Electricity is the New Gold

Just back from a short outing to Poland to discover the Treasury has sold a large part of its stake in nuclear generator British Energy (actually that’s a rather simplified version of events), in an operation only a bit less ham-fisted than McBroon’s notorious 1999 sale of gold reserves.

Indeed, only a bit less ham-fisted than McBroon’s original BE rescue back in 2002. Part of this package was forcing BE to forward-sell a hefty slice of its future electricity generation to Centrica at the rock-bottom prices that helped bring about BE’s demise in the first place.

Now, as any fule kno, the worst time to lock-in is at the bottom of the market – and it didn’t take a genius to figure that 2002 was going to be the bottom: power stations were being mothballed at a rate of knots and BE (with the lowest variable cost of all) was insolvent. The only way was up – and a windfall for the lucky buyer.

Of course, in this instance the beneficiary was another UK company. But ultimately the taxpayer underwrote this gratuitous largesse. Gold, pensions, electricity – all hail, oh economic genius, and welcome to No.10!

ND