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"No it wasn't "political" choice. It was an economic choice. Imported coal was much cheaper than British deep-mined coal."Michael,putting aside the fact that much of the coal came from the Soviet Union & Apartheid South Africa (nothing political about that) the government never published the complete economic cost of the closures. Subsequent governments including Labour ones preferred to hide such costs. Oddly enough it was only the reform of the benefit system that exposed some of the costs.True economic decisions are transparent. The fact the government hid under the 30 year rule many documents which show the full economic was not considered does tend to indicate it was political.https://www.ft.com/content/0952017e-ee2c-330f-9d76-d5e4b52c042f"The idea of Britain having "abundant natural resources" is something of a nonsense."Putting aside wind, according to many the UK is one of the best places in the world to harvest tidal energy. With potential to deliver as much as 20% of UK electricity demand. The UK is also not using it's full hydro potential - essential for energy storage too.There is also of fossil fuel modern "produce 40% of our own gas" is quite a lot compared to most countries.I could not get any figures to compare modern coal fired power station emissions to the emissions produced currently by burning stuff. Whatever method is used, many countries make better use of the heat produced through district heating. This ties in with the under use of geothermal energy and all those old coal mines.As far as I can tell the UK's lack of district heating is political too! 

Ed Robinson ● 1269d

No it wasn't "political" choice. It was an economic choice. Imported coal was much cheaper than British deep-mined coal. It still would be. The privatised generation industry took part in a "dash for gas" - gas was cheaper than imported coal. The levies came much more recently.The idea of Britain having "abundant natural resources" is something of a nonsense. We have no remaining deep coal mines and only produce 40% of our own gas. The idea that we are sitting on massive untapped reserves is something of a fantasy which any half-decent geologist would soon disavow. There is oil gas and coal under the ground everywhere in the world  (along with gold, diamonds and uranium). However, little of it can be practically and economicly extracted.The few remaining coal-fired power stations have been shut down. This was partly an environmental choice. In recent years they had been required to install expensive "scrubbers" so that they did not dump SO2 on the rest of Europe. Had we forecast the rise in gas prices, we might have kept them going a little longer - but they were ageing plant.We delayed investment in new nuclear plants but that doesn't make much difference - it would be 15% of the energy mix instead of 10 - and isn't so cheap after safety and spent fuel disposal costs.Though this leaves the UK more dependent upon gas than some other countries, it is unlikely that we will face shortages. We extract much of our own and import from Norway. We have gas terminals to receive LPG shipments. Indeed, just at the moment we are a major gas exporter. We are importing it on ships and exporting it to Europe through pipes.The UK took the decision to make consumers pay for investment in renewables by adding levies to non-renewable energy costs. This part was a political decision. In other countries that cost has been socialised. Now we are getting to the stage where electricity may become unaffordable, we will soon have to socialise those costs in this country too. That is a political decision which the current government will have to be dragged kicking and screaming into making.

Michael Winstanley ● 1269d

Hi MichaelYes I’m sure there is but I suspect when the market was set up there was a lot of lobbying by the industry.  It may have followed the US markets as I think the UK was the first in Europe to denationalise.To be fair it has worked reasonably well until recently, and it means that generators who want to provide regardless of price can put in a low bid rather than spend time and effort trying to estimate.I suspect a sensible adjustment would probably be to a model which paid say the 70th percentile or the price bid whichever is higher.  That would avoid the massive peaks in costs as outages caused really expensive suppliers to be brought online at the marginA long time for me as I say so now we have erratic power supply from wind the balancing market will be more prominent and prices in that can be huge for last minute capacity but I’m less clear on that.I was in telecoms but spent some time with the guys at Morgan Stanley as telecom capacity was being investigated as a potential next market (yes at the time Enron went bust - knew them too!) and I know in America they sold some power on an interruptible basis to large industrial users with the option to turn off their supply on short notice.  I don’t think we have this here yet but have seen this is being investigated so when a large power crunch is expected an industrial plant can close down.  Obviously expensive for the plant but the upside where they make money is in a deep discount on their power costs.  This seems a reasonable market model to work around power shortages, although we have alot less industry now since we outsourced it to china (who of course power it with dirty but cheap coal) driven in part to reduce our carbon footprint.  An ideal example of civil service ridiculousness to address an issue (carbon footprint) by probably doubling it and moving it offshore but out of their numbers and destroying uk manufacturing in the process.  Anyway I digress…..

