Regaining Real Power: An Energy Price Cap and Green Investment

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The Way Forward – An Energy Cap as well as Green Investment 

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Ed Miliband’s welcome announcement at the Labour Party Conference to cap energy prices was a popular one with the electorate. Realisation of that caused alarm with Tories and energy companies -scare tactics threatening power shortages. Indeed, it is not just energy power they hold, and fear of losing control unnerves them. Ed has emphasised his belief in the green economy, and introducing the feed back tariff for solar power and micro-generation demonstrated that. 

This was rapidly cut back by the Coalition government, and their investment in fracking, and gas makes their self-interest very clear.

An energy cap and green investment policies could go a very long way to shifting that power back to the people. If this is followed by control of other utilities, transports, money and banking, we would be looking at a real recovery – that of Society. 

Our dependence on energy for our very survival is clear. What can be avoided is a perpetual dependence on privatized energy companies. We are imprisoned by fear of the collapse of society and the consequence has been wars in the Middle East. Ominously, British oil companies have unprecedented influence  of British military policies.

British oil companies are promoting a ‘fight against piracy’ to get a vast hidden military subsidy. In the process they have got an unprecedented amount of influence over UK military policies. Oil companies have talked up the risk from piracy to justify the use of Navy frigates, drones and helicopters to protect corporate oil assets in the seas. They have demanded increased spending on military hardware at a time of major public cutbacks. 

The media’s insistence that renewable energy would not satisfy our needs literally fuels the thirst for fossil fuels, and nuclear, while denying the dangers of climate change and nuclear contamination. The financial argument in favour of fossil and nuclear fuels is heavily biased, distorting political and public confidence in renewable energy. Why is George Osborne insisting on commitment to dirty, carbon producing gas-fuel for years to come? Ed Davey has been pressured by George Osborne to adopt gas or face deep cuts to any renewable subsidy. (Friends of the Earth, ) While cutting feed-in-tarriffs, the government prepared to invest in fracking and shale gas, with known dangers, and Lynton Crosby clearly has self-interest, yet Cameron refuses to address questions on this issue.

Evidence shows how energy companies manipulate markets, Libor style by fixing prices. (Guardian)

Michael Burke‘s recent article, was published by Socialist Economic Bulletin, and emphasises the need for green investment if there is to be a real change for British politics.

Capping Energy Prices and Green Investment are BOTH Required

“The announcement by Ed Miliband that Labour would temporarily cap energy prices is a welcome one. But the reaction to it reveals to deep-seated problems of the British economy and British politics.

  • According to Labour’s own (uncontested) research household energy bills have risen by 29% in 3 years. Therefore the pledge to cap prices rises for 20 months is really a very modest reform.
  • According to a campaign tool ‘Freezethatbill’ the average household has seen bills rise by £300 under the Tories and will save £112 a year from this policy. That would be an estimated saving of £160 in total.
  • The reaction to this moderate plan has been vociferous and extreme. Lurid headlines about the lights going out in Britain have been accompanied by open threats from the large energy companies to discontinue investment. SEB has long argued that the cause of the slump is an investment strike by private firms.
  • The energy companies threatened to make that an all-out strike in their sector.
  • The Tory energy secretary and a host of MPs immediately relayed the threats of the energy companies. This is hardly surprising given the very large donations those companies make to the Tory Party. The Tory Press did likewise.
  • However it cannot be argued that this was simply scaremongering, based on empty threats. It is already the case that the energy companies do not invest sufficiently, either in storage capacity or in renewables. The energy companies, especially those controlling energy reserves, have previously withheld supplies in order to push up prices. It was previously reported that in March this year the British economy was just half a day away from running out of gas. But the reality was that energy companies withheld available supplies, which drove up liquefied natural gas prices to 150p a therm, from 57p earlier in the year.

In pursuit of profits, the energy companies have been willing to collude in driving up prices, and endangering supply. They are able to do this, in part, because existing capacity is extremely limited and they are an oligopoly.

