For frack's sake, look at the government first Ed
Miliband is right about the lack of competition in energy. But before freezing prices, perhaps he should examine how much of your energy bill is due to government policies and taxes
Energy got back in the news in a big way this week after Ed Miliband came up with a marvellous idea to stop price increases from energy companies if he was elected.
Now, I don’t know what is more disturbing, the fact that he genuinely believes that this can be a ‘good thing’ or that it was almost like he had read my column a fortnight ago.
I mean he’s right (shudder), there is no true competition or market place in the energy sector but what he proposes is unlikely to do anything but raise prices for the consumer.
If the polls point to a win for Wallace and the Labour Party, do you honestly think that the energy companies would sit on their behinds and just let the freeze happen without a commensurate price hike before legislation came in? Of course not. As I have said countless times before, the abiding rule in this society is to secure the profits for your owners or shareholders -- not necessarily a bad thing but with energy, we get screwed as a result.
What Wallace got wrong is that once again he made a big grab for the hard pressed public but failed to fundamentally understand the figures behind the energy prices.
According to a little reported House of Commons energy price study which was published in the heat of July this year, 4.5 million houses were in fuel poverty in 2011 with gas prices rising by 41 percent and electricity up 20 percent since 2007; 18 percent and nine percent respectively in just the last three years.
The Department of Energy and Climate Change (DECC) estimates that 47 percent is the wholesale cost of fuel with transmission, distribution and metering account for around 20 percent; other supplier operating costs and profit margins around 19 percent.
On top of that you have energy and climate change polices hitting your wallet with an estimated nine percent of your bill and, of course, that lovely little tax VAT accounting for five percent.
Now, Department of Energy and Climate Chane (DECC) figures suggest that around 60 percent of your bill increases was down to energy cost while 25 percent of the increase was down to network costs, supplier operating costs and profit margins. But can you guess how much government policies have costs you in the two years up to 2012? Around 15 percent. Nearly a sixth of your bill’s increase is solely down to government policy.
And this will go up. The DECC estimates that electricity prices were 17 percent higher in 2012/2013 thanks to government energy policies and that could go up to 33 percent by 2020. Gas is five percent higher but is expected to stabilise for the next six or so years.
What does that mean in real terms? About £112 has been added to your 2012 bill thanks to those that worship at Gaia’s altar in Whitehall.
And it gets worse. DECC’s own figures suggest that this year that cost will go up to nearly £200 while it could go up to £250 by 2020. Now that may not sound a lot to some of you, but that extra tenner a month can be very useful to some families and that tenner is solely down to government policy.
And of course you get that lovely little thing that we all love. That bit of parasitical state life that just seems to continuously grow -- taxes.
According to British Gas’ own figures for an average gas and electricity bill of £1,031 for 2011, energy policies were £93 while taxes formed £65 of your bill. So yes, as I have written before, the energy companies do rip us off with the part of bill that they can control but there is still a lot the government -- whoever is in charge -- can do.
You see, Wallace has already been secretary of state for energy and climate change. He could have made changes to policies that cost us all a tenner a month. But he didn't.
Wallace was promoted into the government the year after his Gromit, Ed Balls, in 2007. They had three years to influence cabinet policies that directly affected household fuel costs, costs that could see a 33 percent rise in our bills by 2020; but they didn’t.
Over five years ago, when Wallace’s mentor was the Prime Minister, there was a legislative update that was meant to encourage investment in nuclear energy. We are still waiting.
We are also still waiting on whether fracking is a threat or an opportunity while US fuel bills drop as it surges ahead in its use of fracking. And I am talking about real science. Not the dogmatic belief system that inhabits policy from Westminster to East Anglia. I’m talking about positing a question and seeing what the answer is.
Does fracking work? Is it a pollutant? What are the environmental consequences? Not some dubious footage of methane output in water taps, but actual science.
But Labour seems reluctant to help on that one. In fact, Labour’s calculation seems to be to keep schtum even if it supports the policy.
You see Wallace, you think you know what it means when you talk about the lack of market competition but forcing a bill freeze is not a market solution, it is a statist solution, and one that will hurt consumers even further.
You had the opportunity when you were in power to introduce real competition, real markets. You had the opportunity to role back the state but your ridiculous policies, and ones that continue to be carried out by that other stupid traveller in DECC Ed Davey, have cost us all.
Yes, the energy companies are money grabbers, all too willing to raise prices, all too reluctant to drop them. But Wallace, of all your mad-cap schemes, price fixing will only damage the very consumer you claim you care about.
Simon Miller is a contributing editor to The Commentator. Follow him on Twitter @simontm71
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