The energy regulator, Ofgem, says that retail gas prices have been fairly stable since , after adjusting for inflation, while retail electricity prices steadily increased in real terms between and It also said that there had been a noticeable decline in energy consumption, which would be expected to reduce bills as households use less energy.
This is the breakdown of where the money in an average dual-fuel bill is going. The National Grid says that only about three percentage points of that is down to its transmission costs, with the rest going to the companies that distribute the energy.
Shadow energy secretary Rebecca Long-Bailey says: "Companies have been able to post huge profit margins. The Competition and Markets Authority's report on the sector suggested that a 1. The government criticised Labour's plans for leaving politicians in charge of keeping the lights on, and added: "Through measures like our energy price cap, the Conservative government will continue to protect people from unfair bill rises, while increasing renewable electricity to a record high.
The two most prominent cases of recommunalization in Germany have taken place in Hamburg and Berlin, where Swedish energy utility Vattenfall lost its contract after around a decade of operations, and the city purchased the local electricity grid from Vattenfall for million euros. Similarly, in a referendum , Berliners, or 83 percent of the electorate, voted in favor of recommunalization. After lengthy legal disputes, the Berlin Senate announced in early March that the state-owned company Berlin Energie will be awarded the contract for the power grid license and thereafter responsible for Berlin power grid operations for the next twenty years.
Recommunalization has become part of a larger movement of consumer empowerment in infrastructure sectors.
Around 1. In , almost 17 MW peak of solar tenant electricity from approximately realized projects and planned projects were recorded. The existing installations supplied around 10, residential units with renewable electricity, many of them organized in local energy cooperatives. In rural areas, bioenergy villages strive for energy autonomy, often with combined heat and power plants fueled by local biomass, and sometimes complemented by photovoltaics and solar thermal panels.
As of March , communities are registered as bioenergy villages in Germany. Lest it appears that we imagine only the purest of intentions in this, a reality check is warranted. Could recommunalization thus lead to a reversal of the efficiency concerns that motivated those drivers of the Washington Consensus? Instead, it heralds the emergence of a new balanced position which combines use of markets, democracy, and planning to reach decisions which may be both efficient and more socially optimal.
There are promising, grassroots trends that herald a different way for municipal management of public infrastructure services. Increasing citizen engagement in a decentralized and participatory system of governance, coupled with digital decision tools, such as e-government fostering more transparency, spell greater accountability for politicians and managers of critical infrastructure providers.
With digitalization, power can be brought back to the people. Surging power prices are having savage consequences for household discretionary incomes. Judging from the pronouncements of government and industry — including mainstream economists — privatisation is the practical solution to achieve low prices. Indeed, Australian state governments have embarked upon privatisation programs to varying degrees since the s.
There is only one small problem with privatisation: the long-term history of the electricity industry has shown it almost always leads to disaster. It supplies much needed historical context to the battle between public and private ownership played out over more than one hundred years in the United States and Britain, and the last couple of decades in Australia, Brazil and India. Beder shows throughout this history, industry practised the modern art of propaganda, conducting public relations blitzes to convince consumers private ownership was superior, despite public anger with poor service and unjust pricing.
Although industry attempted to equate public ownership of electricity monopolies with communism, they had no principled dispute with monopolies as long as ownership, control, profits and decision-making were private. Australian governments once wholly owned the four sectors comprising the electricity industry: generation, transmission large networks , distribution local networks , and retailers.
These sectors have been split into competing firms and spun off. The natural monopoly character of the electricity industry makes designing competition difficult. Generators have large fixed capital costs, meaning oligopolistic competition will feature. In transmission and distribution, duplicative infrastructure is wasteful and precludes competition.
A primary argument for privatisation is the issue of moral hazard under public ownership. The four PMAs have one thing in common: they all receive benefits not enjoyed by private utilities.
The main customers of the PMAs — local government utilities and rural electric cooperatives — also receive special benefits. The PMAs enjoy preferential financing compared with private businesses. Some of them receive federal appropriations for capital investment, which must be repaid but in a subsidized manner.
PMA customers — the local utilities — have financial advantages as well. Utilities are often heavy borrowers, so this is an important advantage. The RECs receive numerous financial benefits from the government, including subsidized loans and loan guarantees from the U.
It pays hundreds of millions of dollars a year in federal and state corporate income taxes, which in recent years have averaged 8. The uneven tax treatment of the electricity industry in different regions of the nation is unfair and distortionary. Property taxes also create uneven treatment. In many states, they are some of the largest property taxpayers. Congress passed a major tax reform bill in The way to fix the problem is to privatize the PMAs and federal hydropower facilities, while ending subsidies to the RECs and requiring them to pay income taxes.
Those rules were based on misguided notions that it was somehow unfair or inefficient to earn profits on the sale of power. Put aside that PMA costs are likely bloated by the inefficiencies of government operations.
The lack of profits means that PMA owners — the American public — are being shortchanged because they are not being paid a sufficient net return for their investment in productive assets. The EIA produces an occasional report that tallies the subsidies going to each part of the energy industry. What are the effects of subsidies to the PMAs? PMA rates are low partly because the utilities rely on inexpensive hydropower. BPA rates were 38 percent lower than the average rates of nearby utilities, which also depend on hydropower.
Artificially low prices might be good for PMA customers, but they induce customers to overconsume power, which in turn raises the demand for generation. As for the RECs, they are definitely not green. Federal ownership of the PMAs and hydroelectric plants is out of step with the modern economy. Rural America was put on the electric grid decades ago, so rural power subsidies are not needed today. Also, the subsidized and monopolistic federal power entities make less sense in an industry that has been moving toward deregulation and competition in recent decades.
The reforms have succeeded. Academic studies have found that privatization increases operational efficiencies, improves capital investment, and enhances customer service. In a book, finance professor William Megginson examined privatization in dozens of countries.
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