Power to the people

The big energy companies are hiking their prices, would we be better off without them? Photo: Telegraph.co.uk

Britain’s energy supply is far to important to be left in the hands of private companies putting profit before people.

Since the wave of privatisation in the 1980s, private companies has exploited their monopoly-like position to hike bills and their own profits, while not investing enough in the future.

In recent weeks questions about the cost of living and how the energy sector is run have dominated media headlines. The Labour party and it’s leader Ed Miliband have succeed in putting these issues on the agenda and forcing the government to respond. PM David Cameron told the House of Commons that he wanted an immediate inquiry into competition in the energy industry.

The “Big Six” energy companies are currently being grilled by MPs in the Commons Energy and Climate Change Committee but E.ON is the only one to send their chief executive to the hearings, the other companies will be represented by senior executives. Are the other energy companies not taking the public outrage seriously? As some MPs have accused the energy companies of abusing their market position at the expense of the consumer, the companies retaliated by blaming their steep price rises on political interference.

Figures produced by Ofgem shows how several energy companies have consistently raised their prices at much higher rate than inflation even if their wholesale electricity costs has fallen. For example did Npower pay an average of £59.61 per megawatt-hour for electricity in 2010. The cost fell by 4% to £57.32 in 2011 and rose by less than 2% to £58.39 in 2012. Over the same period the company hikes the prices for their customers by 5.1%, 7.2% and 9.1% respectively.

A paper presented at the Scottish Green Party conference in Inverness in October argues that people would be better of if the state took on many of their functions for the wider benefit of society. It is written by economist professor Andrew Cumbers of Glasgow University and Mike Danson of Heriot-Watt and advocates a remodelling of the economy after the lines of the Nordic Countries. Even if the paper focus primarily on Scotland, it’s general concepts are applicable to the rest of Britain.

A state controlled energy sector could see lower bills for the consumers, as progressive pricing would  make the poorest pay less, and the rich pay more. Common ownership could also help develop sources of green energy, a national strategy would be much better than six competing companies. Why? Because the private sector is dominated by the need for short term profits to please shareholders, rather than long term strategies and the wider implications for the rest of society.

Britain must break off it’s marriage to a dysfunctional energy market and establish a new set of strategies and public ownerships to secure just prices for consumers and the use of resources to meet social needs.

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