The Energy Crisis

[MB]

The poor are so fickle (little more than drunken layabouts in effect) and as such we should remove their children to a more suitable enviroment. I'm sure ATOS/Mitie/etc could, following a decent tendering procedure, provide suitable live in training establishments, where their children would be properly cared for and prepared for a worthwhile adult life.

So you don't think any % of the people given a, relatively, large sum of money would waste it?

You then have the how much question and do you keep paying out if it goes up? Take some back if we have a mild winter?

The government are effectively underwriting the price for two years so it is in their interests to do everything they can to reduce demand and increase supply (a good thing) and if we get a mild winter then the cost goes down.

[sendô]

And those nationalised companies would still have to deal with the bits of the companies you cannot get your hands on and pay the wholesale prices to do so as UK production is a small piece of the puzzle.

So you've probably spent a lot more than £100bn to part solve the problem.

So, like private companies then?

So what? We'll spend more than that without nationalising, or have we all forgotten test and trace and PPE?

[mumbles87]

https://www.gov.uk/government/publicati ... ember-2022

The help is announced with the rates

Lower than said previous for electric higher for gas

[DaveWHU1964]

How far do you think £100bn would go in terms of nationalising?

And those nationalised companies would still have to deal with the bits of the companies you cannot get your hands on and pay the wholesale prices to do so as UK production is a small piece of the puzzle.

So you've probably spent a lot more than £100bn to part solve the problem.

Not a pop at you MB because I'm seeing quite a lot of this type of posting but if what you say is true (and it may well be) then we've had created for us a system that doesn't work and that we cannot change. Who does that work?

To me it's utterly unbelievable that some people seem OK with transferring £100-150 billion directly from the public to energy companies with nothing coming back our way, other than less of us will freeze to death this winter, which of course is great but shouldn't be happening in the first place. Some of these same people were having apoplexy when Corbyn wanted to spend a fraction of that bringing in free broadband. It seems redistributing yet more money from the hard-pressed to companies / the comfortable/ the well-off is fine, whilst doing the reverse is not possible/ desireabe/ tolerable and will be fought against tooth and nail.

This isn't going to be sold to people. It's not sustainable. If people (not you) decide to hold this line then it won't go well for them.

[Tenbury]

So you don't think any % of the people given a, relatively, large sum of money would waste it?

I suspect some who introduce the old 'undeserving poor' line, have an agenda, especially given the levels of millions this govt. has been happy to write off over the last 3 years, which to some seems unremarkable.
Of course people waste money, but 'organized' people, be that Govt. depts, councils, and yes, privately run companies are pretty damn good at it as well. If a family is skint, cold and hungry, and they're given money, the overwhelming majority will spend it rectifying the situation. ( and, as an aside, even the most rabid monetarist wouldn't suggest that money spent in this way would 'fuel inflation').

[MB]

Which just leaves the practical problems, some of which Bubbs articulated further up. How much? How do you work that out? What do you do if the situation gets better quicker? Or worse?

[MB]

Not a pop at you MB because I'm seeing quite a lot of this type of posting but if what you say is true (and it may well be) then we've had created for us a system that doesn't work and that we cannot change. Who does that work?

To me it's utterly unbelievable that some people seem OK with transferring £100-150 billion directly from the public to energy companies with nothing coming back our way, other than less of us will freeze to death this winter, which of course is great but shouldn't be happening in the first place. Some of these same people were having apoplexy when Corbyn wanted to spend a fraction of that bringing in free broadband. It seems redistributing yet more money from the hard-pressed to companies / the comfortable/ the well-off is fine, whilst doing the reverse is not possible/ desireabe/ tolerable and will be fought against tooth and nail.

This isn't going to be sold to people. It's not sustainable. If people (not you) decide to hold this line then it won't go well for them.

To be clear Dave, IMO we shouldn’t be in this position. There are plenty you can point the finger at across all three main parties over the years. This isn’t something that just happened. UK plc underinvests shock! Fingers need to be pointed and questions asked but you and I know that all major parties will play the “not on my watch” card. Johnson did it about decisions under May when he was part of the cabinet.

But we are now in this position so you have to look at what practical solutions are available while implementing policy and investment decisions to try and prevent this happening again (been a bit light on this so far).

If we want to nationalise then you are looking at paying a multiple of the net profit. That will be many times the £100bn these measures will cost as you have to buy the producers. 16% of EDF cost the French government €10bn and EDf is half the size of BP and a quarter of the size of Shell.

