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Crew wages - how does £240k sound?

Started by Tim Atkinson in :the bar Dec 30, 2013. 0 Replies

As we've just commented, the …Continue

Tags: social, economic

Does being 'sustainable' cost too much time and money?

Started by entsust in :the cafe Dec 14, 2013. 0 Replies

While the thinking is that being more 'sustainable' as a business should lower your costs, does it just cost too much to begin with - in both time and money?By the time that you've invested in all…Continue

Tags: social, environmental, economic

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Freezing energy prices doesn't get to the core of the issue

Ed Miliband is standing firmly by his proposal to freeze energy prices for 20 months, should Labour win the 2015 general election. The announcement has prompted a whirlwind of comment from all sides, ranging from the prospect of blatant pre-election price-fixing to the threat of rolling blackouts, similar to those seen in the western United States in 2000 following price-capping.

There is yet to be much in the way of confirmation of the operation of the proposal from Labour, but it certainly does throw up a number of issues.

Firstly, we already know that we're heading for an energy gap. Power stations are being decommissioned faster than we can replace their capacity. Regulation, subsidy levels and approval for new nuclear power stations has been held up, while contenders to build them drop out of the process.

The hold up in getting the Energy Bill through parliament has created a great deal of uncertainty in the energy industry (although it could be argued that suits some quarters perfectly well), and it is likely that it will be reluctant to carry out any kind of infrastructure improvement without the security of knowing that it could raise prices to cover wholesale energy market fluctuation.

Which brings me on to the wholesale markets. Whilst always at the mercy of general global fluctuations, because of the stupendous quantities of global cash tied up in them, the energy markets are fabulous nervy, and jumpy. The graph here, from EDF, shows the change in wholesale energy prices following the first phase of the Arab Spring in late 2010, followed by the tsunami and subsequent accident at Fukishima in Japan in March 2011. Some energy suppliers - most likely some of the smaller ones rather than the 'big six' players - may not cope with such extremes of unpredictable volatility - that it would be imposible to pass on to the end user.

It is that volatility that would be the most likely cause of any blackouts, although there's no evidence that this would actually happen. While critics have pointed to blackouts as an apparent inevitability of Miliband's proposal, citing California in the early 2000s, the price-freezing programme was not ever cited as the sole cause - bigger issues surrounding the collapse of energy companies were tied to manipulation of the energy markets by now-discredited firms such as Enron.

This might be beginning to sound like a robust defence of the status quo, but it is anything but. That the energy system is in such a vulnerable state is a shocking indictment, highlighting successive governments' inability to deal with the energy companies in the same way as they failed to deal with banks.

On a day to day basis we see energy bills for companies that make no attempt to be intelligible to their users, or offer support or guidance to their readers. There is no interest whatsoever for the suppliers to reveal their innermost workings to the end users, and as such large energy companies engage in a deception-by-omission game; each apparent move to improve clarity just shaping the same information in a different unintelligible way.

The rolling out of smart meters (left) - the only mechanism by which our generation system can learn to get by on its meagre resources - is woefully behind (not rolling out until 2015), as are attempts to improve the nation's energy efficiency, with apparently flagship projects such as the Green Deal taking an inordinate amount of time to gain momentum.

While perhaps Ed Miliband deserves respect for taunting the energy companies (which have been delightfully upended by his announcement), consolidating a coherent national energy policy, a military-scale assault on energy inefficiency, and a drive to speed up roll-out and understanding of smart-metering would have been a better, and more practical plan - and benefit consumers for longer than just 20 months.

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Tags: buildings, economic, energy, environmental

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