Miliband, energy prices and the Big Six

British Gas, EDF Energy, Eon, Npower, Scottish Power, SSE.

At the 2013 Labour Conference, Labour leader Ed Miliband said of these Big Six:

Take the gas and electricity companies. We need successful energy companies, in Britain. We need them to invest for the future. But you need to get a fair deal and frankly, there will never be public consent for that investment unless you do get a fair deal. And the system is broken and we are going to fix it.

If we win the election 2015 the next Labour government will freeze gas and electricity prices until the start of 2017. Your bills will not rise. It will benefit millions of families and millions of businesses. That’s what I mean by a government that fights for you. That’s what I mean when I say Britain can do better than this.

I expect the black-hearted Conservative voting lobbies to go for Labour between now and the elections. So here is Which Magazine, bastion of consumerism, debunking some energy market myths in its October 2013 issue (pp28-29).

From it we discover that our electricity comes from coal (39%), gas (28%), nuclear (19%), renewables (11.3%) and other (2.5%). Of the 28% gas, over half is produced in the UK and around a quarter is from Qatar. Less than 1% is from Russia.

Since 2008 there have been 91 price changes of which 77% (hey Which, that’s 71) price changes have been increases. The generation and retail operations are ‘vertically integrated’ – that is, linked by a single company which sells to itself behind closed doors. You can bet they make a heap of money. Which estimates that in 2012 the generation operations averaged profits of 20%. These vertically integrated companies can and do choke off supplies to smaller companies, causing them to become uncompetitive. My fuel comes from one of these smaller companies.

Six huge vertically integrated companies prevent genuine competition in the energy market. Weak competition means that although British Gas lost 868,000 customers after increasing its prices by 28% in 2006, its gas sales revenues increased by 15%. Hiking the prices pays off for the Big Six.

4% of an average household energy bill is invested in low carbon energy – for some reason this is taken from the electricity bill. However, 26% of the 9% of British households which are electrically heated are classed as fuel poor (significantly higher in Scotland and Wales) – they are paying disproportionately for this low carbon investment.

No mention of fracking in the Which report. Miliband mentions it once – not to oppose it or rally renewables support. But to score a cheap point off the Conservatives.

Obviously the solution is a combination of nationalised and small-scale renewables. Not on Miliband’s cards, as far as I can see. Nor anything of substance in Caroline Flint’s 2013 conference speech. And what about the Living Standards and Sustainability Policy Commission – hello? Pathetic, appalling. But still, resigned gradualist that I am, I support the fuel price fixing gambit. It forces the Conservatives to either reveal themselves as profiteers or rein in the Big Six. If the former, Labour gains. If the latter, the consumer. Either way is better than now. But it’s a long way from actually doing any good. I wish Labour were better, because the Green Party is crazy nasty.

And yet, the worst thing would be not to vote.