilst the other lower rates (such as I use) will increase to maintain profitability!! Net – a gimmick – with some losers and some winners – not worth the effort – unless you are trying to win an election.
Price is merely a mechanism to match supply and demand. And massive price inflation is the symptom of a failing market. if the price mechanism is prevented from matching the crazy demands on the suppliers to the real consumer demand – we will end up with a failure of supply – aka “power cuts”.
However … on the positive side – if electricity companies can’t just keep jacking up the price to make more profit – it suddenly becomes in their interest to reduce the cost of supply. And the easiest way for them to do this – is to force government to stop putting up prices through the green tariff.
And if I’m not mistaken – once the electricity industry stops lobbying to put up prices by constantly increasing the green tarriff (and their profits) and they start lobbying government to end the green non-science, government will “reluctantly” give way to the new push – and very quickly there will be no need for these price caps.
Scottish Skeptic says
“is to force government to stop putting up prices through the green tariff.”
Just how do you suppose the energy companies can force the Government?
You have it completely back to front
Maybe “force” is the wrong word, but it happens when companies cease investing in capacity and simply allow massive shortages to happen. A few days of blackouts in London’s financial center, with the energy companies saying “hey, nothing we can do about it, we got nothing” will have the government singing a very different tune quickly.
Every system has a design margin, a safety factor that keeps the system from crashing. I get the impression that most ordinary people in GB have no idea that the policies of the last 15 years have used up the design margin for your energy sector, and it is much, much closer to collapse than most of you realize.
I suspect the response to electric utilities having an outage in protest to burdensome regulation will be louder calls for nationalization, that “the free market can’t do the job.”
The energy market suffers from too many goals. In no way has free market rules applied to the electricity system. The government has demanded green energy but not specified that the pain be distributed evenly. In consequence the energy companies have penalised the poorest and least able to shop around. The energy companies SHOULD have pushed back against green demands but happily signed up, knowing the subsidies meant they didn’t have to be competative. They’d make their money no matter what. A price cap might make the energy companies tell the truth about green energy.
In the minds of many, anything that isn’t wholly owned by the government, is the free market.
No one seems to be aware that when govts decree that renewably sourced energy be included in the grid, they are, in effect, also decreeing that duplicative capacity be increased. This because renewable energy is not reliable and therefore not equivalent to existing reliable capacity and that “displaced” reliable capacity cannot be eliminated. The only expenses of the reliable capacity that are eliminated by being displaced by renewable power are basically fuel costs. But fuel costs are generally only a small fraction of the cost of maintaining an active reliable power plant. The only way that renewable power capacity can NOT increase total grid costs is if the total cost of the renewable power were less than the cost of the fuel that its use eliminates the need for. In the case of nuclear fuel, those costs are 1) not reduceable at all, since nuclear plants cannot ramp down their output on a regular basis(thereby reducing fuel usage), so that nuclear power plant costs are not reduced at all if some of their power is displaced by renewables and 2) in any case, the fuel costs for a nuclear plant are small – around 3/4th of a cent per kWhr. Nowadays even natural gas, once by far the most expensive energy fuel source. is now cheaper than coal. So displacing gas power plant output by renewable energy also yields little savings, far less than the cost of generating the renewable power. In short, it is expensive to add a power generation capacity to the grid that cannot eliminate an equal existing capacity.
Even fuel costs are not cut that much since the fossil fuel plants have to be kept on standby ready to go from low power to full power on short notice.
Yep. Irish study showed that 50% of the putative gains of adding windmills to gas turbines were lost in the ‘whore’s drawers’ operating mode that the turbines ended up following.
Plus the O & M and capital costs of those turbines, excluding fuel, are more or less fixed overheads.
I.e. the less capacity factor you operate a gas station at, the more it has to charge to stay in business. and the more ramping it is called upon to do, the more fuel it burns getting to peak efficiency rather than operating at it.
Renewable energy isn’t just expensive, it adds cost to other operators who have to co-operate with it.
Net result is far more expensive electricity.
The Climate Change Act and it’s consequential effect on energy suppliers was backdoor nationalisation without government purchase of equity.
Having thus legally prescribed the parameters attaining to the production methods and supply of product, the 99% of shameful parliamentarians who voted aye in 2008 now own the situation that exists today, and to double down on that stupidity by proposing a price cap ten years later in an attempt to pass the buck is no more than a momentary encumbrance to the cash devouring monster they created at that time.
