Almost exactly a year ago I wrote the following blog saying that what the UK required was fundamental energy reform, not the tinkering that Sunak promised then that guaranteed the profits of energy companies at ultimate cost to us all.
Now we know that both BP and Shell have made record profits, precisely as I predicted.
What we also know is that no politician has any real clue about how to address this.
Why is it so hard for them to do the right thing?
I have been reflecting on yesterday's political debacles. One of these was the fiasco of a plan that Rishi Sunak put forward to support those who will suffer dramatic increases in energy prices over the coming months and years. My response was a Twitter thread, unusually for me actually written on Twiter itself and so only capable of easy reproduction by screenshot.
I began with this:
The argument continued with me saying:
I am quite convinced that what we are seeing is evidence of total market failure. We must have reform or this crisis will not go away.
But is Labour willing to suggest it? And will the SNP do so too? It's beholden on both to rise to the challenge.
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Labour cowardice in front of a wide open goal is unbelievable. They havent even made the general public aware that they are bearing the cost of the Conservatives’ ideological fairy land that is the energy ‘market’ of invented competing companies, as part of their £3000 plus annual bills.
Getting people to understand why they are suffering – and who is imposing these bills on them, and why they are paying more for energy than most other countries – is the way to ensure they vote the right way.
The answer is simple…. well, WAS simple when the government owned a large domestic supply company. But I am sure another one will go bust soon and could be the perfect vehicle for a new policy.
Fix a ‘fair’ price for gas and electricity…
to me this would be a progressive structure instead of the current regressive one – NO standing charge, equal prices for prepayment meters, higher per unit cost for high consumers. Sure the fair price won’t be “as we were” but it would reflect affordability.
Invest massively in software and customer service….. and wait.
Before long everyone would be switching supplier and existing players would either compete or shut.
As Giro Bank was to retail banking Peoples Power could be to energy. Of Giro was privatised as it threatened the banks …. which tells you what a great thing it was!
Indeed…
One of the worst energy crises in history, and you would think that the government would be doing everything it could to create energy sovereignty. No laws have been changed to stop energy company price gouging, and I see no promises of investing in new nationally owned clean renewables.
But we have a shiny new ministry to make it look as if something is being done
I thought Mike Parr would have commented by now! I hoped he weould have commented by now!
The so-called ‘market’ created by the Government in domestic energy wasn’t a real market and has been a complete disaster, that has impoversihed poeple, and no doubt ruined the helath of vulnerable people; sepecially the old, the poor, the disabled and children in hard pressed families. There is no excuse for this. It is the Government’s fault, on one else is to blame. Domestic energy, like railways does not lend itself to a “market”. It really isn’t impossibly diificult ….. unless you are a neoliberal; in which case it is a guaranteed disaster.
I tell you now, spelling this out over and over again is the only way to get this over I’m afraid.
Richard I agree with all the points you make. The problem with energy market reform in general and elec market reform in particular is a total focus by almost all commentators on markets & an assumption that markets can & will be a key enabler for the energy transition (which is much more than just “more elec”). Of course this is nonesense & most analysts get it wrong – because of their narrow focus. For those that have the time and inclination what follows is indicative (and all public) and is what passes for mainstreaming “thinking” regarding elec market reform.
Last week Carbon Tracker (CT a Uk-based outfit) issued a report on elec market reform in the Uk and held a tele conf. I have read the report, I wasted an hour of my time listening to what they had to say. The report lead author worked for Argus – a company whose major clients are… energy market traders. Any substantive/fit for purpose market reform would cause prices to stabilise – need I say more? The core claim by CT was that splitting the elec market into CAPEX and OPEX-based generation would have made an impact in late-2021 and 2022 but as gas prices calm down the claim is that such a split would cost UK serfs more. They claimed the modelling they had done proved this. Of course there was no public discussion – to be avoided at all costs since they would have struggled to answer difficult questions. There was a panel discussion, BEIS, Agor Energiewende and a couple of others, spouting the usual sound bites and cliches. The whole thing was a setup.
CT answered by e-mail one or two of my questions. I was tempted to put the responses here – but to be honest I can summarise with “markets and more markets and flexibility markets and markets etc etc blah blah”. They deflected my questions. There is no doubt that Liebore will listen to the likes of CT – because they deliver a comforting message – “bit of change but not much – everything is OK”. It won’t be, for a range of reasons, but by then those in CT who wrote the report will have moved on to pastures greener. Side note: CT make a big deal about their modelling, which I found odd since it takes me a week to build a model for any country over one year with half-hourly resolution using ENTSO-E data (and building in load & RES growht over a 10 year period) . It’s not a big deal – but it seemed to be for CT. Funny.
In the case of the retail (non)market this should be abolished. However, the Euros now have the bad idea that everybody in the EU will move to Power Purchase Agreements (PPAs) in which you, Mrs Jones, are stuck with a (greenish) supplier for ……5 years? 10 years etc. The economists I know have greeted this with scorn, but in Bx-land it is main-stream and will go through. Who knows what the Brits will do, probably struggle on with the fiction that retail markets exist (& lets be clear – fantastic for traders).
On a more positive note, our community energy scheme still has legs and when implemented we will deliver green elec @ retail for less than half current prices, year round. Most people living in light-suburban/rural areas could implement something similar – sadly the main blockage are the DNOs. Space does not permit me to outline the latest sets of imbecilities I have heard about regarding these price-gougers.
Disappointed by CT
But my own experience of their associates, at least, is of being blocked and ignored
Having learnt what I have over the last 6 months, I no longer trust market research companies, who have been known to be hired to support a required outcome. If “a company whose major clients are… energy market traders”, that seems like a conflict of interest (biting the hand that feeds it?).
In their book “The Microeconomics Anti-Textbook: A Critical Thinker’s Guide – second edition” by Rod Hill, Tony Myatt (recommended)
https://www.bloomsbury.com/uk/microeconomics-antitextbook-9781783607297/
They write: ” ‘Think tanks’ funded by corporations and foundations established by the very wealthy churn out policy papers guaranteed to reach the desired conclusions; they provide talking heads for television and opinion pieces for the newspapers. Capital cities swarm with business lobbyists. In Washington, a city consumer advocate Ralph Nader refers to as ‘corporate occupied territory’, registered lobbyists outnumber members of Congress by twenty-two to one and spend about $290 million a month to advance their clients’ interests.”
I agree re lobbyists. I did not see Carbon Tracker as a lobbyist until this report (previously they had produced pretty OK stuff). Now when I read reports, I always look very carefully at who wrote them – often this is sufficient to understand motivations etc. In the case of Brussels – it is , like Washington, packed to the rafters with lobbyists to the point where meetings with the Commission often start with “tell me Mr Parr who pays you” .. my reply stops them dead in their tracks & modesty forbids me from repeating it here.
In turn, this makes it difficult for politicos to know where to turn for unbiased advice/comment, which suits the lobbyists. We are in a very bad place, be it the UK or EU.
Agreed
Part of the problem is that the media (BBC, print press especially) give far to much airtime/print space (the oxygen of publicity) to neoliberal lobbyists very thinly disguised as ‘expert’ think-tanks. They are expert only in ideology, lobbying and spin, and don’t actually ‘do’ thought. The last thing that lobbyists want is the public to start thinking; they want the public to swallow the lobbyists grotesque, disguised neoliberal ideology: whole.
Ask one question when you hear the dreaded words “think tank”; who pays their bills?
Agreed