This is the real threat to Ed Miliband’s policy.

Clearly the price pledge is only relevant if wholesale energy prices are rising. Capping retail prices for business and household consumers while wholesale prices are rising can only lead to a profits squeeze. As a result the energy companies threaten that they will reduce their already inadequate level of investment, even while some of them have caved in on the temporary price freeze. This could lead to energy shortages and would end Ed Miliband’s much more ambitious goal of de-carbonising energy production by 2030.

The financial position is clear. Taking the shareholder payout from just British Gas, Centrica, Scottish & Southern Electricity and National Grid alone the current annual dividend is £3.4bn. Yet despite the imperative for investment in renewables, the level  of  investment has halved from already low levels over 3 years.

This private investment slump has been exacerbated by the withdrawal of state investment in the energy sector under this government. Private companies have proved incapable of providing the necessary investment for long-term projects over a prolonged period. They are simply unwilling to take the risk. Yet the current government has reduced its own investment in subsidies for renewables which reflects its commitment to the oil companies and in pursuit of the illusory benefits of fracking.

Ed Miliband’s policy of capping energy prices is very welcome. It makes a small contribution to softening the fall in living standards. But the extreme response to it highlights the complete unwillingness of the energy companies to provide the necessary investment in renewables and storage capacity. De-carbonisation and energy security require large-scale state-led investment. Instead dividend payouts to shareholders are at record levels. Faced with sabotage and threats from the energy companies, nationalisation is a necessary step that can lead to the investment that is imperatively required.”

So what exactly do our Dear Leaders think they are playing at?

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 So what exactly do our Dear Leaders think they are playing at?

From @julijuxtaposed

Have the Rightists not noticed the irony in their professed disdain for the ‘Big State’ when the Right-winged Coalition is constantly and increasingly nannying the minutiae of our daily lives? They can claim all the love they please for ‘the market’ but this does not entitle them to outsource and corporatise the responsibilities we pay them to hold. Mussolini would applaud. They seek to make our sources of public accountability elusive and faceless entities while making us account daily for our individual worth. The irony is so stark that only a fool, a tyrant or a religious fanatic would overlook it. What will actually become of Government? Is it to be shared among the likes of G4S, Virgin, Atos, Eddie Stobart, Centrica, etc…? And who’s getting the Treasury? Yeah, silly question…

There’s a fine line between pragmatism and cruelty and it is my belief that this government has crossed it with gusto. There’s no need here, for a list of everything that’s wrong: you know what bothers you, I’ve detailed my grievances in other posts and the government is patronising enough for all of us. To me, the lack of trust in and love for the very countrymen and women this collective purports to serve and its individuals’ unseemly delight in their own pomposity is markedly apparent.

What exactly do our Dear Leaders think they are playing at? I’m not referring to the present details but to the bigger, medium- to long-term picture. The final destination, so to speak. Have they not worked out where they’re taking us all with these attitudes and policies? They don’t even have a mandate! It’s easy to infer some grand plan but I’m not sure they are that intelligent – I don’t think they’ve properly translated their vision from ideological abstract to ground-level reality. Iain Dontcare Smith, Gove, That Hunt, Grayling, et al seem to think that if they just ‘clean up’ Society; make everyone obedient to their faith in a crumbling world view, that all will be well again. Hmm… Has it ever been that well for the masses? Has civic life ever been weighted in our favour?

But, really: what does this Coalition envisage are going to be the consequences as the years roll on for, even if/when they are kicked out in a couple of years, the government that will replace it will be hamstrung by, not just the accumulated sham of decades, but by the instinctive enthusiasm in the present to build on every hitherto mistake. And anyway, how much do we trust them to be that much of an improvement, irrespective of your belief in Labour’s good intent? It took a long time to get into this mess and the changes occurring right now are set to cement all that I have come to detest. This won’t be over any year soon.