It’s an old trick. Use regulations to force an industry into bankruptcy. Buy the assets at pennies on the dollar, then remove the regulations.
Price controls haven’t worked since the Romans first tried them over 2500 years ago. The Chinese may ache tried them even earlier than that – and also failed.
Deregulation and stopping the “green” c**p will not work to produce the necessary investment because of the ever present threat that they will be reintroduced by future vote-seeking “progressive” govts. The “green” genie is out of the bottle and will not return there for decades, so I believe that hankering after a return to a (largely mythical) Free Market is doomed.
Thus, despite being a Free Market zealot I support a price cap, which will inevitably change from being The Cap to being The Price. The govt needs to fully interfere in the electricity market, i.e. a return to central planning, it must keep the lights on, and that is the only way to make sure that happens.
As well as a price cap there needs to be a subsidy cap (around 10% of electricity bills), at present it seems like any loony-tunes “green” scheme gets a promise of massive subsidy, with no regard to consumer bills.
If implemented (price controls), the British grid will go into rolling blackout mode and rationing. There’ll be no incentive to even attempt to conserve. Perhaps the UK will then convert to personal battery storage devices so everyone can queue up every day to get their allotted energy. For the nostalgia folks it’ll be replaying the queues of WWII. Great fun, what?
Your post above abruptly took me back to the 1940’s, when, as a young child, it fell to me to cart my grandmother’s ‘accumulator’, as she called it, to the shop on the corner of her road, to have it recharged to enable her radio to work.
She was not on mains electricity and depended on gas for lighting at that time, despite being located in the centre of Portsmouth.
Could we really be so stupid as to cast ourselves back to the bleak post war conditions that we then endured?
I remember them well ; too well.
Eugh!
Um, I’m a bit confused here, if power derived from renewables is cheaper than that from fossil fuels, as we’ve been told repeatedly, why do they need price controls?
(natural) gas is still the largest part of UK energy… 80% of people use it for heating and it supplies most of the electricity (for the moment).
the price fluctuates… UK consumers get sudden increases when it goes up for heat and electricity… then gas wholesale price goes down, and for some reason firms don’t drop the price to consumer…
Also, UK firms have a history of obscure pricing structures and a habit of giving new customers cheap rates while keeping old customers on high tariffs.
The issue here is not renewables, but a perception UK firms rip off customers. So govt will be popular if they beat said firms with big stick…
As Griff so well demonstrates, when a left wing media repeats something often enough, those who rely on government for their daily bread will quickly come to agree.
Well griff, for once you are correct, there is a perception that energy companies are ripping is off, and its true. Renewable energy companies have ripped the UK so far that we now have two…well let’s leave it there…
I get my energy company information from the business pages of the likes of the Times and Telegraph Mark.
If you want to know what’s going on always read the business pages…
Like I said, Griff gets his information primarily from propaganda sources.
Let the solar and wind generators, compete on the open market without subsidies or tax breaks, if they can sell at a profit around the 3D a KWH like a coal power station they have a right to exist. If they cannot it is their problem, they have been propped up long enough. I live in OZ and the same madness is here , just got my power bill @38cents a KWH, last week they forced a coal plant to close that was efficient at 3C a KWH, bat shit crazy green BS.
You also have to eliminate the mandates.
Competition and choice is the ONLY cure for high prices ! IMHO….
As climate scientists appear to have high confidence in their ability to assign causation to correlated events, perhaps they should analyze this correlation with respect to energy prices doubling:
“For First Time Since 1800s, Britain Goes a Day Without Burning Coal for Electricity”
https://www.nytimes.com/2017/04/21/world/europe/britain-burning-coal-electricity.html
No relation at all, surely?
(and since 50% of UK coal for power stations imported, an increase in energy security to boot!)
This was originally a Labour party proposal ( centre left party) which was severely criticised by the Tory party ( centre right party) . It ‘s interesting to see that in view of the massive profits made by energy companies in the UK, politicians, even on the right have now thought twice about opposing the cap.
My advice is to generate as much of your own as possible through Solar PV panels and panels that generate hot water. You are then largely protected against both political meddling and profiteering by energy companies as well as saving money.
Massive profits. Now that’s funny.
Gareth says
“massive profits made by energy companies in the UK”
What planet do you live on?
Its should be easy, even for you, to look at the share price of Centrica and SSE
What a socialist solution. If the government makes something too expensive, just order the makers to sell at a loss.
Nicely said.
