Ed Miliband’s offer of a price freeze has postponed the construction of half the new power plants we need to keep the lights on (so said the boss of the National Grid last week).
The Energy committee got the energy regulator in. Critical time, critical place, critical man.
Crisis, what crisis?
Andrew Wright, chief executive of Ofgem, isn’t responsible for retail prices. He doesn’t know what the companies pay for wholesale supplies. He doubts whether there has been excess profits. He has no evidence that anything untoward is going on.
NB: He is the interim chief executive of Ofgem.
The Energy and Climate Change committee is once more under the leadership of Tim Yeo, absent while he was being cleared by another wonderfully indulgent Commons committee (see Yeo tab, right, for list of conflict of interest charges almost as long as the VAT regulations).
Yeo’s scene-setting examples of monopoly abuse lacked deadliness. The regulator batted them aside with a slight increase in pulse-rate.
The committee then conspicuously failed to advance the argument, or even much to clarify it.
What merit is there in there in a 20-month price freeze? What would the effects be? Is it justifiable?
On the one side you have Ian Lavery saying power bills can’t be fair because people can’t afford to pay them. On the other side you have the regulator saying energy companies are making no more than 4 or 5 per cent profits.
Peter Lilley who ought to know better (that is, he ought to know) said: “People feel the price of power has been driven up by companies increasing their profits. If that were the case, their profits would be 50 per cent or more. Could you not publish some information whether that was true or not?”
The regulator replied, “That information is in the public domain.”
That was practically sarcastic.
And then, “The main drivers are cost increases.”
Are they really? That isn’t something we should be arguing about at this stage
Tory Phillip Lee asked what was his view of Ed Miliband’s price freeze proposition. After some faffing, the regulator said his consideration would be whether it had an adverse impact on consumers, “and that includes, an adverse impact on investment”.
That is significant. The regulator himself is saying a price freeze will damage investment.
“Anything that undermines confidence in the market is detrimental for consumers,” he said again, later. “When considering such policies you need to be very careful about these consequences.”
To translate the regulatory Esperanto – Ed Miliband’s price freeze would be a howling horror of a policy resulting in a hundred thousand winter deaths from hypothermia. On the other hand, it might win Ed the election.