Tuesday, April 9, 2013
Energy crisis? The answer is obvious: renationalisation
This piece by CPO co-founder Neil Clark, on privatisation and the 'Emperor's New Clothes' effect, appears in the Morning Star
.......Another good example of the Emperor's New Clothes effect is the current "debate" about soaring gas and electricity bills and what the government should do about them.
The "experts" tell us that we need more competition in the energy market. We need more regulation.
We need the government to "get tough" with the utility companies and make it easier for us to switch providers.
But the reason why our utility bills are so high and continue to rise year after year above inflation is a simple one indeed. It is the same reason our rail fares are so high and continue to rise year after year above inflation. It's called "privatisation."
You can read the piece in full here.
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The main cause of high prices is total retail deregulation / "liberalisation" i.e. fragmentation and huge business risks on generators which can lose their entire market tomorrow. This has applied since about 1999.
From privatisation until 1999 we had retail monopoly regulation of energy as we still have for water. It was definitely less bad and with a strict regulator it could be quite good for consumers. This costs nothing whereas a return to public ownership is difficult because unlike the rail franchises the franchise length for gas and electricity is infinite.
The main possibility I see is to issue bonds which are hypothecated and raise enough capital to bring back into public ownership. But please, regional or local ownership as in most other countries and not nationalisation.
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