Tuesday, 19 November 2013

Ed Milliband And Energy : Solidarity Begins at Home!

We British are so generous a huge chunk of the energy supply industry is now owned by foreign firms so we have the joy of knowing we are increasing the GDP of Germany, France or Spain every time we put the kettle on. And those who have stayed loyal to dear old British Gas or Centrica as it is now known will be cheered to be able to make a contribution to the £16,439,000 that was shared by their top five executives’ in 2012. The poor old Chief Executive Sam Laidlaw had to struggle by on just £4,959,000.

I bet the pensioner described by John Major has having to choose between eating and heating will be heartened to know they are making a contribution so poor old Sam can manage on such a paltry sum. Old-Etonian Sam’s dad was a former chair of BP so we have to keep Sam in the style to which he has doubtless become accustomed.

The reality is of course that this is a monopoly. A complex one but a monopoly just the same. This is not a real market most people have only one electricity connection to their house and if they are lucky one gas connection. What we have is a pretend market. The energy companies have different marketing, billing, accounting and head office functions that add costs to our energy bills then they pretend to compete.

Ofgem may claim that, “protecting existing and future customers is its first priority.” But in the second sentence of their objectives they give the game away, “we do this by promoting competition, wherever appropriate, and regulating the monopoly companies which run the gas and electricity networks.”

In trying to regulate these monopolies they have the power to fine them for abuse of market position which they do in 2010-11 to the National Grid was fined £15 million. Other fines include £8 million and a £4.3million from National Grid Gas, £4.5 million from EDF, £5 million from British Gas Trading, £2million from RWE N-Power. More recently Scottish Power has agreed to £8million compensation for its customers following miss-selling.

We clearly we have a crazy world when firms are being constantly fined huge sums for not pretending hard enough.

If the market is a joke so is government energy policy. When researchers at Cambridge University did a review of energy policy for the Consumer Association they came up with a grim conclusion.

“The UK faces an ‘impossible trinity’ of energy policy objectives: decarbonisation, energy security and affordability”, they said.

It is time we came clean and admitted the simple truth. There is no market solution. The privatization and dismembering of the industry has made things worse not better. The interests of the owners and as we can see often the managers are totally incompatible with the needs of both the environment and of the customers.

These policy objectives cannot be met in the current ownership structure. If Ed Miliband wants an energy price freeze as a prelude to bringing the industry back into social ownership then three cheers! However if he things we need more competition then that can only means more fragmentation more marketing and billing systems on top of the same monopoly infrastructure and can only increase costs further!

It seems to be taking a long time for him to get it. Maybe his personal energy choice gives us a clue. Apparently he has switched from E On to First Utility.

When  Ian McCraig CEO of First Utility heard Ed’s new policy he said that a freeze was impractical and could put him under. This is the firm that increased its duel fuel tariff by 18.6% in June.

In terms of its green credentials they are not brilliant either with over half their electricity coming from coal and just 8% from renewables. It prides itself on accurate billing because it installs real time meters in people’s homes this does not equate to higher customer satisfaction ratings mind as it is 11 out of 14 in Which’s customer satisfaction tables.

So Ed what is wrong with Co-op Energy? As a consumer/owner it works in your interests, over half its electricity is from renewables and it has a better customer satisfaction rating. It been a bit tough at the Co-op lately and Co-op Energy is one of our star performers.

What is more Co-operative Energy became the ONLY energy firm to support his policy. Ramsay Dunning, general manager said: “We welcome the pledge Ed Miliband has made, to freeze energy prices if the party is elected in 2015. A tough approach, like this, is required to tackle the spiraling profits the Big Six continue to enjoy and, most importantly, to create a fairer deal for customers who are struggling or in some cases, unable to pay their energy bills.”

So come on Ed solidarity begins at home!