10 ms·

Days of Reckoning (Why the UK energy cap failed)

32 points by mosiuerbarso 5y ago

nickt 5y ago
https://web.archive.org/web/20220204140224/https://consciousnessofsheep.co.uk/2022/02/03/days-of-reckoning/ https://web.archive.org/web/20220204140224/https://conscious...
samwillis 5y ago
Seems to be down, google cache: https://webcache.googleusercontent.com/search?q=cache:pRc1gqHuRLUJ:https://consciousnessofsheep.co.uk/2022/02/03/days-of-reckoning/+&cd=1&hl=en&ct=clnk&gl=uk&client=safari https://webcache.googleusercontent.com/search?q=cache:pRc1gq...
samwillis 5y ago
I'm fairly sure we are due a political swing back towards the left in the UK, and my expectation is we are going to see increased calls for the re-nationalisation of various national infrastructure and services, including energy supply. As the article says at the end, clearly the Torys are not going to do this, and Labour will be very quiet about this as they need to play the middle ground if they have any chance of gaining a majority. But, if they were to win in the next general election we will see increased calls for them to act on the aspirations of the left of the party to nationalise these things. It will be an interesting time.
- ealexhudson 5y ago
  The Tories have renationalised many of the train companies, and are currently toying with nationalising the General Practice (GP) service in the UK - which most of the public would not realise was private sector (albeit GPs have strict rules against private practice, unlike dentists). There are some obvious reasons to want to renationalise critical infrastructure like water and power, particularly given the absolutely piss-poor job done by the private contractors. And in many areas - like the trains - the "private enterprises" running the services turn out to be commercial arms of other European public sector bodies anyway, and are not private sector in any meaningful sense. I don't think this is Left vs Right any more. If the Tories want red-wall voters and broad appeal, they have to move a lot more than Labour needs to stay in the middle ground. Left vs Right does not capture the complexity of what's happening here.
  - samwillis 5y ago
    Quite true, although I wouldn't say that they nationalist the train companies willingly or that it was planned, it was a result of them going bust.
    - ealexhudson 5y ago
      Mostly agreed - they went bust and/or withdrew from contracts, and yes pandemic was an issue, but these companies were also getting huge amounts of public money (Gov was typically buying the trains), and the infrastructure/rail element has been properly nationalised for a few years now. The idea that competition can have any real meaning on a highly constrained and contended single resource - like railways - is a bit laughable, so the market doesn't really offer much opportunity for optimization. Equally though, the old British Rail was nothing to get excited about. We just don't seem to have a decent economic model for running loss-making services with positive general externalities for the benefit of society.
      - lbriner 5y ago
        The private model does work elsewhere in the world but I'm not sure whether we completely understand the differences and what makes these other countries work so well. On the other hand, we tend to have rose-tinted memories of how cheap everything was in the old days, which I don't think is true. For the level of subsidy that our railways have, they are probably not actually that bad. Many people have said before that even places like France might do well on the high speed lines but their secondary routes can be as rough as ours and they get much more investment.
      - pydry 5y ago
        >The idea that competition can have any real meaning on a highly constrained and contended single resource - like railways - is a bit laughable, so the market doesn't really offer much opportunity for optimization Of course not. The Tories always meant for it to be a vehicle through which they and their mates could extract rents. That's always the point of privatization.
  - 5y ago
- drcongo 5y ago
  I hope you're right, but the current Labour Party are more right wing than the party has ever been, indeed right of the tory party of 15 to 20 years ago, and they've been purging the left since Starmer took over. I think we've missed our chance to take these things back into public ownership. The British political system incentivises short-termism - our politicians largely see no point in implementing a policy that will benefit the entire country in 10 years time when someone else may be in charge, hence the sell-off in the first place. In an ideal world we'd have gone the same route as Norway [0], and could possibly have still done so if Corbyn had won. Now though, that ship has sailed and we've sold short-term selfish thinking to the public, have a "left" party that is almost indistinguishable from the right, and all of them are pushing populism above all else. [0] https://www.lovemoney.com/news/85476/norway-oil-reserves-norges-investment-fund-returns-strategy https://www.lovemoney.com/news/85476/norway-oil-reserves-nor...
