CPS head of economic research Daniel Mahoney writes for City A.M. on the economic bulletin “Are We Heading for Blackout Britain?“, Thursday 29 September 2016.
To read the full article, visit the City A.M. website.
Today, the government will release its monthly statistics on total energy production in the UK. This new data will no doubt reflect the poor state of the UK’s energy system, which has suffered from a series of highly damaging state interventions that have burdened consumers with unnecessary costs and left the UK with a worrying level of energy insecurity.
In the post-Brexit world, many will be asking whether Westminster or Brussels is to blame for the UK’s shambolic energy policy. In reality it is both.
The UK government has implemented a series of unilateral measures which have dramatically raised costs for energy consumers. The Carbon Price Floor, for example, forces generators of fossil fuel-based energy to pay a carbon price over three times their EU counterparts.Furthermore, the government’s promotion of renewable energy has been a charade. Rather than using market mechanisms to determine the construction of renewables, the government has been centrally planning decision-making.
If you include renewable energy subsidies along with associated network and other costs, consumers will be paying £466 per household by 2020-21 for the government’s renewables policy. And this figure could end up being even higher, given that the Office for Budget Responsibility estimates that the subsidy limits could be 20 per cent over the forecast cap by 2020-21.
This does not even include the latest deal on Hinkley Point, which has united climate sceptics and green activists in opposition. EDF is being offered a guaranteed strike price for Hinkley’s energy of £92.50 per MWh, which is around double the current wholesale power price. This extraordinarily generous deal will run for 35 years, and will be indexed-linked to the CPI measure of inflation.
To read the full article, visit the City A.M. website.
Date Added: Friday 30th September 2016
