Labour Party Policy on Energy Pricing

[biffvernon]

I do not understand how the promise to freeze prices makes any sense. Can somebody explain?

[clv101]

They reckon the price freeze will cost the energy companies some £4.5bn ('cos they've estimated future energy prices), which they also reckon is okay as the big six energy companies have overcharged us something like £7bn.

"The idea that the lights will go out is patently absurd" ~Chuka Umunna, shadow business secretary this evening.

I watched the speech, some horribly cringeworthy bits, but generally fairly good. The energy price fixing just seems bonkers to me. Pathetic populist rubbish, it ain't going to happen.

[Tarrel]

Conference grandstanding bulls**t is how I read it.

Thing is, there are already workable schemes to help some people out of fuel poverty.

E.g. Solar PV co-operative, installing PV on housing association properties. Co-op investors get the FITs plus the deemed 50% export tariff, while the tenants get to use as much of the free electricity as they wish. Enterprise Investment Scheme allows investors to deduct 30% of their investment off their current year income tax liability, yielding a return far in excess of interest on long term savings accounts.

E.g. Large scale retro-fitting of external insulation to social housing, as practised by the Highland Council in our area.

I'm sure this idea would be pretty unpopular in some circles, but I think my policy would be to increase energy costs, perhaps by raising the VAT to the standard rate, but simultaneously:
- bring forward the renewable heat incentive that's been kicked down the road for several years now
- relax some of the quite draconian standards that properties currently have to meet in EPC terms, before they can get access to any kinds of grants or incentives *
- encourage the widespread adoption of solar thermal via the RHI
- continue to champion, advertise and support the increasing of insulation standards
- use the increased VAT revenue to financially support the above.

* case in point; there is currently a grant available towards the installation of low energy lighting in the home, but properties have to meet EPC rating D or above, and have the certificate to prove it. Not sure how extra loft insulation, etc, makes my house a btter candidate for low energy lighting?

Bit then I'd probably render myself unelectable for the next 20 years, and be remembered as the one who introduced the "cosy tax".

[Tarrel]

I apologise if this offends anyone struggling to meet their energy bills - definitely not the intention - but, in the bigger scheme of things, our energy is still incredibly cheap.

I put the power meter on our log splitter the other day. It cost me 5 pence in electricity to split a week's worth of logs (around 150kg). Given the sinewy nature of the wood, that would have taken several hours of work by hand and, even at minimum wage, would have cost me £20-25 in labour if I hired someone to do it.

[kenneal - lagger]

If they really are serious about saving money on energy why don't they just insulate everybody's home. That's the only way to do it properly/affordably/sustainably.

[extractorfan]

If they really are serious about saving money on energy why don't they just insulate everybody's home. That's the only way to do it properly/affordably/sustainably.

They aren't serious about anything sensible.

There is indeed a cost of living crisis, and we all know why that is.

it's a combination of expensive energy and a consumer economy the immediate problem for them (the politicians) is people can't afford to buy stuff, and that means change in lifestyle, which is unmentionable.

but of course, it seems obvious here.

[Little John]

I'm sick of the entire spineless shower of shit at Westminster. Their language is a pale facsimile of idealism and willingness to act on behalf of the people, while their behaviour demonstrates them to be utterly powerless and without conviction.

Our politicians cannot change geology or the world economy and the imperatives these two things impose. But, they can change how equitably the resources we do possess are distributed. They can come clean and tell it straight with regards to how a smaller cakes gets distributed.

Instead, we get bullshit announcements about insignificant policies that fundamentally change nothing inside an unsustainable system that is unquestioned by all parties.

I f***ing give up.

[RevdTess]

Every time I think about the ramifications of this policy I get the heebie jeebies. I can only conclude that the Labour policy planners don't think further ahead than what will sound populist coming out of political mouths at their conference. Did you hear the applause when Miliband announced it? Like Steve I'm left open-mouthed in gobsmacked amazement. Surely if you want to subsidise cheaper energy the way to do it is to insulate homes and invest in wind/tidal energy projects? As I said in the other thread, even nationalising energy production would be more coherent than price-fixing. If I'd ever been inclined to vote Labour, they would have just lost my vote. I just hope the Greens don't get tempted to support this.

