tag:blogger.com,1999:blog-3286106202636235175.post9080477406701740349..comments2023-05-03T10:49:42.621+01:00Comments on John Rhys on Energy, Climate and Carbon: TIME FOR A REALITY CHECK ON UK ENERGY PRICESJohn Rhyshttp://www.blogger.com/profile/11377389836259129821noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-3286106202636235175.post-58259653699704906782016-04-25T14:18:40.941+01:002016-04-25T14:18:40.941+01:00Peter
A good question. The answer is that there w...Peter<br /><br />A good question. The answer is that there were several distinct influences in the 1990s as a result of the 1990 privatisation, not all operating in the same direction.<br /><br />1. This was the end of the road for the British coal industry, hitherto protected by governments allowing it to have the CEGB as a captive market. This could have been done at any time but privatisation was a useful handle, and meant that the government could subsequently wash its hands of the future problems of the coal industry. But it did imply a significant fall in generation costs, absolutely and relative to other countries, as the new owners were allowed to import cheap coal.<br /><br />2. There were lots of other influences in the early years, 1990s and 2000s, including falling gas prices (and energy prices generally), and also some exchange rate movements. But these applied internationally, so would not necessarily affect the UK's relative position. They could have improved the UK or relative position or made it a bit worse, though I don't think these effects were very large.<br /><br />3. Privatisation almost certainly improved efficiency, or at least lowered the costs of providing the distribution business, ie the wires. In fact this was built in to the regulatory structure of RPI - X.<br /><br />4. I think the margins earned in retail supply went up quite a bit, perhaps from around 0.5% to about 4.0%, which would have offset reductions elsewhere by tending to push prices up. A lengthy IPPR report, to which I provided some input, talks about this area.<br /><br />I can't really speculate on how things might have moved in the last few years had all else remained the same, but it does seem strange that the UK does not have a better relative showing within the EU.<br /><br />Note the paradox, though, that if our currency falls (eg post Brexit)we shall look significantly better in the international comparison stakes, just via the arithmetic of conversion to a common currency. John Rhyshttps://www.blogger.com/profile/11377389836259129821noreply@blogger.comtag:blogger.com,1999:blog-3286106202636235175.post-88740242920889414632016-04-25T09:49:20.525+01:002016-04-25T09:49:20.525+01:00John, A bit slow to ask but is the UK price down t...John, A bit slow to ask but is the UK price down to or at least in part to privatisation? peter mPeter Mnoreply@blogger.com