In the United Kingdom the government has decided that the energy companies (there are six that control 99% of the market) have been giving such poor value for money that they should be forced to write to all their customers offering to put the customers on their cheapest tariff. This of course is a policy, devised by an idiot full of words and nonsense signifying nothing.
There are many problems with this embryonic policy which will not see conception. First, it is hard to pick up the cheapest tariff; there are so many and they are so complicated and trust me the big six energy companies will continue to work to make their tariffs as opaque as possible. Secondly, we need to understand how fixed price tariffs will work; are people not to be allowed to hedge against future prices rises by these means? Thirdly, the pricing will do nothing to encourage competition; the energy companies will as I understand the policy, only be obliged to provide details f their won lowest tariff, not that of their competitors.
The solution to the problem of energy prices is nothing to do with switching supplier for the savings of a few pounds. It is more deep rooted than that. The problem is the energy pricing pyramid, which on every tariff provides savings the more energy that you consume. The philosophy is simple. Buy more energy and you get it cheaper as you buy more. The bigger and the less efficient your home the cheaper it costs, in energy unit terms, to heat it and power it.
Now this state of affairs is clearly unfair. A logical solution would be to invert the price pyramid. Let every home be entitled to so many kWh of energy a year at a very low tariff, and after those units are consumed the bill would rise in unit terms in blocks. This would encourage folk to insulate their homes and to consume less, rewarding them for doing so and penalising them if they do not. It would be a fair way of making polluters pay for their pollution (because all fossil fuel and nuclear energy involves much pollution).
Another advantage to my idea is that people will be encouraged to install clean microgeneration in their homes because the clean microgeneration would compete with the fossil fuel energy at the highest marginal rate of fossil fuel, rather than the lowest marginal rate of it. I do not hold a candle for dirty microgeneration, like biomass boilers, but that is another subject.
When it comes to using fossil fuel energy we have to be guided by the maxim “less is better than more” and devise sensible policies rather than the froth and bubble of the recent announcement.