Monday, October 18, 2021
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Energy policy is all about the big boys

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THIS is a letter to my Conservative MP, Mel Stride.

Dear Mr Stride,

Lockdown and idiotic advice from so-called scientists has resulted in our national debt increasing beyond the bounds of recovery, unemployment, loss of small and medium businesses, dependence upon Universal Basic Income, food and energy shortages and Government intrusion on our basic rights and freedoms, all through incompetence by those paid to look after our best interests.

My energy supplier Green has been forced out of business through this government’s lack of planning and as a direct result of this government buying wholesale into climate alarmism, just as it did with the Pandemic That Never Was, and then pursuing an idiotic policy to deal with climate change. Effective lobbying, risk aversion and unsuitable candidates being appointed to positions of power have prevented us from becoming nearly self-sufficient in gas. The development of shale gas has been ditched. As a result we are dependent on unreliable renewables and unpredictable foreign power to keep our lights on!

Now this government commits to go faster than anyone else to ‘Net Zero’ regardless of cost to consumers, businesses and the already broken economy. Are you aware that China continues to build coal-fired power stations to maintain low-cost energy and maximise its advantage over the West? And Germany. Yet again, this government listens to the wrong people.

Back to my predicament and Kwasi Kwarteng, Business Secretary. I wonder what qualifications he holds? This man said that small firms would be allowed to go bankrupt, with their customers auctioned off to the company prepared to offer them the cheapest rate. The Business Secretary was made aware of the threat to energy suppliers in March last year by Ofgem. Some 18 months later there has been no tangible action taken by him.

My supplier Green informs me that the current market conditions are unprecedented with record wholesale prices pushing the cost of energy above the price cap. The fire at the interconnector site in Sellindge led to wholesale electricity and gas prices reaching new record highs (nothing like a substantial incident out of nowhere to add fuel to the fire). With other incidents at other production sites, unplanned outages, high demand for Liquefied Natural Gas tankers, Brexit, the Suez Canal incident and the Beast from the East to name but a few.

Green, like other energy suppliers, are selling at a loss. The ‘price cap’ is calculated based upon a historic observation period, which means that it does not accurately reflect current market conditions.

Together with 14 other suppliers, Green wrote to the PM, Business Secretary and Chancellor of the Exchequer, asking for the energy cap methodology to be reviewed and for an immediate support package to be assembled. Combined, the signatories account for over 1million customers and 2,000 staff. The letter accuses Ofgem of being unfit to regulate the industry and of overseeing a return to a monopoly and a reduction in competition(perhaps that is why Mr Kwarteng announced that ’smaller business would be allowed to go bankrupt’?)

The Business Secretary accused the smaller suppliers of bad business practices. In reality it is the soaring energy prices due to global gas shortages. Mr Kwarteng should be reminded of the prediction made by the Energy & Utilities Alliance (EUA) in 2017 concerning the UK’s low capacity and upon the closure of the Rough gas storage facility by Centrica.

It is also worth noting that during the infamous Pandemic That Never Was, Ofgem mandated that energy suppliers must provide payment holidays for customers and a relaxation of credit control while still requiring that energy suppliers meet all their payments. Green and no doubt the other smaller suppliers supported their members throughout these difficult times, providing payment holidays and being understanding of individual circumstances. Unfortunately, Ofgem’s ruling led to an increase in debt positions due to Green and others having to meet their industry obligations!

That seems very unfair. Rather typical of big government making one-sided demands without shared flexibility. In fact, it is a fact that rescue packages were being put in place for the larger suppliers together with private discussions to be held with the Business Secretary. Regardless of the unprecedented increases in wholesale electricity and gas and an outdated ‘cap’ methodology forcing the smaller suppliers to sell at a loss, it is quite clear that you would rather assist the big boys with rescue packages, probably not a loan, than help those smaller companies who have tried to bring about changes for the benefit of the consumers. Heaven forbid that the consumer should get a fair crack of the whip.

We shall see if it is the government’s intention is to return to the market to the pre-deregulation position with only British Gas, EDF, E-On (including power), OVO (SSE) and Scottish Power controlling the bulk of the customer base. With the exception of OVO, which acquired SSE, the other suppliers have maintained a monopoly since the 1990s, making it very difficult for any new entrants to thrive without having significant financial backing (e.g. Octopus and Bulb).

Ofgem will ‘appoint’ a new supplier for all of Green’s customers – I don’t know about the folk who were with the other five suppliers which have gone under in the last few weeks. It will be interesting to see if fixed prices become a thing of the past. What does the future hold for us? In fact, I would like to know what you personally feel about the whole sorry situation that we find ourselves in.

Yours sincerely

Martin Redfern

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Martin Redfern
Martin Redfern is retired and lives in South Devon. Hobby: lawn bowls. Concerns: Fallout following non-pandemic.

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