I want cheap energy. I have tried various proposals to bring this about, all to little avail so far.
The Chancellor and Prime Minister now want cheaper energy. It is good to have powerful allies. So why can’t they just fix it?
The reason is simple. All the time we are in the EU and bound by its laws, there is strong pressure for dear energy. We are under several legal requirements which necessitate dear energy.
The UK has been forced to close a number of coal and oil fuelled power stations which provided relatively cheap electricity, to comply with an EU emissions directive. I have urged the government to seek a temporary exemption whilst we sort out new ways of generating affordable power, but Mr Davey the Energy Secretary has not done so. There is no guarantee we would get such a derogation, but surely it would be worth a try? If we could demonstrate without these older stations we might run out of power we could just ignore the Directive on grounds of security of supply and overriding national interest if they refused to see sense.
The UK signed up under Labour to an extremely expensive renewables obligation. The UK is having to expand its output of renewable power massively. This is expensive power to provide. The more we rely on it, the higher our bills go. Much of it is interruptible, so we also have the extra cost of back up power sources for when the wind does not blow or the sun is not strong enough.
The UK also signed up to carbon reducing requirements which reinforce the move to dearer energy.
Labour signed up to these laws under Mr Miliband as Energy Secretary. He told us at the time that it would mean dearer energy, but he thought that a price worth paying to have a pioneering carbon reduction policy. Now he says he wants energy prices frozen, regardless of the rising costs of renewable energy as the proportion of it increases, and regardless of the costs of gas or oil on the market. Under pressure has had to agree his freeze policy could not work if world energy prices took off during the freeze.
Nor can they work on the figures. The typical profit margin of a large energy company in the UK is 4%. If all companies worked for no profit at all – not something that of course can work – they would still need price rises now to hit breakeven, given what’s happened to costs. Mr Miliband is trying to offer people something for nothing. He is seeking to spend far more than the current profits of the energy companies. He needs to grasp that if investors think the relatively low margins of the majors are going to be slashed, there is not much point in investing in UK energy. Who will then build or the new and replacement capacity we need?
So what should we do? The UK government should go to Brussels and explain we need to have a dash for gas and other cheaper energy. The UK will do this regardless. We would be happy to contribute to a revision of EU law to make it legal and to help other EU countries also damaged by dear energy. If not, the UK will simply have to take action on its own. It would be part of our renegotiation. Our country needs cheaper energy. It is an overriding national interest. I see from the remarks of the Industry Commissioner in Brussels there are some in our EU government who understand just how much damage the EU’s energy policy is now doing. It is pushing much industry and business out of the EU to places where energy is cheaper.