Wednesday, 25 September 2013

I quite like Milliband’s power price freeze.



I’m not a fan of Labour, and most certainly not a fan of Milliband but his pledge of a freeze on gas and electricity prices sounds quite good to me.

Of course I realise it’s the pinnacle of hypocrisy for the architect of the climate change act (that put all the extra ‘renewable’ costs onto bills) to now turn round and complain at energy costs. Equally well I realise it won’t work. It’s a nonsensical piece of socialist thinking that will cause untold confusion in the supply industry. But that’s really the main reason I like the idea.

At the moment we have what is described as a ‘free market’, except that it isn’t. It’s a cartel of large corporations operating in a government set of rules. Most of these rules being defined to defend the corporations and ensure they make large profits.

The only champion for the consumer is a toothless and sofa-bound utility regulator that is in practice worse than useless. Why worse? Because in the event that the utility does something naughty and fails to provide fair service the regulator (if it bothers to do anything at all) fines them – i.e. they take money from the utility company and give it to the government. This does nothing for the consumer in the way of repaying them for being ripped off. In response to the fine the utility company then inflate their costs and charges, thereby extracting yet more money from the consumer to ensure company profits and shareholders don’t lose out. Thus regulatory fines act in practice as nothing but a simple tax on consumers – a penalty for having chosen a poor utility supplier!

What the consumer needs is a mechanism that would force the utility supplier to pay back the overcharging and rip-off pricing directly back to the consumer. A price freeze does exactly that. 

So it’s a stupid idea, it won’t work, it’s probably undemocratic and against EU rules and it will cause chaos. Bloody good job, the entire utility cartel system and the renewable obligation nonsense needs a good dose of chaos, maybe it will even help improve the existing rip-off system.

2 comments:

  1. Yoh hit the nail on the head, it's the government, not the companies. But where you go wrong is the word "force". The only force we need is the ability to choose the cheapest supplier, which is impossible whilst th state has a finger in the pie.

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  2. Woodsy - defending Miliband? Grrrrr.

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