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UK Energy Policy/Price scandal – outages due

(41 Posts)
Isitmebut Thu 30-Jan-14 19:17:22

In late 2012 Ofgem in their first annual Electricity Capability Assessment, warned that Britain is running out of energy generating capacity, as the spare capacity would fall from 14% then, to 4% by the winter of 2015-16.

But in actual fact the crisis was worse than Ofgem feared, as we could have had power outages during the CURRENT winter, as the energy giant SSE warned, but the national grid denied – but whatever, it is getting too close for comfort..

So why in a bad winter within a few years, could the UK be like some third-world emerging economy, where power outages may have to be managed/rotated throughout Britain?

Firstly it will not be because ‘the market isn’t’ working’, it is as Ofgem states, a capacity problem and that we needed to secure £150 billion to replace aging/closing reactors and infrastructure - unlike France whose nuclear power generation had FALLEN to 75% of their energy generation - allowing much CHEAPER electricity to their population, than here.

The problem is with nuclear reactors is there is no quick fix as it takes around 10-years of planning and building, to generate the first megawatt to replace lost supplies and alleviate potential power outages, so by that measure alone, firm decisions should have been made in the early 2000’s and the ground broken.

So what expertise did the UK have in building our own new energy generating capacity? We had a company called Westinghouse, but we decided to sell it in a multi company bidding war to Toshiba of Japan in early 2006, at a price of £3.1 billion, and how pleased the government were – despite Tony Blair saying in 2005 “nuclear power is back on the agenda with a vengeance”.

Next, how come via the bidding process and cunning plan to get the Private Sector to fund our (Ofgem calculated £150 billion) nuclear reactor/infrastructure building programme, were we left relying on the French State, via EDF the French government owned nuclear energy company, to fulfil our national energy needs, clean up our nuclear waste and stop the UK’s lights going out – in a huge Private Finance Initiative type funding, that has saddled our schools and hospitals with annual debt service bills for decades to come – and selling off of to EDF British Energy for £12.5 billion?

Interestingly, did Blair and Brown think that they had an important ally within EDF, as Gordon Brown’s brother Andrew Brown had become a Director of Media (later Corporate Communications) within EDF in 2004, despite admitting he didn’t know too much about energy before he got there?

Well in a government White Paper in 2008, Mr Brown said that “it will be for energy companies to fund, develop and build new nuclear power stations in the UK, including meeting the full costs of decommissioning and their full share of waste management costs”. And Mr Riaz of EDF confirmed that all costs WOULD be borne by EDF.

Did anyone within the government ask back then WHY & HOW the private sector would be able to take all the costs of building nuclear reactors – when the financial crash had restricted most companies from accessing cheap finance?????

Well we are now in late 2009, with Labour and Mr Miliband, responsible for energy, realising the light were likely to off in several years, was starting to panic, AS EDF WERE SAYING THAT NO NUCLEAR POWER PLANTS WOULD BE BUILT IN THE UK WITHOUT GOVERNMENT FINANCIAL SUPPORT.

So when Labour left ‘power’ in mid 2010, this was their legacy; “the money had all gone”, our own nuclear expertise sold off already (but Westinghouse now of Japan will be subcontracted by EDF to build nuclear rectors here) - so the French State (EDF), energetically now had us by the goolies – as their was no PFI type contracted price for electricity generated at the beginning, for a NEW GENERATION NUCLEAR REACTOR that is YET to be built and tested, for maybe a year or so.

Isitmebut Thu 30-Jan-14 19:19:56

Part 2.

So the sheer hypocrisy of Miliband, the last Labour Energy Minister, in leaving the country (and coalition) in such a position of energy weakness, for THEN blaming Cameron for the fixed £92.50 price of future electricity prices AND being too close to the energy companies, has no bounds – ESPECIALLY as he says that Labour can control energy prices, of the energy that thanks to Labour incompetence over a decade, we won’t have unless the French, Chinese and heaven knows who else, pays for BUILDING it – and will demand a fixed price for energy generated, in doing so.

And what is the estimated wholesale cost of electricity NEXT YEAR for the ‘green alternatives’ that again thanks to Labour we have nowhere near enough off? Onshore wind £100 a kilowatt hour. offshore wind £155 a kilowatt hour and Solar £125 per kilowatt hour. Now we are told that those prices will come down, really, in a supply and demand market, when?

Fracking is clearly no short term answer, but in the years to come, we need options on all the energy source/supply/price permutations we can get.

ItsAllGoingToBeFine Thu 30-Jan-14 19:22:04

A record two fifths of electricity used in Scotland came from renewables last year, official figures have revealed.

UK government figures showed 40.3% of energy consumption in 2012 was met by the sector - up from 36.3% the previous year and 24.1% in 2010.

The Scottish government said it was on course for half of electricity use to come from renewable sources by 2015, an interim target ahead of the goal of having the sector generate 100% of the country's electricity by 2020.

Scotland continues to produce more energy than it uses, with more than 26% of electricity generated here last year being exported, figures from the Department of Energy and Climate Change showed.

No energy shortage here...