  - JacobThreeThree 5y ago
    >the current Labour Party are more right wing than the party has ever been What would be the top few policy positions that make Labour right wing in your opinion?
    - drcongo 5y ago
      Not sure if you're trolling or not, but it's hard to say really, given that their current stance is to just agree with tory policies and not really have any of their own. It's more the fact that any socialist policies they did have prior to Starmer have gone.
      - flooow 5y ago
        Pretty obvious what the scam is here. Starmer lied to the membership to become leader, has ruthlessly purged the left including the former leader, and now plans to sit tight doing and saying nothing, hoping the Tories self-destruct as they occasionally are want to. Meanwhile Labour will suck-up to the right-wing press in the hope that Murdoch et al will decide not to destroy them on a whim as they did the previous iteration, enough to sneak the next election. Net result, the 40% of the population who voted for a left-wing party in 2017 will have no representation for the next decade minimum. Again. Great democracy we have, brilliant stuff. Signed, extremely bitter former Labour member.
- switch007 5y ago
  Whatever Labour do, they’ll be raked over hot coals for the mess the Tories leave them and be hamstrung. Then Tories will be back in power shortly after. That’s their usual play. It’s frustrating as hell
- 7952 5y ago
  The energy sector is already dominated by the government. They set the market, set regulations, and determine if new power stations can be built. For offshore wind they own the seabed and give development rights. Any nationalisation would still have to depend on the same kind of expertise that already exists in the industry. They could how new developments are financed and use national debt. But beyond that I am not sure it would actually make much difference.
leoedin 5y ago
The best approach I've heard to solving climate change involves a carbon tax. High gas prices are a proxy for that. It's already driving discussions people just weren't having before - how can I make my home more energy efficient? What can I do to save energy? In many ways, high energy prices are a positive thing for society (in the long run). The problem is, of course, that high energy prices are a huge negative for those who can't afford them. All the proposed carbon tax schemes I've seen are a carbon tax and dividend - you tax carbon, and redistribute the profits to those who can't afford the higher prices. Right now, we've got the carbon tax, but the dividend is going into the pockets of oil companies - exactly the people you don't want to be building up cash reserves in the fight against climate change. The other issue we have in the UK (and maybe elsewhere) is that the cost of energy is borne by the tenant, but the cost of renovations would be borne by the landlord. This means that landlords have no incentive to improve the energy efficiency of their houses, and tenants have no ability to. We should be changing that - make landlords of energy inefficient houses pay for it.
- cjrp 5y ago
  There are quite a few grants available for things like improving insulation, but you're right; a landlord doesn't really have an incentive to go through the hassle of applying for it and arranging for the work to be done. An EPC (Energy Performance Certificate) is required when you let a property, and it has to be at least an "E" rating (A: best, G: worst) but that's not really saying much.
  - leoedin 5y ago
    Yeah - the EPC is a joke. It's just a tick box exercise. It doesn't take much effort to get a good enough rating to let. High energy costs could be an incredibly powerful tool to drive changes in the UK housing stock. It's only when energy is expensive that the payback time starts to make sense. That would need sensible and cohesive policy decisions from people with a good understanding of high efficiency housing. Clearly we don't have that.
    - cameronh90 5y ago
LatteLazy 5y ago
There are a lot of errors here. Not least that the price of renewables somehow ignores their lifespan or that there is a price cap in place on the producers of energy that might discourage investors (there isn't). Given that, its not really worth reading.
- hollowdene 5y ago
  I feel like the purpose of the cost cap is kind if misconstrued here, too. It was mostly in place to ensure the poorest people, who are often on PAYG meters and the worst tariffs, don't pay way over market rates. It was never designed to stop the kind of huge increases in costs we're seeing now. One thing is for sure, we desperately need to ween ourselves off natural gas. Switching to heat pumps etc. for heating can't come soon enough.
deleted 5y ago
[deleted]
Zenst 5y ago
