I may a bit more forgiving towards Ofgem than CU, and as part of our usual service to readers have read their Project Discovery document which confirms everyone’s worst fears about the looming electricity shortfall.
It’s a bit like the Butler Review – a lot of good stuff but as knee-jerk civil servants they’ve felt obliged to encrypt it & we’re supposed to decode for ourselves. It’s even quietly subversive in places:
“If [sic] reductions in carbon dioxide emissions domestically is seen as important …” (4.21)
If !?! What official body has dared to question the received wisdom like that in the past ten years ? And by way of further heresy, they register the point (albeit obliquely) that wind-power is getting too easy a ride, suggesting that price signals for balancing and peaking problems should be ‘sharpened’ (= greater penalty for intermittent output). Also this:
"The risk is that more generous subsidies are required … in order to stimulate the desired low carbon investment. Should carbon prices subsequently rise, low carbon generators may enjoy super-normal profits at the expense of consumers." (3.21)
We should be grateful these things can still be said, if only in code.
They shy away from the actual infeasibility of government targets: the coded statement is ‘There is a need for unprecedented levels of investment to be sustained over many years’ (a point I first made to the DTI in 2006 but they weren’t amused). This is a pity as a knock-down proof of outright infeasibility can be given.
Ofgem satisfies itself with worrying about a range of things including, most tellingly, the ‘risk of prices being greater than necessary’. Yes indeed - particularly if the 'possible policy measure' of reinventing a central energy monopoly/monopsony is adopted, Heaven help us.
We've cracked the code. Prices greater than necessary. And super-profits for the subsidy-wallahs. Yes indeed.