BUT to freeze on energy price the cap now looks inevitable. The increase that Ofgem plans announce on August 26 and further increase later in in year should to be abandoned energy regulator whose functions have been overwhelmed events. Ofgem really can’t set in start a process that further fuels inflation, already works on 10%, and condemns millions fuel poverty. Honorable retirement of Ofgem board member Christine Farnish will not last withdrawal from an organization that has lost its way.
Freezing is necessary, but far from sufficient. We still rely on natural gas for about 40% of our daily energy expenditure. The promised energy transition has barely begun. price of gas that we import – approx. half of total consumption will still be set on in world market and will probably keep risingespecially if a hot European summer is followed by a cold winter. Further action is needed from government and energy.
The first support diagram should be in place who protects the poorest people and those struggling on limited budgets. welfare system can be used to protect these on benefits, but some further action, perhaps through discounts on bottom bands of council tax maybe best way of helping those for whom current energy prices creating difficulties. Business rates may also be varied, as during Covid, to help these enterprises in greatest danger. Energy retailers should to be required to show that they supporting those in need, not least by ending the pernicious surcharges levied by for those using prepaid counters.
Secondly, there should be a forensic medical examination. of accounts of companies in the energy sector. In each case they must set out their costs and profits if they want to recover public trust. There is, for copy, no reason why manufacturers of power from nuclear or renewable sources in United Kingdom should take advantage of a price cap prevail wholesale price of natural gas. Careful inspection of in true economy of every company is likely show that freeze price cap will be cheaper currently imagined and set exactly who should be subject to any taxation of unjustified profit. Those who resist in danger of lose their license to operate.
Cycle of privatization started in Perhaps the 80s are coming to an end. I worked for HELL for almost 30 years old and I studied with hard experience during the tanker drivers’dispute in 2000 what a succession of energy supply is rightfully considered government duty. As with in financial sector in 2008 if private the energy industry does not meet the needs of the society it serves, its functions must and will be carried out on through government. Participating companies must now show they understand that they must use them skills and resources in in public interest.
Third challenge apart from freezing, is to ensure adequate inventories of gas. it’s a question for close cooperation between government and the energy sector. Other European countries, led by Germany, were actively looking for resources on in world market to replace supplies that no longer come from Russia. The EU has created a single buyer and individual countries persecuted new deals with manufacturers all over world, from Qatar and Algeria to the USA. There are few free resources because the level of investment was low and new deliveries typically take three to five years to enter service. result it’s a physical disability of gas by the EU is very likely this winter.
Germany and others prepare for what risk with serious plans for regulation of consumption. Britain, apparently considering itself immune to European problems, has done nothing and does not even comply current voluntary measures taken in EU countries to reduce consumption. Ministers do not seem to understand that if countries such as France and Norway are limiting supplies to the UK this winter in to meet their own needs, shortage may be real and essential. urgently need is to provide a buffer of additional supplies and develop long-abandoned gas storage facilities that others countries take for granted. Ensuring and maintaining adequate stocks requires public-private partnership with in common main goal of maintaining energy security.
These steps would help reduce risks of in current situation. But they are still not enough to create a genuine long-term energy security. Sustainable investment needed in All parts of energy business – to improve efficiency of like us use energy to provide the necessary infrastructure for serious low-carbon transition and regulation of a complex hybrid sector that combines public policy as well as private capital. Vague, unsubstantiated and underfunded commitments to more ambitious goal headlines achieve nothing. Regulator that licenses suppliers with insufficient capital in for advancement “competition’, then watches them fail as soon how are the prices begin to rise incompetent. Fatalism in in face of inevitable volatility of a global market in what stocks are concentrated and vulnerable to use as a weapon looks pathetic.
Lesson of past experience it is systemic problems draw a line between public as well as private the sector is largely irrelevant. Solutions require a collaborative effort between pragmatic, realistic governments and conscious companies of them social responsibilities. When we lean towards new winter of discontent, the only hope that current crisis will drive us back to the point and details of serious energy policy.
Nick Butler away professor at King’s College London and former group vice president for strategy as well as policy development at BP and adviser to Gordon Brown