The solution in Venezuela is to Inflate the currency while imposing price controls. Then even the poorest have money to buy anything they want. What could go wrong?
Eugene WR Gallun
The UK domestic energy market is not a true market, it is a fog of obfuscation by 6 major and 50 minor so called energy providers. About 30% of folk use price comparison websites once per year to choose their next supplier. There is no company loyalty because the companies will let you roll over onto much higher tarrifs if you don’t switch each year. The same gas and electricity comes out of the pipes and wires no matter which supplier you choose. The 70% who don’t use price comparison websites are the ones ripped off by about £300. Inertia is the basic supplier philosophy with the poorest, less tech savvy folk being ripped off. None of this has anything to do with sources of energy or policy.
A far more successful market would be created if the 70% could pick up a card at the supermarket showing the cheapest supplier so they could fill it in, mail it and so save £300 per year. But hey the present system employs lots of folk dancing on a pinhead in call centres, comparison websites etc.
One of the many reasons why the UK has such low worker productivity, lots of non-jobs.
surely the existing websites do what a card would do… the problem is not the means of finding cheapest it is people not being inert.
Yes they do but 70% of the population are not using them regularly or at all. I’m pretty sure many would fill in a form and post it. Price comparison websites have been around for years. Many folk are either too old (I help two elderly folk to use them ie I do it for them) or don’t trust computers/internet because of the horror stories they hear about hacking/crime and are scared of something they don’t understand. No business model should profit from inertia. The banks use inertia, insurance companies do and they take advantage of people’s (misguided) loyalty.
And the irony in the UK is that a single elderly person over 75 recieves a £300 annual payment for heating which in many cases is just gobbled up by the energy firms overcharging.
son of m
” gobbled up by the energy firms overcharging.”
Far from it Centrica made losses in two of the last 4 years brackets ( ……..) indicate losses
Here are the financial reports for Centrica
Dividend Data
31-Dec-16 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12
Interim Dividend 3.60p 3.57p 5.10p 4.92p 4.62p
Final Dividend 8.40p 8.43p 8.40p 12.08p 11.78p
Total Dividend 12.00p 12.00p 13.50p 17.00p 16.40p
Fundamentals – based on IFRS
£ (Millions) £ (Millions) £ (Millions) £ (Millions) £ (Millions)
Income Statement 31-Dec-16 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12
Continuing Operations
Revenue 27,102.00 27,971.00 29,408.00 26,571.00 23,942.00
Operating Profit/(Loss) 2,384.00 (670.00) (1,005.00) 1,721.00 2,491.00
Net Interest (300.00) (279.00) (266.00) (243.00) (209.00)
Profit Before Tax 2,186.00 (1,136.00) (1,403.00) 1,649.00 2,416.00
Profit After Tax 1,662.00 (884.00) (1,005.00) 950.00 1,245.00
Discontinued Operations
Profit After Tax n/a n/a n/a n/a n/a
PROFIT FOR THE PERIOD 1,662.00 (884.00) (1,005.00) 950.00 1,245.00
Attributable to:
Equity Holders of Parent Company 1,672.00 (747.00) (1,012.00) 950.00 1,245.00
Minority Interests (10.00) (137.00) 7.00 n/a n/a
Total Dividend Paid cn/a cn/a cn/a cn/a cn/a
Retained Profit/(Loss) for the Financial Year cn/a cn/a cn/a cn/a cn/a
Continuing EPS
Earnings per Share – Basic 31.40p (14.90p) (20.20p) 18.40p 24.00p
Earnings per Share – Diluted 31.20p (14.90p) (20.20p) 18.30p 23.90p
Earnings per Share – Adjusted 16.80p 17.20p 18.00p 26.60p 26.60p
Continuing and Discontinued EPS
Earnings per Share – Basic 31.40p (14.90p) (20.20p) 18.40p 24.00p
Earnings per Share – Diluted 31.20p (14.90p) (20.20p) 18.30p 23.90p
Earnings per Share – Adjusted 16.80p 17.20p 18.00p 26.60p 26.60p
Dividend per Share 12.00p 12.00p 13.50p 17.00p 16.40p
£ (Millions) £ (Millions) £ (Millions) £ (Millions) £ (Millions)
31-Dec-16 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12
Bryn, Centrica are the parent company of British gas which is the operating arm selling energy in the UK. It is estimated that the Cap will reduce Centrica profit by £330M. from £1.6Bn to £1.3Bn. My heart bleeds.
son of m says
” gobbled up by the energy firms overcharging.”
