Particularly when we read crap like this from Ed Davey, trying to elbow out Milibean from the driver's seat on the bandwagon.
"[people] look at the big suppliers and they see a reflection of the greed that consumed the banks. So this is a 'Fred the Shred' moment for the industry. You deliver an essential public service, so your industry must serve the public"Where to start ? Firstly, yes, the ability to buy reliable and safe gas and electricity supplies in the home is essential. The 'natural monopoly' aspects of this have long since been analysed out to be just the pipes and wires, the costing and pricing of which are heavily regulated and always have been. The supply and commodity aspects (along with ancillary services such as meter-reading) are not natural monopolies, and have been 'contested' - i.e. subject to competition - in the residential sector in this country since around 1995 (gas) and 1998 (electricity). The last Labour government finally dropped all price controls around the turn of the century.
They also regulated every other aspect of residential supply very closely, imposing no end of social obligations (such as not disconnecting elderly non-payers). Indeed, they and their Coalition successors have been layering on ever more social obligations and 'green' surcharges with every passing year, culminating in the 'electricity market reforms' and the Heath-Robinson Energy Bill now inching its disreputable way through Parliament. Is this 'good' regulation? No, generally speaking it is not - but it is a far cry from the 'hands-off', light-touch, non-regulation (or at least non-enforcement) that was the Blair / Brown / Balls policy for the banks in the run-up to the 2007 crisis.
Undermining the operation of a proper market in residential supplies still further was the shocking failure to prevent the revival of vertical integration by acquisition, again on Brown's watch. We've discussed this at huge length in comments here before. Suffice for now to say that permitting Powergen (latterly E.on) to become the vertically integrated behemoth it became, followed by RWE and most recently EDF**, was a capital error - and I do mean capital: lots of it.
(The scotties - SSE and Scottish Power - were of course privatised as verticals, and have jealously maintained their integrated structures. I exempt Centrica from all this because they achieved their 75% integration organically, not by acquisition - a very different thing - and it was done defensively, against the declining wholesale market liquidity engendered by the others.)
No shortage of very pro-active regulation, then, albeit frequently crass. Actually, rather a shortage of intelligent intervention, which should have been initiated by Ofgem to promote wholesale liquidity. Their efforts have been protracted and pitifully lame,
The Big 6 must of course play the game under the ever more complex and often self-defeating rules they are faced with: and now to be turned upon by politicians of all parties is pretty rich. I've no doubt that in many ways they haven't helped their own cause. But, politicians beware! - because somewhere out on this uneven field of play is a cliff-edge. Anyone who reads the papers will know that the UK is hoping for hundreds of billions of pounds of investment from these companies (and the National Grid, which raises almost all its revenues from them), to finance the comprehensive programme of power-plant replacement and grid upgrading required (a) to prevent the lights going out and (b) to deliver the monstrous 'decarbonisation' agenda.
It's well worth reading this piece from the Economist, which points out that as a consequence of the impositions and changes foisted upon them the market cap of the European power companies has fallen more than that of the banks (!!) These are fast becoming companies whose balance sheets just will not support what is desired of them. "Existential threat" is the phrase used by the Economist, and indeed RWE is arguably in a bed quite close to the door, with Iberdrola (Scottish Power) none to healthy either. Imagine the reaction if Big 6 were to become Big 5 one fine morning: who'd be investing their billions the day after that ?
Meanwhile, back at the populist soap-box we have Ed Davey stirring things up instead of calming them down. Ironically, on the same day we also have Cameron spouting this:
Growth depends not just on Government policy but one wider social attitudes towards commercial success, he said. “We need a bigger and more prosperous private sector to generate wealth and pay for the public services we need. That means we need to support, reward and celebrate enterprise,” he said. “That requires a fundamental culture change in our country. A culture that’s on the side of those who work hard, that values that typically British, entrepreneurial, buccaneering spirit, and that rewards people with the ambition to make things, sell things and create jobs for others up and down the country.”And that's the perverse political climate of double-think in which the Big 6 must go about their business. Let's not imagine they won't one day, one way or another, respond quite badly to the kicking they get.
** remind me - was EDF's vertical integration in the UK achieved by acquiring British Energy ? Oh yes indeed. And was EDF advised by Gordon Brown's brother ? Well, now you mention it ...