Big issue in the UK is the standing charge and how (thanks Ed Davey) that got raised and was a huge impact for all. Many caps learn towards an ideology of 4.2 children household's in many respects and see's those responsible in energy usage and general low usage household's bear the burden with high energy users in effect getting a cheaper deal on the back of those responsible low usage consumers (yes did raise with local MP at the time - Ed Davey and ignored, though not forgotten). How should this be fixed, well like taxation it should be scaled and a usage threshold per person in which you pay X amount and over that, you pay more for your fuel usage, so the more you use, the higher it gets that you pay and not sadly as we have, the reverse. Sorry but whole subject a bit of a personal issue when my local MP sends out election voting paraphernalia stating how he has saved households money on their fuel bills when the reality for me was the polar opposite and again, he ignored that. But I shall have my day soon upon this. Of course, no model is ideal, though when we see initiatives for solar and electric cars that learn towards those who can afford such items over those who can not and those that can not paying for such subsidies, you do feel the brunt of unfairness and why the rich get richer (not saying having solar or an electric car makes you a rich person, but for those who don't own their own house and rent or use public transport, relativity does become a factor)
cletus 5y ago
tl;dr price controls didn't work (again) surprising no one who understands anything about how supply and demand work. If there's an underlying reason why costs are rising then a price control is just a band aid solution as the underlying cost pressure typically doesn't go away. The privatization of energy companies in the developed world to me is a giant failure and a classic example of how public-private partnerships like this just end up privatizing the profit while underwriting the losses and it's sold to us on supposed "efficiency" gains. If you think about it energy consumption is basically a hugely regressive tax. The cost of heating 2000 square feet doesn't change much depending on if you're poor or a billionaire. I'd honestly support nationalizing these companies, cover grid connection through taxation and provide resident individuals (not corporations) a rebate for $X every year in their tax return to cover expected usage.
- lbriner 5y ago
  The argument doesn't go away though that nationalised industries are largely unaccountable like the governments they report to. I worked for the railways immediately before and after privatisation. I can't speak for the whole network but there were a few of us who enjoyed the work and a whole load of people who were happy to sleep through most of their night shift (including the Managers). The awful truth is that money is a powerful motivator for Directors and shareholders although clearly with the danger of moving too far the other way. I'm not sure there are any decent models that could get the best of both worlds. They tend to be nasty bureaucratic PPP type deals which bring more mess than they clean up.
gandalfian 5y ago
(Mirror) http://webcache.googleusercontent.com/search?q=cache%3Ahttps%3A%2F%2Fconsciousnessofsheep.co.uk%2F2022%2F02%2F03%2Fdays-of-reckoning%2F&ei=KlP9YfiHCd2ChbIP7Kub0AM http://webcache.googleusercontent.com/search?q=cache%3Ahttps...
matthewmacleod 5y ago
This is a pretty unconvincing article, because it ignores that the energy price cap wasn't really intended to shield consumers from massive swings in underlying wholesale prices – so it can't really be said to have failed at a thing it wasn't intended to do. The cap was mostly there to stop some people from being fleeced in specific situations when they were on a standard variable-rate tariff or prepayment plans. It was already set at a pretty high level.
Traster 5y ago
I think this article is basically making the argument that the energy cap failed because it didn't do something that no one reasonably expected it to do in the first place. The energy cap was put in place very simply to stop energy companies from slowly raising rates on customers who don't switch, because generally people are very unlikely to switch providers and so could be exploited by the companies. That's what it was there for. Recently, it's actually done a fantastic job of protecting UK consumers from facing quick shock increases in their energy prices, delaying the impact in a way that allowed the government to take action to mitigate the real problem. Now, that's nothing to do with the fact that fundamentally energy prices are the result of long term government policy in terms of how they fund our national grid and invest in building power plants. It's got nothing to do with the price cap that the UK government failed to build (enough) Nuclear power plants and it certainly has nothing to do with the fact that the whole of Germany went insane and shut down all their Nuclear plants just in case Germany suddenly became geologically unstable as forewarned in the factual documentary Geostorm. The real problem is a combination of the fact that the UK government has failed to really tackle its long term energy strategy, and the fact that given this crisis it has chosen some really weird levers to pull to help people, choosing to give out loans and lower council taxes temporarily rather than use the actual benefit systems that they just spent the best part of a decade re-designing.

