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Cameron’s green levies hit poorest hardest

We should be thankful for the Big Six Ugly Sisters. Nobody makes the case better than they that private markets are often wholly uncompetitive, allowing a small dominant clique to gain a stranglehold and ruthlessly advance their own greed without regard either for the national interest (investing to keep the lights on) or for their poorer customers (over 5 millions pushed down into fuel poverty).

Nobody makes a better case that exploitative private markets in areas of basic public need repeatedly evade proper regulation and can only be made to serve the public interest by being brought back, whether whole or in part, into public ownership. This truth was highlighted by none other than Cameron himself at PMQs 3 days ago.

The right way to bring down energy bills is via energy conservation, energy efficiency, fundamental restructuring of the energy market (especially the opaque wholesale sector), and establishing a public sector benchmark. The wrong way to cut energy bills is by phasing out measures that promote energy efficiency, yet that is precisely what Cameron is suggesting as a panicky response to Miliband’s hugely popular energy price freeze. He is proposing to axe the Energy Companies Obligation (ECO) which adds some £47 (or 3%) to an average annual bill . Ending this energy efficiency requirement would let the companies completely off the hook and be a disaster for the 5+ million poorest, mainly pensioner, households either in or at risk of fuel poverty.

The response of the Ugly Sisters to the recent popular outcry is illuminating. Instead of holding off further price increases or at least severely moderating them, they have provocatively one after another in lockstep put up prices by 8-10%, nearly 4 times inflation. Their only interest in energy conservation and efficiency is to block it so that they can sell more units at a bigger profit to their customers. They want ECO and all other green subsidies abolished.

And instead of listening to the public, they have turned aggressive and threatening. Scottish Power, owned by the Spanish company Iberdrola, have warned that they will withdraw power investment to the tune of £14bn unless Miliband retreats from his price freeze. Miliband should, and will, face down this bluster when Iberdrola lives with price controls in its own Spanish market and when the company persistently failed to make that investment before 2007 and preferred to profiteer instead.

The whole debate about energy in the UK is wrong-headed. Companies shouldn’t be rewarded for generating megawatts, but rather for creating negawatts by reducing usage. The whole policy framework should be, not about the energy source to be used – whether gas, nuclear, wind or whatever- but rather about reducing energy use, making sure what is used is used more efficiently, and switching away from fossil fuels to renewables as quickly as is feasible.

One Comment

  1. ShirleyKnott says:

    “Companies shouldn’t be rewarded for generating megawatts, but rather for creating negawatts by reducing usage.”
    Michael, they ARE doing that, only it’s the poor who cannot afford to use fuel who are reducing usage! ie, I have an old boiler and cylinder, but NEVER use it – I’ll heat a kettle for washing up/housework & use the electric shower rather than bath. Heating only goes on when i’m cold thru the layers of clothes. TV? that’s gone, not only licence cost, but elec too – cuts approx £4+ off the weekly bills. Oh, and I’m one of those who don’t have a cooker – just a two ring thingy, a breadmaker (given by someone who had no use for it) and the microwave.
    Trouble is, the way big6 structure their pricing, this means they lose on units charged at their higher prices – because for gas, these are on the earliest units, then the price comes down! Living gets cheaper the better off one is.
    See one of your recent previous articles for my “solution” to pricing.

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