Energy Price Freeze Announced

By Paul Homewood

 

 image

https://www.dailymail.co.uk/news/article-11193045/Energy-bills-frozen-2-500-TWO-YEARS-says-Truss.html

We’re still waiting for a lot of detail, but there’s a few snippets of interest:

First of all, fracking is back on the agenda, as well as a boost to North Sea oil and gas exploration:

 

image

There’s support for business too for six months, but will this also apply to gas generators, which would help to bring down the wholesale electricity price?

 

image

Green levies are to be suspended, which means transferring them to the Exchequer, which is where the belong, as they are a consequence of government policy.

image

Labour are inevitably pushing for a windfall tax on “energy giants” (translation – Big Oil. Nobody in Labour appears to have realised that the really obscene windfalls are being by by renewable energy businesses.

But as Guido points out, North Sea oil is already being taxed to the gunnels, and left wing talk of £170 billion of excess profits for the energy giants, a figure frequently bandied around by the idiot Ed Miliband, applies to global energy businesses, most of which are registered abroad.

image

This bit is interesting. One of the failures of public policy in recent years, both here and in Europe, has been the neglect of the need for long term contracts for gas, relying instead on spot markets:

 

image

And here’s the crux of the problem:

 

image

 

As I have been arguing, renewable generators need to be weaned off ROC subsidies, and put onto CfDs instead, along with other non gas generators like nuclear. The problem is how to “persuade”, when they can all currently make huge profits. In my view this can only happen if the government threatens to withdraw all ROC subsidies and make life as difficult as possible for them.

Deals for nuclear can probably be struck if the plants are offered a long term supply contract, to buy all of their output.

I have seen comments in the media, by the way, that price freezes simply discourage businesses from increasing supply. This is nonsense, at least as far as this arrangement goes, because it does not restrict revenue for suppliers; on the contrary such revenue continues to be topped up by taxpayer subsidies.

I have also seen it argued that higher prices will “encourage” energy savings. Forcing people to switch their heating off is not my idea of a rational policy.

Whether such subsidies are sensible in the long run is of course another matter – but we are where we are because of years of incoherent energy policy. The alternative, a complete meltdown of the economy, is not an attractive proposition.

via NOT A LOT OF PEOPLE KNOW THAT

https://ift.tt/JcOkl96

September 8, 2022 at 01:49PM

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s