You can nationalise the suppliers, but there is a reason a lot of those are going bust. Their margins are tiny so you spend X billions to save a fraction of X short term.

Taking shares in the banks was a bit of a mess when we went down that route last time.

In some form or another the money gets to the energy producers (ultimately). You either do it directly by underwriting the wholesale price (UK government approach). Or you bung everyone in the UK a variable lump of cash and they pay it to the energy suppliers who in turn pay it to the energy producers.

No one else is taking about anything viable. The only articles I have seen about nationalisation all focus on the suppliers.

As for what we get in exchange, we’ll that’s where ministers earn their pay. For making life very easy for the producers, they should have extracted concessions in terms of investment and jobs. No idea if they did.

[Awooga_Iron]

A lot of well informed posts here.

I recently heard the phrase "if you're not selling it, you should be buying it" in the context of IT architecture supply/value chains. Meaning a business should focus on the things that drive value and not creating their own version of a raw resource that has become commodity - which is why everyone now uses cloud IT platforms. If you're producing your own version of a commodity, it should be so much better than the market that you should be competing in that market and selling your product. Otherwise, buy it!

This is kinda how we got to lean global supply chains with specialist areas. I get the reason why UK plc shouldn't run our own energy provision, and perhaps we shouldn't do 100% of it, but we seem woefully under prepared in all kinds of national security areas- energy security, health security, food security, ... Surely this is what gov are there for.

[bubbles1966]

On the basis of those new charges and my historic usage over the last 12 months I estimate my winter bill (Oct-Mar) to be £1093.76 and summer (Apr-Sep) to be £729.37. So just over £1800 a year, pre-handout.

[DaveWHU1964]

As for what we get in exchange, we’ll that’s where ministers earn their pay. For making life very easy for the producers, they should have extracted concessions in terms of investment and jobs. No idea if they did.

You'd have thought that if they had they would have / will tell us, if only to lessen the criticism they have received for loading all of the cost of this onto us.

Nationalising Shell and BP? Even taking out the equation that Truss is an ex-Shell employee (I'd say she still was in effect), we haven't got the money or (currently the) political will. But I'd use some of their money to invest in public owned renewables. When I say some, I mean lots. They are making hideously large excess profits - they can put at leats half of them our way. They'd still keep half/ whatever of those excess profits. How much more do they need? We need to share the burden, but more than that we can't afford to ever again rely on gas, etc. £150 billion with no end date and no guarantees that won't become an even greater / far greater amount - that can't be allowed to happen again. This government 'ditched the green crap' years ago and we've had no plan since. If they can't see the need for that now then we're ****ed.

Will that cost us more as individuals? Oh yes, you and me and everyone. But without fixing this, there are zero guarantees that what is happening now won't be repeated again, even ad infinitum.

And thanks for the response MB. Thoughtful as ever.

[EvilC]

Bubbles - will respond to your post on Monday.

There were some vague words from the Norwegians to the EU about being happy to discuss a price cap with the EU. Equinor is making so much money at a massive discount to current prices that it could cap at €150/MWh and still be filthy rich (current price is above €200). I’m no expert on geopolitics but I suspect they’d be happy to do something for us here too.

The real question is what you do with LNG, because it is basically outside the reach of regulation/taxation.

[Pop Robson]

https://www.gov.uk/government/publicati ... ember-2022

The help is announced with the rates

Lower than said previous for electric higher for gas

From the link, shirley this should say up to ? As if my new fix tafiff is reduced by the figures below I'll be below the limit listed !! I'll have to check on MSE

If you’re on a fixed tariff
If you’re on a fixed tariff at a higher rate caused by recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas.

If you’re on a standard variable tariff
The average unit price for dual fuel customers paying by direct debit will be limited to 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October.

[bubbles1966]

There were some vague words from the Norwegians to the EU about being happy to discuss a price cap with the EU.

From what I read, the EU had an indecisive meeting yesterday and individual countries are arguing the rights and wrongs of various things such as whether helping companies with energy bills amounts to state aid, whether any proposed import price cap should just be for the Russians, whether they should implement a 'price brake' on rises, whether there should be a price cap of any kind.

The kind of things they did agree on was a windfall tax on renewables/fossil fuel companies' profits due to non-use of gas, along with a plan of consumption-reduction being required, though price rises will make the latter happen naturally to some degree.