But the reality is Centrica made losses in two of the last 4 years brackets ( ……..) indicate losses
See above.
So instead of correctly identifying the damage that the green policy does to power supply companies and the loading of these costs being passed on to customers som falls for cheap government propaganda.
Government does not want to admit that it forced the power companies to adopt highly expensive green policies.
So instead the government says the increases bills are due to ‘ greedy’ power companies.
Bryan, because Centrica make losses in other parts of their business in some years is no excuse for their British Gas subsidiary ripping folk off where there is such low hanging fruit.
Bryan , and as for the green policies that simply puts costs up for all and I condermn it but it is an irrelevant argument when it comes to inertia selling.
Price caps create an economic illusion for the customer. It is a way of disconnecting the cost of energy from how much the customer chooses to use. Of course, when government policy preferences force the utility to generate electricity using technologies that are several times more expensive than others, both the utility and government get pushback from the voting consumer whose bill is far higher than he knows it could be. So government and the utility conspire to fictionalize prices.
This in essence only adds to the burden and public cost of the pursuit of “climate change” policies. It is all a form of fraud and lies. The government data is “adjusted” which is a form of altering past readings into useless fiction, it subsidizes which shift money from productive sources of funds (business profits, not NGO profits), it distorts costs (more lies) and it then caps some cost components of a bill. Every layer of these compound lies serve to increasingly disconnect the user of energy from the costs. It piles inefficiency upon inefficiency. Such foolishness is often paid for by government borrowing money, which is a form of creating money out of thin air. An then to put the icing on this cake, politicians vie for votes when they claim that this will all be fixed with better “policy initiatives.”
“……Britain’s ruling Conservative Party said it would cap domestic energy prices if it retained power in an election in June, targeting an industry it accuses of not working properly and sending shares in the leading providers down sharply……”
I will hazard a guess here and suggest that the problems with Britain’s grid and energy industry has plenty to do with the British Govt’s meddling in it—much the same as in South Australia. Shutting down plants, shoving wind energy down the industry’s throat, etc….
I heard Libertarian presidential candidate Harry Browne once say something to the effect that …..”Govt is the type of institution that breaks your leg. Then it hands you a set of crutches and takes credit for your being able to get around on those crutches….”
Tilting from the tip of a GE windmill in the North Sea in the dead of winter!
I recall when Comifornia imposed price controls on electricity. The utilities made up the difference by neglecting capacity and maintenance. Until they hit a hot summer and demand exceeded supply leading to statewide rolling greyouts.
The $ equivalent of 1200 pounds would be a nice reduction in my electric bill. No sympathy here.
The truth is we cannot trust any of the major political parties to reduce the cost of buying energy by ditching green policies ,they have been and remain committed to these green policies. The only hope I believe we have of rolling back the green coalition is if ukip makes a breakthrough in this election coming up. I don’t think we should be subsidising renewable energy and we need an opportunity to choose a fuel supply that opts out of doing that ,all energy suppliers remain committed to subsidising renewable energy.
I don’t know what the Venezuelans have been up to with their energy market, but I think this article is somewhat wide of the mark. What they’re proposing to do is stop energy companies ripping people off who remain on their energy proder’s standard tariffs.
At the moment, you have to keep switching providers every time your ‘introductory rate’ expires, or you pay through the nose on a standard rate. Some people, particularly the old and the infirm (often the very people who are in fuel poverty), find it difficult and confusing to keep switching and get stitched up like kippers.
People are confusing the proposed narrowing of the difference in energy prices (between rates for new and existing customers) with the sort of knee-jerk, blanket price-fixing put forward by the slack-jawed Ed Milipede in 2015 (who is also the main culprit behind the UK’s appalling 2008 Death Act (aka Climate Change Act)).
And yes, our energy prices have also ‘necessarily skyrocketed’ due to the appallingly subsidies for ruinable energy.
* provider’s
Blasted auto ‘correct’.
Translation: I demand that the energy companies sell me energy below cost.
Must be an Anglo Saxon thing-
http://www.wattclarity.com.au/2017/04/high-regulation-fcas-prices-on-tuesday-18th-april-in-south-australia/
Not to worry as we have record wind energy-
http://www.wattclarity.com.au/2017/04/aggregate-wind-farm-output-across-south-australia-topped-1400mw-for-the-first-time-on-9th-april-with-more-to-come/
Ready on tap for Mr and Mrs Average-
http://anero.id/energy/wind-energy/2017/april