Week 39: Villain – The “Big Six” Energy Companies

by Charlie_East_West on September 29, 2013

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This week’s villain of the week award goes to the “big six” energy companies and their bullying tactics in response to Ed Miliband’s proposal to put a price cap on energy bills for 20 months.

Immediately after Ed Miliband’s announcement, the usual howls of disdain were heard across both the right wing and the energy sector – “socialism revisited“, “Trot-lite“, “you can’t beat supply and demand“, “let the market decide” “Britain faces risk of blackouts” were the distant howls of the raging energy beast.

Angela Knight, the former Tory Minister, former head of the British Bankers Association (during the 2008 crash) and now Chief Executive of Energy UK, said: “It will also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000-plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone.”

Sir Roger Carr, the head of Centrica, the owner of British Gas, went further – saying it could lead to “economic ruin”.

The general theme running through both free market supporters and energy companies was that Miliband was taking Britain – “back to the seventies” – Yet, the average yearly growth in the 1970s was 2.88% – which is substantially more than the economy has grown in total since Quarter 3 2010. In one respect, this is a return to the 1970′s – Britain’s energy is run by an oligopolistic cartel. Just replace the Trade Unions with giant corporates.

Six multinational companies dominate the energy market in the UK, and in many areas, the choice is reduced even further. These companies are now threatening blackouts if their profits are in any way challenged by a future government. Were this a trade union threatening to turn the lights out across Britain, David Cameron be sitting in a Cobra meeting.

This hypocritical attitude to the energy “free market” runs through all the “big six” – It is corporate bullying at its worst – often from corporate HQ’s outside of the UK.

– Npower accused Ed Miliband of “easy answers“, and that the global market would drive costs regardless of any policy from Miliband. Yet, the biggest shareholders in Npower are from Germany. The artist known in its homeland of Germany as – Rheinisch-Westfälisches Elektrizitätswerk Npower plc, have its major stakeholders in a group of German towns and cities. So, the profits Npower soaks up from the British people allow Germans to keep their own rates down. We pay Npower and a German city gets lower energy rates.

- Iberdrola, owners of Scottish Power, are backed by €27bn in state backed loans and massive subsidies from the Spanish government – despite the massive amounts of public austerity being forced upon the Spanish people.

- Both Centrica and Scottish and Southern Electric are receiving over £50m each in UK government subsidies for wind power.

- E.On’s decision whether or not to build a new biomass generator in Bristol is dependent on Department for Energy and Climate Change financial support.

- Électricité de France, EdF is controlled by the French state. They are now tasked with building a new generation of nuclear power stations in the UK.

This is the sort of thing that if UKIP wanted to develop a decent rather than pathetic isolationist message, they would actually have a point. But they don’t – they just blame immigrants.

So there we have it. Corporate bullying. Corporate hypocrisy. Corporate global market interventionism rubbed stamped and financed by the state. Welcome to the law of supply and demand, as dictated by the energy companies. It appears that the state is used to invest in these companies, but the state will be bullied if it decides to take away some profits.

Ed Miliband has touched upon something very important. Since the privatisation of our energy supply, the market has run amok. We have repeated failures of British governments over the past 30 years to throw away our core publicly owned industrial assets towards corporate greed. Our essential daily human needs such as energy, transport, water and communications have sold off to the highest bidder – anywhere in the global marketplace. As a result of this, we see corporate skullduggery, ruthless profiteering and low service provision standards – all which hits the British consumer hard. These corporates have been allowed treat our core services as a corporate playground, and when someone like Miliband has the guts to say “Britain can do better than this” – these companies become playground bullies.

I suspect that Miliband’s energy price freeze is just a toe in the water on this issue. I hope this marks the start of Miliband’s long march towards the dismantling of Thatcherism – in particular, the march towards a modern day workable version of renationalisation, and an end to the corporate greed within our energy market.

{ 2 comments… read them below or add one }

Alx w September 29, 2013 at 9:53 am

Not sure if we can really say the market has run amok as there never was or ha been a real market for the consumer. Fundamentally the product is identical for all suppliers so really we just have a choice of delivery agents, but again there are no difference in how the product is delivered. It must follow then that any genuine free market would lead to a monopoly since the only criteria would be price, so logically we should all be getting it from the same supplier, or at the least the cheapest supplier for each scale of use group. The only way a market can therefore exist is either through a cartel, obfiscation and confusion about products and tariffs, constant ‘sales’ and short term offers. The thing was always flawed a a concept and a with many of these ‘privitisations’ was as much about balancing public finances without raising taxes (see royal rail)

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Mike Killingworth September 29, 2013 at 3:50 pm

Quite so.

The idea that the State can create markets contradicts Economics 101. Or should do.

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