Mike Warman ● 1269d

Hi to clarify slightly the outline above, the UK wholesale market for power is all priced at the highest level.  From memory some time ago so apologies if slightly out of date companies enter bids to supply power for the pool to the grid.  Typically nuclear which is always on will put in a low rate and other suppliers varying rates upwards of that.  So for example say a nuclear plant bids £10 per mwh, a wind farm £50, another wind farm £100, several gas providers 200,300,400, 500.  The grid determines its power needs to include all the power up to the £400 per mwh provider and then ALL providers are paid at this highest marginal rate.  If the wind provider in this example is knocked out by low winds or the nuclear supplier by maintenance then the grid will require power from the £500 per mwh provider and all the other providers including those who bid at 10,40,100 etc will be paid at 500 so it’s the highest marginal cost that sets the whole market for the day.So it’s not that gas is expensive per se to produce but because gas supply is down from Russia and they are always the marginal supplier in Europe (few coal statIons none in the UK, and insufficient wind/solar etc even at peak generation it is what is used to set the rates.The government guarantees wind and solar providers a minimum rate| for old projects this is say 80-100/ mwh and the green levies went to pay the difference when the market was setting the rate at 50 say the green levy funded by consumer levies would make up the difference.Obviously it was never envisioned that the market rate would be £300/400/500 per mwh so did not set a cap.  All suppliers pocket the massive markup including the 40% of our supply that comes from renewablesAs Michael says the Customer owning companies (bulb octopus etc) then buy at these rates and pass them on on very thin margins as the customer business is very competitive one.There is also a Trading business between the power producers and customer firms.  These have made significant profits buying forward contracts and selliNg next day etc (note not always the case if you remember the negative next day market in oil in 2020 where a trader lost billions)Many companies are vertically integrated with elements of supply, trading and customer business eg locally EDF and centrica (British Gas)So the market is fixed in a way in favour of producers.  Across Europe also.If the renewables were on a fixed range guarantee (say 70-100) and could not charge more than 100 if they had bid at 50, then the 30-40% from that element would likely reduce the consumer cost by 25% say from predicted levels.So windfall taxes should be across all energy producers effectively.  As the push for net zero in the uk has disincentivised local production of gas then a lot of the gas production profits are not made by uk companies which can be taxed but by foreign ones this is one out-turn of the hostile envIronment for local fossil fuel production from extinction rebellion but mainly from uk government policy - we now ship gas in at astronomical cost from Qatar Norway etc and make ourselves poorer by the day.This should improve relatively rapidly though as offshore wind starts to come online and  innovative projects like this from Morocco as long as the contracts are not set to day ahead market pricing but rather long Term contracted ones.https://www.advancedbatteriesresearch.com/articles/24874/massive-solar-plus-wind-morocco-project-source-of-power-for-ukThere is also a major grid upgrade due in 2024 which will enable wind power to be transmitted across the whole grid rather than paying wind farms to turn off due to lack of transmission as at present.  So we should not have more than two years of pain.In the meantime there is a government review into the market structure as it has provided such skewed results in favour of producers rather than consumers but this is not new in principle it is the same system I came across in the late 1990s.https://www.gov.uk/government/news/uk-launches-biggest-electricity-market-reform-in-a-generation“Major review into Britain’s electricity market design launched by UK government to radically enhance energy security and cut costs of electricity for consumers in the long termproposals out for initial consultation include exploring changes to the wholesale electricity market that would stop volatile gas prices setting the price of electricity produced by much cheaper renewables”

Mike Warman ● 1270d

There are a few tiers in the electricity market*. As the public, we are usually dealing with distribution companies who simply run customer billing and meter reading services. In a capitalist system such as we enjoy, it is fair that they make a reasonable profit. To do so and not to go bust, they need to be able to charge us a bit more than they pay for the energy they provide. Then we have the grids - the gas pipeline network and electricity distribution network. they too need to make a profit, particularly if they are to be able to invest in maintaining these networks.Further up the chain we have generators  and other providers of wholesale power (such as wind farms). Similar arguments apply to them.Finally we have the companies who take gas out of the ground. They have invested in their wells and I'm sure they all work very hard, particularky their CEOs. But by dint of a tight gas market (caused largely by Russia easing off the gas taps), they can suddenly sell their gas for a lot more than they could last year. These are the only people making super-profits from the current situation and this is where the target for windfall taxes should be. The same argument would apply to a windfarm owner who suddenly found themselves able to sell electricity for twice the price they expected when they built the farms - often with government subsidy.Their is no point bashing the retail suppliers - they are not the ones creaming off unwarranted profits and very often they are thinly capitalised so have little to give.*A little confusingly, in the years since privatisation, a lax regulatory regime has allowed companies in different tiers to merge, so sometimes a generator may also be a retail supplier. It makes identifying where profits are earnt a little more opaque.

Michael Winstanley ● 1271d

I see Ms Truss has missed the point again? Describing profits as not evil (or evil?) is irrelevant and perhaps playing to her audience's emotions? Profits are justifiable when a company is adding value: by satisfying customers, producing innovative, useful and cost effective products and services, reinvesting in its future, and rewarding employees adequately. In those instances it's reasonable that investors will be compensated. So even if I might disagree with some of their business practices or dislike their CEOs I see no reason why Microsoft, Google, BT, Tesla, Facebook, Airb'n'b, Easyjet, Oracle, even Ryanair and Uber if they follow regulations (although I think Uber are loss making at present …) shouldn't make profits - at the other end of the scale I hope some small businesses like Mildred's vegan restaurants, vegan friendly Sagar south Indian restaurants, Lush cosmetics, etc do make profits so they don't go bust. However, most utility companies haven't seemingly added much value, made many wise investments and often have made profits from prevailing circumstance because they're essentially monopolies or an oligopoly in what seems to be poorly regulated UK energy and other ulility markets. In fairness some, like Ecotricity, have invested in renewable developments and managed their businesses properly with forward purchases of gas, although even they have been reprimanded for increasing direct debits by too much, too soon. But back to my starting point, it seems some capitalists don't understand capitalism?