Isitmebut Thu 30-Jan-14 19:36:58

"No energy shortages here".

Envious Of England here, although we clearly have something you need.

What currency are you going to get paid in, the Euro, U.S. Dollar, or the Groat? Sorry, only jealous.

Spinflight Tue 04-Feb-14 13:41:11

That's because Scotland is on the national grid... Otherwise when the wind doesn't blow you will indeed have shortages.

Miliband's tax seems to be badly understood, and makes his pledge to freeze energy prices even more dangerous and dishonest in my opinion.

Whilst it is true that "only" fifty pounds or so of the average bill goes towards his tax this is used to subsidise the creation of more wind farms.

Hence your fifty pounds or so creates more expensive energy, which puts bills up, which raises the amount of tax paid, which creates more wind farms, which raises the price of energy, which means you pay more tax.....

In short it is designed as a feedback loop and one which has put the majority into energy poverty within a few years.

HollyHB Tue 04-Feb-14 20:38:17

It's an EU wide thing. A repeat of California in 1999. It is all about making obscene profits. And obscene profits require people to pay obscene prices, which they will be keen today after a the odd week here and there of blackouts. But not until.

No electricity doesn't just mean you can't light your house without risk of burning it down; nowadays it also means you can't pay your bills and so you get hit with penalties even if you have money in the bank.

Optimisation of profit is incompatible with reliability of supply, that is why electricity was nationalised in the first place.

Scotland will be OK as to electricity if it goes for independence. Hunsterston and Torness are both good through at least 2023.

niceguy2 Tue 04-Feb-14 21:21:20

Actually I disagree that this is about profits. This is the failure of politics.

Environmental friendly energies are expensive and whilst we all want to be green the reality is we don't want to pay for it. Look at the outcry when our bills went up recently.

Nuclear energy is relatively cheap, efficient but power plants are complex to build and take 6-8 years to build. So for us to have enough power in 2015-2016 the politician's really needed to decide around 2005-2006 to allow for all the planning permission, objections, protests etc that would inevitably surround the construction of new nuclear power plants.

Blair & Brown bottled out of the decision for various reasons including the financial ones linked above.

The problem is that in a few years time when we do start running out of power, people will blame the current government rather than the fact a Labour govt over a decade ago wussed out of doing the right thing.

HollyHB Tue 04-Feb-14 23:03:27

It's certainly true that we are headed toward the cliff with the accelerator pedal down hard.
To overcome the failures due to shortage would take a crash programme of both extending the life of existing plant and building new. In reality neither will happen unless demand falls a lot. The plan then is to have demand fall a lot by pricing electricity such that ordinary folk can't afford more than a very little of it. That is the inescapable long term consequence of having sold off the public asset that was the CEGB over the period 1991 to 2001.

HollyHB Tue 04-Feb-14 23:06:52

But Scotland will be OK. A full 50% of Scotland's power is nuclear and is secure for more than 10 years.
Right now a lot of electric power flows South, from Scotland and from Northern England. That may change if things get extreme.

Isitmebut Wed 05-Feb-14 17:19:01

"That is the inescapable long term consequence of having sold off the public asset that was the CEGB over the period 1991 to 2001."

HollyHG...please explain how this caused the problem, rather than 20 energy companies becoming 6, with less competition as well as shrinking energy supply capability?

Labour had 13-years to sort this out, chose to spend OUR money elsewhere, usually on fat, inefficient government, hence (as mentioned in my opening post) in 2008 Gordon Brown had insisted that the Private Sector picked up the tab for building around £130 billion worth of nuclear reactors – and that they’d be paid back how, if not via the increased charges for businesses and consumers for electricity?

And this electioneering sham of ‘facilities now, pay for it over decades;’ was a well trodden New Labour path via the Private Finance Initiative (PFI), trying to use previously effective capitalism for its political ends, but screwing it up – similar to the City and investment banking profits/tax receipts really.
^“PFI deals became popular in government from the end of the 1990s, under the then chancellor Gordon Brown, because they allowed ministers to secure large sums to invest in popular projects, such as new schools and hospitals, without paying any money up front.

Repayments are made over a long time scale, usually between 25 and 30 years but occasionally as long as 60 years, but at a high rate of interest.

That meant that large debts were stored up for future taxpayers – which now have to be repaid.”^

doitmyself Wed 05-Feb-14 17:25:35

What does this actually mean for the average bod? I agree that our energy policy has been short term and ill thought out but are we really facing actula blackouts in the average home? What will happen to those on oxygen pumps/dialysis/medical equipment at home? Why arent brightly lit shops and offices made to turn it off at night?

Isitmebut Wed 05-Feb-14 17:48:18

Currently the danger over the next few years is if we have a severe winter, that takes us over our current spare capacity - meanwhile numerous energy saving measures are being taken by the power companies and individuals.

HollyHB Wed 05-Feb-14 21:14:59

Itsme - I agree with you that the blame lies as much with the Labour Party, and quite likely more so. Although the disastrous sell off of the CEGB started an John Major's watch the Labour government did nothing to fix things. In fact as you rightly point out with PFI they made it a lot worse.

