MSE News: Government electricity plans 'provide price hike insurance'

magyar

Pincher wrote: »

High upfront costs?

Does £100bn not seem 'high' to you?

Pincher wrote: »

No one wants to take on the risk and responsibility of major projects, which is what running a business in a capitalist system is supposed to be. You raise capital, by borrowing or putting up your own money, you build it, and the profit or loss is yours.

[...]

Why would any company build a power station out of their own pocket, when they just have to hang around long enough, and the government will come up with yet another handout, which always come out of our pockets.

But the point here is that the government have taken away the downside risk but also the upside opportunity. This makes the investment suitable to things like pension funds, who look for long-term yield.

Please don't think the concerns I raised about the system imply I don't think that it's significantly better than the current system.

magyar

Joe_Bloggs wrote: »

I wish to thank magyar for their informed comments.
I am worried that the public is being milked by systematic market behaviour that rewards corporate speculators who dabble in the seasonal energy market. Could this this 'dabbling' ultimately increase the price of energy as seen by the consumer ?
J_B.

This is the right area to be concerned about. It's the overall wholesale price which is the issue, not the margins made by suppliers.

polka_purpura

The Department of Energy and Climate Change (Decc) claims that introducing the reforms will add around £160 to household bills by 2030, but leaving the current system in place will cost £200 a year for households.


Small potatoes compared to what market price rises might be like but it is neither here nor there how much it translates into as Mr Huhne will be in the upper house by then.

If you were to change the system so that prices were flat regardless how much you used those who use more would pay more. Likewise if we were to lobby Europe so that we could raise VAT according to usage we could lump that bit more money up front and get more done sooner.

Instead we have a PM who was apologetic that the 5% VAT was controlled by Europe but is ineffective at negotiating with the party's MEPs.

Yes the poor would need cross subsidising and the wealthier would pay more - that would be a good investment compared with loss of supply in 4 or 5 years time and the huge cost of winter repairs.

Sometimes looking after your own voters is not good for them in the long run.

polka purpura