Either the current political vision will fully come to pass and we will be a Stepford Nation – goodbye soul – or the government will have to become ever more forceful and enforcing. I wonder: how far is the present administration prepared and willing to go to see the fruition of their flawed vision. Keeping a regimented poor will require more than forced labour, punitive policies and food banks. What if resistance becomes the matched force, already overdue, I think, considering how the disadvantaged are growing into the majority and how lives are becoming ever more untenable. ID cards, checkpoints, segregation, armed forces? How authoritarian are they ready to be and to what lengths will they go to justify their actions? Will they even care to justify them?

Fascism is an accusation readily and even casually flung and so easily dismissed as melodramatic labelling but, you know what? I don’t think we can afford to take chances and neither do I buy the counter that our direction of travel can’t be deemed fascistic because it doesn’t perfectly match that which has gone before. The signs are all there, in every area and at all levels, from the House of Commons to the televised sound bite, albeit newly spun, but hey – that’s what the ‘neo’ prefix is for. Nationalistic, yes – in the sense that our rulers are seeking to preserve the sovereign interests and culture of their own realm. The supremacy aspect has morphed but it’s there in the emotive and divisory tactics; in the collusion of type and its subsequent sense of superiority and entitlement that so demonstrates a detachment from ‘other’ – the rest of us, that is. The expectation of dutiful obedience and the attempts to quash resistance are not just atmospheric but manifest in policy, revealing complete disrespect for real human dignity and an utter contempt for democratic process. Even the charge of demagogy can be laid when I think of how we are micro-managed in the least necessary and/or least reasonable areas of our personal lives with all the petty hubris of Greek gods.

That so many in political power (including the media) have only scorn and denial for such fears and perceptions is insulting and short-sighted and does nothing whatsoever to diminish my concerns. They should be mortified. Are we supposed to wait until we have either a neo-totalitarian state or possibly no state at all before we say it is something we saw coming and could have stopped? History is supposed to inform our present, not predict or command the future.

Fascism: from the Latin noun, ‘Fascis’ (s) / ‘Fasces’ (pl) – ‘A bundle of rods with a projecting axe blade. I think it’s as apt a metaphor as its symbolic image ever was.

If you see Sid

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If You See Sid

British Gas: profits set to rise again this year So how’s that privatisation thing working out for you now? You know: the one where they sold companies we already owned back to us on the basis that it would create a “stakeholder economy” and that competition was going to keep prices low. “Competition”. That’s not really the word. It has actually had the opposite effect. Once one energy company puts up its prices, all the others follow suit. A better word would be “cartel”. It’s not as if these companies are starved for profit either. British Gas increased its margins by 24% to £742 million last year. Other companies showed a similar rise. Meanwhile the regulator accused them of profiteering, suggesting that they had increased their profits for duel-fuel customers by an astounding 733% between June and October 2011 through a slew of complex price hikes. It then went on to call for simpler tariffs and clearer bills, a suggestion that was later repeated by David Cameron. Not that it has made any difference.
According to Which, the consumer magazine, profits are set to rise even more this winter, from around £40 per customer to £65 over the last three months of 2012. That’s profit not price. It’s what they are intending to take directly from our pockets, to pay their shareholders, over and above costs. A few weeks ago David Cameron promised to force the energy companies to offer customers their lowest tariffs. The following day the energy secretary contradicted him. It’s not that energy companies will be forced to give their lowest tariffs, he said, it’s that the government will legislate to “help” customers get the best deal. It makes you wonder what the point of democracy is, doesn’t it, when the government seemingly has no control over energy prices in the country it purports to rule?
British Gas was privatised in 1986 amidst great public fanfare. It is now owned by Centrica which has interests in Norway, the Netherlands, North America and Nigeria. How many of you who bought shares back then are still doing OK from the sale? Do your dividends cover your increased energy costs?  If you see Sid, tell him he was conned.