It Will be An Expensive Winter

It is going to be an expensive winter in Britain. SSE, one of the six suppliers of energy that serve around 99% of the United Kingdom energy market, has announced that from 15 November there will be an average price increase of 8.2%. This increase is about the same level of increase that energy users had to pay this time last year when all the six oligarchic energy companies increased their prices by around 5% more than inflation.

These six companies do not have to operate as a cartel; there is no need for secret meetings in hidden places in order to fix the market. The companies simply have to have their executives listen to the radio or read the newspapers in order to discover what their so called competitors are doing, and then they know that they can do likewise.

We now have the occupiers of an average home in the United Kingdom paying £1,224 to SSE for their annual energy bills, which translates to £2,000 of their pre-tax income. The average man earns £31,500 and the average woman earns £24,400, so for a family in which two people work the proportion of earnings that have to be spent on energy is significant and it is even more significant for people where there is only one earner in the household and for single people.

The energy regulator, who seems to have been well and truly captured by the oligarchy, is OFGEM and it tells us that out of the average energy bill the energy companies’ net profit is only £65, but I very much doubt the accuracy of this calculation. Energy companies not only supply and distribute energy, but they also generate energy and it is very hard to understand in this horizontally structured industry how much of the profit that is attributed to energy generation is actually borne by energy consumers.

The government’s solution is to encourage energy competition in the market and attempt to regulate the misleading and complicated tariffs which enable the oligarchy to confuse their customers into paying high prices. The opposition’s solution is to freeze energy prices for 20 months, which will simply provide an opportunity for the oligarchy to push through early price rises and then more swinging prices rises at the end of the 20 months. In my experience oligarchies are very good at exploiting measures such as freezes.

The solution which no political party mentions is simply to nationalise the energy companies and bring them under government control. This would enable the government to have political responsibility for energy prices and will probably enable the government to create an energy policy that genuine protects the environment. I doubt is anyone will ever propose this measure, but to me it seems a sensible idea worth exploring.

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