Some people feel their energy suppliers are ripping them off. Some resent the fact they are mostly owned by foreign companies. The government wants them to invest over £200 bn to order – but is happy to hunt with the hounds. Fair game ? They are big boys, for sure.
But there is a real problem, for the government and for all of us, with the long-running sport of treating the gas & electricity companies as punchbags. And for conducting public debate at such a depressingly low level. From the Telegraph, with a little fisking:
"The companies have paid more for their gas and electricity than spot prices because they buy on long-term contracts to 'smooth' volatility in a process known as hedging."
Yes yes yes, of course they do: they are in a margin business, and they can't switch us off on a cold day when prices are spiking, or pass through the cost of the spikes to us. It’s not unusual for there to be a hedging premium for natural shorts, when spot prices are volatile. Not everyone can afford to be at the mercy of spikes in order to be able to benefit from the average: “the market can stay irrational longer than you can stay solvent”, in the words of the prophet.
"Tim Yeo, chairman of the energy select committee, said he intends to question companies about their varying wholesale prices when they next appear before MPs."
Me, I’d be raising questions if they had all paid the same wholesale price !
" 'It reveals very different input prices and that some are much smarter at buying energy than others. … It also exposes the extent to which perhaps companies are exploiting their better position rather than reflecting their own costs in lower prices.' "
Mr Yeo, suppose you were selling your house (MPs are said to be well-practised in this). You go to estate agents for estimates. Do they ask you what you paid for it ? Do they enquire as to the price of bricks, joists and tiles ? No they do not: they consider the market, and give you an estimate accordingly. Your cost-base will determine whether you make a profit or loss, but it has no bearing on the value of your house whatsoever.
The net result of this infantile public discourse is that RWE are said to be throwing in the towel (who can blame ‘em?): and the government had better not be holding its breath for the fabled new nukes to hove into view. For the thousandth time, can we please be shot of Huhne and get an honest realist into the job ?