It's not as if this wasn't seen coming for a long time. Power station life is on the order of 35 years. Lead time to new build is at least 5 years, typically 10 or more. The chickens are only now coming home to roost.

doit - it means that some blackouts are inevitable at some point and emergency measures will have to be put in place to cope with life critical systems. Blackouts have always happened, but the frequency of them will go up and some will be predicable ahead of time.

What bothers me is that no electricity means no internet and society has foolishly allowed itself to become dependent on a working internet since 1991.

This is what you get when all of society is concerned with short term gains. An economy that consists of financial services (also know as loan sharking) and not much else.

Spinflight Wed 05-Feb-14 22:58:14

I believe the recent claim is that there is no shortage of generation capacity as they will merely use diesel generators situated in hospitals and the like to cover any shortfalls....

The mind boggles...

VoiceoversSoundSmug Wed 05-Feb-14 23:02:55

People who rely on electrical medical support can go on a "special" list. I am on one, I have no idea what it means though.

funnyossity Wed 05-Feb-14 23:10:31

Yes it's a failure of politics. Shameful.

Isitmebut Thu 06-Feb-14 11:00:35

Questions should be asked in parliament why Brown sold the UK’s own Westinghouse, the nuclear power plant builder/supplier, to Toshiba of Japan in 2006, when we were losing so much manufacturing/industrial jobs in the mid 2000’s AND had such a huge need for nuclear energy ourselves..

EDF is owned by the French State, why couldn’t we have invested in Westinghouse to supply our own needs and export that expertise, heaven knows we need to boost stuff we make and makes a mockery of Labour’s old complaints of selling off public/utility assets – especially as EDF is likely to sub-contracts a few plants to Westinghouse to build in the UK.

Spinflight Fri 07-Feb-14 00:19:10

Tories would have done the same..

HollyHB Fri 07-Feb-14 01:34:44

Yes Spinflight, the Tories would indeed have done the same. There is more than plenty blame to go round.

But the issue is - how do we fix it? And that has to begin with admitting that there is a problem to fix. Do we really have to suffer massive blackouts for days on end without light or internet before we get the message? I fear we do.

I used to be a technical writer for the electricity industry quite a few years ago. No-one in that industry has been in ignorance but management focusses exclusively on this year's profit.

funnyossity Fri 07-Feb-14 10:10:08

It has been reported on but no-one in government appears to be doing anything - is that a fair summary?

Isitmebut Fri 07-Feb-14 10:39:24

Funnyositty…no that is not a fair comment, as although our last Energy Minister (Miliband) left office without managing to sign an agreement with their EDF, Cameron did, hence as per my second post on this thread, a future fixed price of £92.50 was set – but they still take several years to build.

Oh and as EDF were still trying to squirm out of their head man Riaz confirmation to Brown in 2008 that they would fund themselves, Cameron secured the additional finance from the Chinese on one of his visits.

Cameron has to play the stacked nuclear card deck he was handed – including the EU now wanting to investigate if such deals Brown and Miliband set us up for e.g. State subsidizing industry, that Cameron just signed, is ‘fair’ or not.

Isitmebut Fri 07-Feb-14 15:45:54

Spinflight…sorry, just saw your post; re your “Tories would have done the same”, that is very doubtful as they were actively trying to reduce UK debt after the early 1990’s European/U.S. recession, so PFI type finance was used relatively sparingly, and therefore £130 bil of borrowing for nuclear reactors was not planned, unless you find different.

Remember Brown was only trusted in 1997 as he promised New Labour was different to the Old version, so New Labour adopted Conservative debt reduction budgets until 2002/3, which funny old world is when the annual budget deficit virtually balanced – and the Brown spending splurge started around then.

So would the Tories had spent £70 billion a year on new Quangos and other fat government, certainly not, they had reduced the size of the State/public sector throughout the 1990’s, Brown increased it by over 1 million employees from 1997 to 2010 – with the extra future pension liabilities for generations to come.

Therefore from the budget/spending ‘known, knowns’, the Conservative priorities were very different to Browns.

HollyHB Fri 07-Feb-14 16:35:50

There is one very good piece of news on this topic this morning -
Swansea Bay £850m tidal lagoon plan submitted
Good because lead time is less than nuclear (even though it's only a relatively small project and less than quarter of the power of a nuclear site) and also if it were successful a similar project could be the long term solution to the Somerset flooding (so it must be politically popular right now).

funnyossity Fri 07-Feb-14 16:40:13

Jim Ratcliffe compared that price to the negotiated price of under £40/MWh from French nuclear, showing the uncompetitiveness of Hinkley C. Sobering.

Isitmebut Fri 07-Feb-14 20:09:19

When was the £40 price negotiated (and not signed), when power price were cheaper and promises were plentiful - but also turned out to be ‘cheap’ from 2008 on?

France historically was falling over nuclear energy, up to 90% of their usage at one point, if memory serves, and now closer to 75% - and both businesses and consumers get cheaper electricity than us - as I believe our nuclear energy is down to around 10% of our usage.

In fact France’s socialist government at the last election promised to close down capacity, but not now.

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