32 points by mosiuerbarso 5y ago

https://web.archive.org/web/20220204140224/https://consciousnessofsheep.co.uk/2022/02/03/days-of-reckoning/ https://web.archive.org/web/20220204140224/https://conscious...

samwillis 5y ago

Seems to be down, google cache: https://webcache.googleusercontent.com/search?q=cache:pRc1gqHuRLUJ:https://consciousnessofsheep.co.uk/2022/02/03/days-of-reckoning/+&cd=1&hl=en&ct=clnk&gl=uk&client=safari https://webcache.googleusercontent.com/search?q=cache:pRc1gq...

samwillis 5y ago

I'm fairly sure we are due a political swing back towards the left in the UK, and my expectation is we are going to see increased calls for the re-nationalisation of various national infrastructure and services, including energy supply. As the article says at the end, clearly the Torys are not going to do this, and Labour will be very quiet about this as they need to play the middle ground if they have any chance of gaining a majority. But, if they were to win in the next general election we will see increased calls for them to act on the aspirations of the left of the party to nationalise these things. It will be an interesting time.

ealexhudson 5y ago
The Tories have renationalised many of the train companies, and are currently toying with nationalising the General Practice (GP) service in the UK - which most of the public would not realise was private sector (albeit GPs have strict rules against private practice, unlike dentists). There are some obvious reasons to want to renationalise critical infrastructure like water and power, particularly given the absolutely piss-poor job done by the private contractors. And in many areas - like the trains - the "private enterprises" running the services turn out to be commercial arms of other European public sector bodies anyway, and are not private sector in any meaningful sense. I don't think this is Left vs Right any more. If the Tories want red-wall voters and broad appeal, they have to move a lot more than Labour needs to stay in the middle ground. Left vs Right does not capture the complexity of what's happening here.
- samwillis 5y ago
  Quite true, although I wouldn't say that they nationalist the train companies willingly or that it was planned, it was a result of them going bust.
  - ealexhudson 5y ago
    Mostly agreed - they went bust and/or withdrew from contracts, and yes pandemic was an issue, but these companies were also getting huge amounts of public money (Gov was typically buying the trains), and the infrastructure/rail element has been properly nationalised for a few years now. The idea that competition can have any real meaning on a highly constrained and contended single resource - like railways - is a bit laughable, so the market doesn't really offer much opportunity for optimization. Equally though, the old British Rail was nothing to get excited about. We just don't seem to have a decent economic model for running loss-making services with positive general externalities for the benefit of society.
    - lbriner 5y ago
      The private model does work elsewhere in the world but I'm not sure whether we completely understand the differences and what makes these other countries work so well. On the other hand, we tend to have rose-tinted memories of how cheap everything was in the old days, which I don't think is true. For the level of subsidy that our railways have, they are probably not actually that bad. Many people have said before that even places like France might do well on the high speed lines but their secondary routes can be as rough as ours and they get much more investment.
    - pydry 5y ago
      >The idea that competition can have any real meaning on a highly constrained and contended single resource - like railways - is a bit laughable, so the market doesn't really offer much opportunity for optimization Of course not. The Tories always meant for it to be a vehicle through which they and their mates could extract rents. That's always the point of privatization.
- 5y ago
drcongo 5y ago
I hope you're right, but the current Labour Party are more right wing than the party has ever been, indeed right of the tory party of 15 to 20 years ago, and they've been purging the left since Starmer took over. I think we've missed our chance to take these things back into public ownership. The British political system incentivises short-termism - our politicians largely see no point in implementing a policy that will benefit the entire country in 10 years time when someone else may be in charge, hence the sell-off in the first place. In an ideal world we'd have gone the same route as Norway [0], and could possibly have still done so if Corbyn had won. Now though, that ship has sailed and we've sold short-term selfish thinking to the public, have a "left" party that is almost indistinguishable from the right, and all of them are pushing populism above all else. [0] https://www.lovemoney.com/news/85476/norway-oil-reserves-norges-investment-fund-returns-strategy https://www.lovemoney.com/news/85476/norway-oil-reserves-nor...
- JacobThreeThree 5y ago
  >the current Labour Party are more right wing than the party has ever been What would be the top few policy positions that make Labour right wing in your opinion?
  - drcongo 5y ago
    Not sure if you're trolling or not, but it's hard to say really, given that their current stance is to just agree with tory policies and not really have any of their own. It's more the fact that any socialist policies they did have prior to Starmer have gone.
    - flooow 5y ago
      Pretty obvious what the scam is here. Starmer lied to the membership to become leader, has ruthlessly purged the left including the former leader, and now plans to sit tight doing and saying nothing, hoping the Tories self-destruct as they occasionally are want to. Meanwhile Labour will suck-up to the right-wing press in the hope that Murdoch et al will decide not to destroy them on a whim as they did the previous iteration, enough to sneak the next election. Net result, the 40% of the population who voted for a left-wing party in 2017 will have no representation for the next decade minimum. Again. Great democracy we have, brilliant stuff. Signed, extremely bitter former Labour member.
switch007 5y ago
Whatever Labour do, they’ll be raked over hot coals for the mess the Tories leave them and be hamstrung. Then Tories will be back in power shortly after. That’s their usual play. It’s frustrating as hell
7952 5y ago
The energy sector is already dominated by the government. They set the market, set regulations, and determine if new power stations can be built. For offshore wind they own the seabed and give development rights. Any nationalisation would still have to depend on the same kind of expertise that already exists in the industry. They could how new developments are financed and use national debt. But beyond that I am not sure it would actually make much difference.

