Outside the marginals

a commentary on the politics that followed the UK 2010 & 2015 elections

Energy Companies: too big to control?

The energy companies are vigorously complaining that Ed Miliband’s proposal to freeze energy prices would mean lack of investment and a chance that the economy would grind to a halt as we started to have black out – like in the ‘bad old days’?

Energy UK said:

“Freezing the bill may be superficially attractive, but it will also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000 plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone.”
Energy UK response to Ed Miliband – Labour Conference speech

Now the temptation is to say, “so we have to choose between ‘freezing the industry’ or ‘freezing its customers’?”.

And as for breaking up the energy companies or banning them both making and selling electricity – that is not the way to bring greater competition into the market or to provide the range of services which domestic and business customers want. ibid

I am surprised that they downplay this line – concentrating instead on the effect of a temporary price freeze. This restructuring is pretty fundamental – and all they do is assert “this is not the way …”.  Perhaps Labour is on to something – returning to the original post-Tory-privatisation structure of “producers” and “distributors”.

Disbanding Ofgem to create Ofgem II is posturing to no purpose. Energy companies have already simplified the tariffs they offer. ibid

Again they posture to no avail. Simplified means: variable, short fix, medium fix, long fix, “ed fix” (see below), with/without dual fuel discount, with/without discount for letting them raid your bank account, with/without discount for paperless billing, with/without standing charges, quarterly or monthly billing, exit penalties, etc. And I suspect different companies have different definitions of the above terms – they certainly have different prices for different postcodes. And this in an industry where a kilowatt-hour of electricity from one company is indistinguishable from a kilowatt-hour of electricity from another company. It’s not like comparing Hereford beef steaks from Waitrose with mince from Aldi!

Now Channel 4 News (26 September 2013) reports:

Npower, Scottish Power and EDF energy have released adverts promoting fixed price energy bills until 2017 – just days after energy companies condemned Labour’s proposal to do just that: freeze energy bills. They said the policy would lead to blackouts, and would destroy the energy industry.

Npower implementing Labour policy early?Scottish Power implementing Labour Policy?

They say one thing “fixing prices means the end of the world as we know it!” and yet they offer even longer fixes!

I get the feeling that the energy companies operating together (is that the definition of a cartel?) believe that they could bully a Labour Government.

We have banks that are too big to fail. Do we have energy companies that are too big to control?

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