Current UK energy policy is a colossal failure. It is supposed to (1) deliver cheap and affordable energy to consumers, (2) provide security of supply, and (3) shift from carbon fuels to renewable energy as a key part of tackling climate change. But under the current privatised regime the UK is monumentally failing on all 3 counts. On affordability, the most recent figures for domestic electricity prices show that despite its wealth of natural energy resources, the UK has the fourth highest prices in the EU (excluding the new East and Central European accession states). Other studies over a number of years have consistently concluded that UK electricity prices are consistently higher than they would have been without privatisation. At the same time the UK has some of the worst statistics in Europe for fuel poverty. What is most shocking of all is the number of UK pensioners who die from extreme cold every winter at a rate double that of Finland despite the latter’s much colder winter climate. Indeed the UK rates are also far higher than for countries with similarly severe winter weather like Sweden and Germany.
On the energy security issue, the UK’s current carbon-based and nuclear power energy stations are being phased out, with about one-quarter of the existing power station capacity due to be closed by 2025. It has been estimated by DECC that at least £110bn infrastructure investment is required to achieve both security of supply and the UK’s environmental objectives of meeting 30% of its electricity generation from renewables by 2020. There is no sign whatever that the privatised companies are preparing to deliver this unless the government provides enormous financial incentives for them to invest, i.e. the companies privatise the profits but socialise the cost of investment. On tackling global warming, the UK has one of the worst records in Europe in shifting its energy production towards renewables, still with only 4% of its energy consumption coming from renewables, just one-third of the EU average. The Commons Environmental Audit Committee has estimated that no less than £200-£1,000bn will be required over the next 10-20 years to achieve the commitment to 80% reduction in greenhouse gas emissions by 2050. Perversely the Danish state energy company DONG and the Swedish government-owned Vattenhall have now become the largest beneficiaries of UK government subsidies earning £156m and £128m respectively in wind farm subsidies. UK energy privatisation has not brought the promised investment or efficiency gains, but instead led to private value extraction at the expense of the public purse while leaving a legacy of decaying infrastructure. Faced with these massive contradictions the only sensible way now to re-set energy markets is through taking the energy companies back into public ownership to secure the investment now desperately needed (‘to keep the lights on’) and to regain strategic direction in the public interest in a key sector of the economy.