Michael Ixer ● 1271d

Listening and looking at the news it sounds like nothing will be decided until after the 5th September when there's a new PM. Let's hope the Russians don't decide to invade next week: we'll have to ask the French passport controls to hold them at Dover until the Conservatives have decided which one of the candidates is the less mediocre...Truss seems to be completely out of touch: tax cuts won't help those on low pensions and universal credit who are going to be the worst affected and are unlikely to pay tax. Looking at the the increases many better off middle class (if such a term is still appropriate) people are going to struggle, particularly with inflation on food, interest rate increases , etc, and will likely be dipping into savings if they have them. There will definitely be some in the "can't pay" category. Sunak seems to be coming to that realisation but seems to be worried about saying things that might lose him votes with the Conservative voters in the shires who will select between the two and sound like they believe the holy grail of tax cuts will fix everything by the time of the October increases.We'll never know how Mr Corbyn would have handled this but I think the main thing is he would have cared about the poor, as does Gordon Brown, and would have been prepared to tackle the energy companies (who, if people star racking up large debts, are limited in what they can do as some categories of people such as those over pension age can't be disconnected) and shake up Ofgem? (For the avoidance of doubt, I'm not recommending people don't pay if they can as that may have other consequences, I'm referring to the elderly, disabled, single parents with children, the unemployed, maybe even those on minimum incomes and those on average earnings who have large ren or mortgage commitments,  etc who just won't be able to pay and may already be in debt with energy companies. There's also those on prepayment plans who won't have the money to top up meters; will they freeze to death without heating, starve if they can't cook food?)

Michael Ixer ● 1272d

I think Sunak is utterly crass, no political nous at all. He is a wealthy man, irrespective of his wife's fortune, so must have realised the press and Opposition would be after him, long before this crisis. So why be photographed with a mug costing £180 and £400 trainers. While holding one of the most powerful political offices he should get his footwear at Clark's or M&S!But for rising costs about which one can do nothing, I go back to my experience in Lambeth. I bought my house there in 1976m rates £260 a year.  In 1978 the Hard Left led by Ted Knight took control of Lambeth Labour party and the rates started to rise. Each year I joined protest marches; most people marching were council tenants. Knight knew exactly what he was doing. I remember Town Hall meetings when he just laughed and sneered at people's protests. By the time I left in 1981 my rates were  £981, an increase over the five years of 277%.Apart from plastering the borough with posters proclaiming Lambeth was a nuclear free borough I have no idea what Labour Lambeth did with the money. I was horrified at a report which came out some months ago about children's homes in Lambeth where, apparently, there was abuse going back decades. So my hard-earned cash wasn't doing much to help the poor people of Lambeth. As for combating or coping with rates rises on that scale, there was absolutely nothing you could do.  I always delayed paying until I got final demands, can't remember if it went to a court summons. My solicitor advised: pay up. You will not get your day in court, however justified. You will just be one of many.

Elizabeth Balsom ● 1395d

I agree with much of Tim's post however I find it difficult to source the accurate number of Covid-only under 60's deaths even from searching the ONS website, so I 'll pass on that. His comments regarding furlough aka the happy-to-stay-at-home-and-be-paid brigade I wholeheartedly agree with, together with all the Parliamentary civil servants who could only drag themselves back into the building to attend a leaving party. As for Sunak's wife and her use of advantageous non-dom tax laws, well so what? She is a citizen of India, the country of her birth and her parent's home and India does not allow its citizens to hold the citizenship of another country simultaneously.  So if her £millions are paid as a dividend from money earned in India by her family then surely the tax should be paid in India? Seems logical to me. A lot of self employed people in the UK pay an accountant to help them pay as little tax as possible but they just call that being tax efficient. I wonder how many of that group are today screaming that Sunak's wife is a tax cheat? Or indeed the self employed on this forum? I recently received my next annual forecast from my electricity provider.  Now that the energy cap has come off my bill based on previous usage is going to increase by £953.73 and that's without any further increase in October.🙀In answer to Martine's original post. I tend to agree with you Martine however tbf most MPs who are enjoying a salary plus expenses that total £90k+ similarly have no realistic view on the matter.  I count myself as fortunate because I can buy enough food but many cannot and heat or eat is becoming the reality for a lot of people.  If the Govt do not act and curb energy prices again that will be the reality next Winter for many many more.  Labour's proposal of a windfall tax on companies that have benefited from Covid is a great idea and I hope Boris is listening.

Sue Hammond ● 1397d