I do sometimes wonder, in a sector where there is competition, if thereās an argument for one of many competitors being a nationalised entity, from the perspective of someone who believes in privatization (itās a given that those who believe in more nationalised sectors would take that idea if the alternative is none).
Relatively small beans, maybe 5-10% of the marketā¦ small enough not to be too much of a distorting influence, big enough to get an inside track on best practises and the challenges faced by providers bigger and smaller. On top of that, they could slim down/redeploy civil servants whose job is essentially to duplicate/understand functions that relevant companies themselves need to perform, so the increased overheads involved in running a company would not be higher than a private company after discounting those costs incurred anyway.
Iāve often wondered this with the railways - if they were truest profitable could we take a 5% / 10% stake and take all the profits to create a sovereign wealth fund.
If a free market is the best solution and in many cases it is then āweā could piggy back on the success to a small percentage.
Energy is proving to be the next failed privatisation experiment after the railways. Great video if youāve got 20:28 seconds spare.
I donāt think its just railway and energy that theres been a failure of privatisation. Look at hospital cleaning, prisons, social care, buses, etc. All could do with vast improvements!
Prisons blows my mind! How on Earth did that happen and everyone though - yeah letās get a private company with profit in mind drive down cost and provide the lowest quality service they can.
For me energy and railways are two different kettles of fish. With energy Iām in favour of privatisation in general because the same stuff goes through the wires and the pipes, thereās no incentive to accept the additional cost burden that keeping it 100% in-house would entail. With the railways private involvement needs heavy regulation because it should be high-on impossible to make a profit below a certain level of serviceā¦ if they meet that level, then fine, theyāve earned every penny, alas unfortunately it doesnāt work like that.
Prisonsā¦ yes should be public sector all the way, staggering, staggering decision there.
I support a shift to greener alternatives to fossil fuels ASAP but supply chain wise Iām not sure the UK could consciously accelerate the transition to electric cars even if it wanted to. Emphasis on conscious, by which I mean accelerating it faster than currently planned as a direct result of the energy situation.
Well this is probably the largest beat Iāve ever seen:
With increased pricing and volatility, several of the Companyās storage projects began trading in the GB markets, with the result that September revenues for those projects were nearly two times more than they were forecast to earn, had they relied on DC revenues[3].
Answers the questions of whoās winning in the currently. Even as a shareholder I support a windfall tax similar to Spain. Situation is clearly unsustainable and itās not even November.
The price cap really makes no sense to me, we are pretending to have a private energy market but then youāve got a situation where companies which did the right thing and derisked their contracts are being forced to take on new customers and sell below market price - which obviously they wouldnāt choose to do in any free market situation.
It seems the one piece of regulation that is critical - stress testing is not in place, which is staggering as thatās commonplace in other sectors. We have regulation that effectively destroys the private market, yet doesnāt seem to actually prevent do anything to prevent failures.
Ultimately we are still going to end up effectively bailing out failed companies as the survivors are forced to absorb their costs which you can bet will be passed on to customers.
Out of curiosity, how bad is the impact of feed in tariffs in the UK?
Is it really big, like in Portugal, to the point of making coal based electricity production economically unviable as a consequence of the weight of FIT? Or is it negligible?
I donāt live anywhere near London but I do watch with interest the situation around Thames Water and its debt mountain. It seems the company only operates to service debt and pay dividends now, with the water supply of the captive audience within its geographic monopoly just being something of a secondary consideration - How Macquarie bank left Thames Water with extra Ā£2bn debt
For me the answer to this was to never have a price cap but to have been prepared to increase the support available to those for whom the rise would be too steep to bear. IMO this isnāt really a political point (just find a way to not brand it as welfare and go heavy with the targetting). The only difference politically is that those further left would have been more inclined to put that in place a bit earlier than perhaps necessary whereas those further right would be more inclined to pull it a bit later than perhaps necessaryā¦ political views would determine who you think would have gotten the balance better.
Bailing a company out doesnāt win votes beyond that companyās employeesā¦ and if they knew you had no choice anyway they might not even give you much credit in the matter. Giving the same amount of money out to people who need it, might.
Completely agree - if the rationale is for energy to be affordable Iād much rather see benefits for the individual and rather than ham-fisted interventions that disrupt market forces.
The whole thing has echoes of rent controls, a weirdly politically popular policy with no basis in economics. Itās just odd that the areas where we have the most to lose seem to be the ones that states seem to feel the need to intervene the most, mostly to our detriment.
So the government (us taxpayers) will take on 1.7M loss making customer energy accounts over the winter. Maybe forcing companies to supply things at a loss should not be government policy.
There is the other side of the coin: many (all ?) of these companies could have bought on the forward markets if they had a sound business model. The typical margin for them was -1%.
There was a very good Sunday Times article some weeks ago that had a step by step explanation of the business model(s) involved. So I am sure sufficient digging around and research should help one understand what was really happening.
How was the government forcing them? The government canāt win. Brining energy under government control doesnāt solve the cost issue either as then general taxes would have to pay for it.
