{"id":3005,"date":"2013-09-27T15:42:36","date_gmt":"2013-09-27T14:42:36","guid":{"rendered":"http:\/\/www.theoillamp.co.uk\/?p=3005"},"modified":"2013-09-27T15:42:36","modified_gmt":"2013-09-27T14:42:36","slug":"one-thing-learnt-week-energy-price-freeze","status":"publish","type":"post","link":"https:\/\/www.theoillamp.co.uk\/?p=3005","title":{"rendered":"One thing we have learnt this week-energy price freeze"},"content":{"rendered":"

At the labour party conference this week, Ed Milliband announced an energy price freeze on gas and electricity prices for 20 months.\u00a0 This will happen if labour win the election whilst legalisation is put through parliament to create a new regulator and break up the big six energy suppliers.\u00a0 This has energy in the news, as it rarely is and a real debate going. The 4 billion pound question (literally) is, is this a good idea?<\/p>\n

The first thing to ask is how have we got there?\u00a0 The regional electricity and gas boards were privatised by Mrs Thatcher.\u00a0 Part of British Energy (nuclear) was sold off later.\u00a0 Essentially we have ended up with six energy suppliers (four being foreign owned – ironically by European state owned energy companies).\u00a0 There are apparently as many 80 small suppliers, but these have less than 2% of the customers.\u00a0 The big six have vertically integrated businesses i.e.\u00a0 they generate the electricity and sell it to customers.\u00a0 They have a reputation for colluding on prices, making excessive profits and having until recently a huge number of complicated tariffs.\u00a0 The regulator OFGEM (Office for gas and electricity) is rightly regarded as fairly useless.<\/p>\n

After privatisation the price of energy fell but this coincided with the peak in north gas production.\u00a0 The big six built a lot of gas powered power stations so the price of electricity fell.\u00a0 The amount the consumer compared to incomes spent on energy also fell in line with this gas production. By the way an excellent background to this can be seen here at “Make Wealth History”<\/a>.\u00a0 However, since 2004 as gas production started to fall prices have risen.\u00a0 In 2004 I was paying 6.8p\/unit for electricity (which had not changed for years) and about a penny a unit for gas*.\u00a0 Now I’m paying 16.4p\/unit for electricity and 5.06p\/unit for gas.\u00a0 In 2008 wholesale electricity prices soared as gas prices linked to the record oil price soared.\u00a0 Most of the price increases in my bills have taken place since then.\u00a0 In 2011 my gas bill went up by 30%. There have been only modest drops in bills since then which have been more than made up for by subsequent increases.\u00a0\u00a0 Right wing commentators try to blame increases on renewables, but the bulk of the price rises are due to the fact that we have to increasingly buy gas on international markets.<\/p>\n

Back to our original question.\u00a0 Is this a good idea?\u00a0 The first thing is to say as a labour supporter I can see where the party are coming from.\u00a0 I slightly disagree with “Make wealth history” about the implications of the % of consumer spend being lower than it was 40 years ago.\u00a0 Energy is both too cheap and too expensive.\u00a0 To explain, I once went round to one very wealthy family that used to go my church, every light was on in every room (occupied or not) in every house plus a number of coal effect electric fires.\u00a0 For this family energy was clearly too cheap.\u00a0 However, every article I read or see on TV about food banks brings the price of energy into the reason why so many families (often working) are struggling with their bills.\u00a0 It not just the price of energy that has soared but also food as well.\u00a0 For millions of people the price of energy is too expensive.\u00a0 Despite this I’m worried.\u00a0 My concerns about this policy are as follows;<\/p>\n