Our broken energy policies need reform – but don’t hold your breath– Jeremy Warner

By Paul Homewood

h/t Philip Bratby

Jeremy Warner follows up on the Helm report:

Theresa May was quick to endorse the findings and recommendations last week of a review into mental health in the workplace – Thriving at Work – by Paul Farmer, the chief executive of Mind, and Dennis Stevenson, a former HBOS chairman who has been refreshingly open about his own mental health issues. And rightly so. For whatever reasons, mental illness is a growing scourge, and must be treated much more sensitively by employers.

There was a less fulsome welcome, however, for Dieter Helm’s equally compelling review of the cost of UK energy. Greg Clark, the Business and Energy Secretary, would say only that he was “grateful to Professor Helm for his forensic examination. We will now carefully consider his findings.” In Whitehall speak, that’s what’s known as playing it off into the long grass. Privately, some of the central ideas are already being rubbished as unrealistic. That Professor Helm apparently spent only four weeks of his own time on the report is cited as further grounds for scepticism. It should not; Helm has devoted much of his adult life to this stuff. Few know the territory better.

His report is one of those plague-on-all-your-houses exercises; he blames just about everyone for the scandal that is the British energy market – the distribution companies for engaging in financial engineering, the regulator, Ofgem, for allowing it, National Grid for the way it operates the system that matches supply and demand, and the suppliers for not properly reflecting the fall since 2014 in the price of oil, gas, coal and renewables.

But most of all he blames Government policy. The scale of multiple interventions is now so great, Helm observes, that few, if any, can even list them any longer. Complexity is itself a major cause of rising costs, and tinkering with regulation, as the Government proposes with its planned price cap, will only make things worse. But the biggest curses of all are the Government’s green and nuclear energy interventions, which through feed-in tariffs and contracts for difference unnecessarily lock consumers into what now seem usurious prices.

Most of all, Dieter Helm blames Government policy

We were told that these prices would eventually look cheap, such was the inevitability of the ever-rising cost of hydrocarbons. Then along came shale and blew all such calculations out of the water.

The now fast-falling price of renewables, moreover, promises eventually to reduce the marginal operating costs of generation to virtually zero. For the guilty men – and women – look to Ed Miliband, Chris Huhne, Ed Davey and Amber Rudd. They were the ministers who presided over this spectacularly ill-judged bet at the consumer’s expense.

For years, the likes of Centrica, owner of British Gas, have been characterised as supposedly profiteering monopolists. Ministers were only too happy to let that narrative run riot. Those who suggested the rise in fuel prices was primarily down to Government policy got shouted out, such that ridiculously, one of the few manifesto commitments to have survived the Conservative Party’s drubbing at the polls is that of imposing energy bill price caps.

To see the damage likely to be inflicted, ministers need look no further than university tuition fees, where virtually all colleges now charge the maximum £9,000 a year, regardless of quality or value of degree. Fuel bills will likewise gravitate to the cap, rendering all competition meaningless.

Since 2014, the policy-mandated costs of the average electricity bill have more than doubled to £165 a year, which is actually more than the electricity generation component itself. These costs are highly regressive; the poorest are paying as much as the rich for the decarbonisation of our electricity network. A more honest and progressive approach would be to take them out of the bill entirely, and instead charge for them through taxation, but no prizes for guessing where that suggestion will end up; in the bin, which is unfortunately the all-too-likely destination for many of Helm’s recommendations. They are far too sensible to be worthy of serious consideration.

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Warner comes close to outing the elephant in the room – the Climate Change Act. But unfortunately does not quite make it.

Still, at least this is finally getting widespread attention in the media. For far too long, those of us who have been pointing out these basic facts have been shouted down and ignored. Instead the constant lies and misinformation from successive governments, the BBC and the renewable lobby have been allowed to take hold.