leoedin 5y ago

The best approach I've heard to solving climate change involves a carbon tax. High gas prices are a proxy for that. It's already driving discussions people just weren't having before - how can I make my home more energy efficient? What can I do to save energy? In many ways, high energy prices are a positive thing for society (in the long run). The problem is, of course, that high energy prices are a huge negative for those who can't afford them. All the proposed carbon tax schemes I've seen are a carbon tax and dividend - you tax carbon, and redistribute the profits to those who can't afford the higher prices. Right now, we've got the carbon tax, but the dividend is going into the pockets of oil companies - exactly the people you don't want to be building up cash reserves in the fight against climate change. The other issue we have in the UK (and maybe elsewhere) is that the cost of energy is borne by the tenant, but the cost of renovations would be borne by the landlord. This means that landlords have no incentive to improve the energy efficiency of their houses, and tenants have no ability to. We should be changing that - make landlords of energy inefficient houses pay for it.

cjrp 5y ago
There are quite a few grants available for things like improving insulation, but you're right; a landlord doesn't really have an incentive to go through the hassle of applying for it and arranging for the work to be done. An EPC (Energy Performance Certificate) is required when you let a property, and it has to be at least an "E" rating (A: best, G: worst) but that's not really saying much.
- leoedin 5y ago
  Yeah - the EPC is a joke. It's just a tick box exercise. It doesn't take much effort to get a good enough rating to let. High energy costs could be an incredibly powerful tool to drive changes in the UK housing stock. It's only when energy is expensive that the payback time starts to make sense. That would need sensible and cohesive policy decisions from people with a good understanding of high efficiency housing. Clearly we don't have that.
  - cameronh90 5y ago

LatteLazy 5y ago

There are a lot of errors here. Not least that the price of renewables somehow ignores their lifespan or that there is a price cap in place on the producers of energy that might discourage investors (there isn't). Given that, its not really worth reading.

hollowdene 5y ago
I feel like the purpose of the cost cap is kind if misconstrued here, too. It was mostly in place to ensure the poorest people, who are often on PAYG meters and the worst tariffs, don't pay way over market rates. It was never designed to stop the kind of huge increases in costs we're seeing now. One thing is for sure, we desperately need to ween ourselves off natural gas. Switching to heat pumps etc. for heating can't come soon enough.

deleted 5y ago

[deleted]