[EvilC]

From what I read, the EU had an indecisive meeting yesterday and individual countries are arguing the rights and wrongs of various things such as whether helping companies with energy bills amounts to state aid, whether any proposed import price cap should just be for the Russians, whether they should implement a 'price brake' on rises, whether there should be a price cap of any kind.

The kind of things they did agree on was a windfall tax on renewables/fossil fuel companies' profits due to non-use of gas, along with a plan of consumption-reduction being required, though price rises will make the latter happen naturally to some degree.

They did, but none of this is likely to prevent any agreement with the Norwegians, which would simply be a massive win/wealth transfer for the EU.

[mumbles87]

From the link, shirley this should say up to ? As if my new fix tafiff is reduced by the figures below I'll be below the limit listed !! I'll have to check on MSE

If you’re on a fixed tariff
If you’re on a fixed tariff at a higher rate caused by recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas.

If you’re on a standard variable tariff
The average unit price for dual fuel customers paying by direct debit will be limited to 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October.

I agree as per its clear as mud. It should say limited to 34p etc .. I doubt for example my day rate is currently 14p what are you going to pay me 3p a unit to use ? ofc they arent (I hope they are lol)

same with gas mines 9.6p they arent going to reduce that by 4.2p surely

what I could see happening is say my tariff if I went on at todays rates is 40p day and 7.5p night I could see that being 34p day 7.5p night

[bubbles1966]

They did, but none of this is likely to prevent any agreement with the Norwegians, which would simply be a massive win/wealth transfer for the EU.

The Norwegians deny a price cap but[ this sounds similar to when our state sector purchases certain items in short supply - block contracting rather than spot purchasing.

The state purchasers prioritise certainly of medium/long term supply and agree a discounted, yet fixed price, for supply but guarantee in return to cough up whether it's required or not and over an extended period of time and whether the price has dropped or not.

I wouldn't be surprised if the EU are looking to purchase at scale - it's the vaccine contracting stuff being rerun with energy supplies.

[EvilC]

The Norwegians deny a price cap but[ this sounds similar to when our state sector purchases certain items in short supply - block contracting rather than spot purchasing.

The state purchasers prioritise certainly of medium/long term supply and agree a discounted, yet fixed price, for supply but guarantee in return to cough up whether it's required or not and over an extended period of time and whether the price has dropped or not.

I wouldn't be surprised if the EU are looking to purchase at scale - it's the vaccine contracting stuff being rerun with energy supplies.

State purchaser, or indeed any buyer, isn’t in a normal situation. The UK and EU economies are utterly ****ed. Norway, I guess, gets to keep its best customers solvent whilst looking like a hero, probably gaining a ton of political leverage and still making a genuinely disgusting amount of money at the same time.

[MB]

Agree with your comments Dave, but it is all stuff which should have happened a decade ago. It now has to happen, but is in addition to the £100bn which is needed straightaway given the lead times on any new supplies coming online.

The Norwegian stuff is interesting. Saw something yesterday linking it to their membership of NATO and energy security being part of that. As you say Evil, they will make a **** ton of money either way so may as well score some brownie points.

[bubbles1966]

..it is all stuff which should have happened a decade ago

Not sure how considering the state of the public sector finances ~ "Minister, there's no money left".

The UK Public Sector Deficit



Five years running between 2007 to 2012 the state was running a deficit of over 7%. The single year deficit at worst was over £200bn in today's money way back then. And that was exclusive of bank guarantees etc.

This year they were on for a primary deficit of just £30bn until this but a whopping £90bn is now being guzzled in debt interest payments on top of that.

So many people suffered personal hardship in the 1990s so the state could get it's financial house in order, and then all that graft and sacrifice was pissed up the wall in the next decade.

Yes, they could have invested in this - but it would have meant giving up something else that people wanted.

Over the last twelve years, all the spare money has gone into the NHS and pensions. Both have been funded way, way, way above inflation and it's possible to argue it's been to the detriment of every other part of the state sector or in the long term interests of the country.

But who's gonna turn the money taps off?

[mumbles87]

Not sure how considering the state of the public sector finances ~ "Minister, there's no money left".



But who's gonna turn the money taps off?

or the actual need to. there is always an unhealthy obsession with balancing the books over a short period of time.

100 year economic plan needed . aim for it slowly by then with policy to build and growth

not oh lets try and cut everything and do it within 5 years.