[biffvernon]

Just heard on 'tnews that share price of energy companies concerned have dropped 3 or 4 %.

Presumably some big players decided to put the boot in.

[clv101]

It might end up being fairly irrelevant. Freezing prices for 20 months is a good soundbite but at what level? Maybe the energy companies will mitigate the risk of not being able to pass on wholesale price rises buy buying futures for all they need. It'll be expensive but without risk. They can go back to the government and say "given the framework you've given us to work in, here's the new wholesale price the market has given us". Prices are fixed - but higher than they would otherwise have been.

Freezing prices is a non-story until the price at which they are to be frozen is negotiated.

[RevdTess]

Freezing prices is a non-story until the price at which they are to be frozen is negotiated.

It's a non-story for the consumer, but it increases risk for the energy companies who now can't plan so easily for how and where to invest.

Labour seem to think that the profit margins of energy firms are exploitatively high, so they think they can set price limits while still making it a no-brainer for companies to continue to supply the UK market.

I'm not sure how true that is. Anecdotally of course people feel that when wholesale costs 'come down', retail prices stay high, but they don't seem to realise that energy companies aren't buying all their energy at today's wholesale prices but have actually hedged a large portion in advance. I've never really been convinced that expecting retail prices to follow wholesale spot prices is a rational conclusion. That said, I'm not clued in to the gas/power markets at the moment so maybe the data supports the populist argument. What I do know is that when the same complaint was made against the oil/gasoline market it wasn't backed up by the data I was seeing back in the mid-2000s.

I'm going to start working for an energy trader again after Christmas so I might have a better clue after that.

[emordnilap]

policy planners don't think further ahead than what will sound populist coming out of political mouths

Stripping down your post, Tess, you embodied an eternal, infernal truth.

A degree in bullshit is on the CV of every politician.

[clv101]

The other interesting aspect of this story is how the retail gas and electricity prices vary from country to country across Europe. The UK is one of the cheapest!

UK has the joint (with Lithuania) 2nd cheapest retail gas in Europe after Romania. France is 28% higher, Germany and Spain 38% higher, Italy 78% higher, Denmark and Sweden more than double!

For electricity (euro/kWh) we're middle of the field:
0.29525 Denmark
0.27249 Cyprus
0.26527 Germany
0.2314 Italy
0.22566 Belgium
0.22518 Ireland
0.20361 Sweden
0.2031 Portugal
0.20147 Austria
0.19323 Netherlands
0.18926 Spain
0.17322 Slovakia
0.17078 United Kingdom
0.16986 Malta
0.16736 Luxembourg
0.15718 Finland
0.15659 Slovenia
0.15613 Hungary
0.15071 Czech Republic
0.14618 Poland
0.14466 France
0.14073 Greece
0.13942 Latvia
0.1255 Lithuania
0.11325 Croatia
0.11066 Estonia
0.10695 Romania
0.08795 Bulgaria

http://www.energy.eu/

[extractorfan]

The other interesting aspect of this story is how the retail gas and electricity prices vary from country to country across Europe. The UK is one of the cheapest!

UK has the joint (with Lithuania) 2nd cheapest retail gas in Europe after Romania. France is 28% higher, Germany and Spain 38% higher, Italy 78% higher, Denmark and Sweden more than double!

For electricity (euro/kWh) we're middle of the field:
0.29525 Denmark
0.27249 Cyprus
0.26527 Germany
0.2314 Italy
0.22566 Belgium
0.22518 Ireland
0.20361 Sweden
0.2031 Portugal
0.20147 Austria
0.19323 Netherlands
0.18926 Spain
0.17322 Slovakia
0.17078 United Kingdom
0.16986 Malta
0.16736 Luxembourg
0.15718 Finland
0.15659 Slovenia
0.15613 Hungary
0.15071 Czech Republic
0.14618 Poland
0.14466 France
0.14073 Greece
0.13942 Latvia
0.1255 Lithuania
0.11325 Croatia
0.11066 Estonia
0.10695 Romania
0.08795 Bulgaria

http://www.energy.eu/

That is amazing. What these politicans need to be saying is "look, we are well off, let's start being more efficient and saving money".

but no.

[biffvernon]

Yep, those figures need to be shouted from the rooftops.