Zenst 5y ago

Big issue in the UK is the standing charge and how (thanks Ed Davey) that got raised and was a huge impact for all. Many caps learn towards an ideology of 4.2 children household's in many respects and see's those responsible in energy usage and general low usage household's bear the burden with high energy users in effect getting a cheaper deal on the back of those responsible low usage consumers (yes did raise with local MP at the time - Ed Davey and ignored, though not forgotten). How should this be fixed, well like taxation it should be scaled and a usage threshold per person in which you pay X amount and over that, you pay more for your fuel usage, so the more you use, the higher it gets that you pay and not sadly as we have, the reverse. Sorry but whole subject a bit of a personal issue when my local MP sends out election voting paraphernalia stating how he has saved households money on their fuel bills when the reality for me was the polar opposite and again, he ignored that. But I shall have my day soon upon this. Of course, no model is ideal, though when we see initiatives for solar and electric cars that learn towards those who can afford such items over those who can not and those that can not paying for such subsidies, you do feel the brunt of unfairness and why the rich get richer (not saying having solar or an electric car makes you a rich person, but for those who don't own their own house and rent or use public transport, relativity does become a factor)

cletus 5y ago

tl;dr price controls didn't work (again) surprising no one who understands anything about how supply and demand work. If there's an underlying reason why costs are rising then a price control is just a band aid solution as the underlying cost pressure typically doesn't go away. The privatization of energy companies in the developed world to me is a giant failure and a classic example of how public-private partnerships like this just end up privatizing the profit while underwriting the losses and it's sold to us on supposed "efficiency" gains. If you think about it energy consumption is basically a hugely regressive tax. The cost of heating 2000 square feet doesn't change much depending on if you're poor or a billionaire. I'd honestly support nationalizing these companies, cover grid connection through taxation and provide resident individuals (not corporations) a rebate for $X every year in their tax return to cover expected usage.

lbriner 5y ago
The argument doesn't go away though that nationalised industries are largely unaccountable like the governments they report to. I worked for the railways immediately before and after privatisation. I can't speak for the whole network but there were a few of us who enjoyed the work and a whole load of people who were happy to sleep through most of their night shift (including the Managers). The awful truth is that money is a powerful motivator for Directors and shareholders although clearly with the danger of moving too far the other way. I'm not sure there are any decent models that could get the best of both worlds. They tend to be nasty bureaucratic PPP type deals which bring more mess than they clean up.

gandalfian 5y ago

(Mirror) http://webcache.googleusercontent.com/search?q=cache%3Ahttps%3A%2F%2Fconsciousnessofsheep.co.uk%2F2022%2F02%2F03%2Fdays-of-reckoning%2F&ei=KlP9YfiHCd2ChbIP7Kub0AM http://webcache.googleusercontent.com/search?q=cache%3Ahttps...

matthewmacleod 5y ago

This is a pretty unconvincing article, because it ignores that the energy price cap wasn't really intended to shield consumers from massive swings in underlying wholesale prices – so it can't really be said to have failed at a thing it wasn't intended to do. The cap was mostly there to stop some people from being fleeced in specific situations when they were on a standard variable-rate tariff or prepayment plans. It was already set at a pretty high level.

Traster 5y ago

I think this article is basically making the argument that the energy cap failed because it didn't do something that no one reasonably expected it to do in the first place. The energy cap was put in place very simply to stop energy companies from slowly raising rates on customers who don't switch, because generally people are very unlikely to switch providers and so could be exploited by the companies. That's what it was there for. Recently, it's actually done a fantastic job of protecting UK consumers from facing quick shock increases in their energy prices, delaying the impact in a way that allowed the government to take action to mitigate the real problem. Now, that's nothing to do with the fact that fundamentally energy prices are the result of long term government policy in terms of how they fund our national grid and invest in building power plants. It's got nothing to do with the price cap that the UK government failed to build (enough) Nuclear power plants and it certainly has nothing to do with the fact that the whole of Germany went insane and shut down all their Nuclear plants just in case Germany suddenly became geologically unstable as forewarned in the factual documentary Geostorm. The real problem is a combination of the fact that the UK government has failed to really tackle its long term energy strategy, and the fact that given this crisis it has chosen some really weird levers to pull to help people, choosing to give out loans and lower council taxes temporarily rather than use the actual benefit systems that they just spent the best part of a decade re-designing.