Energy crisis: more millions to prop up the privateers
Taxpayer cash will shore up monopoly profits while workers shiver this winter.
Furlough is a fading memory, the cut to universal credit stays, food banks are overwhelmed, ambulances queue outside hospitals and winter looms. And still the domestic price of energy keeps rising by leaps and bounds, encouraged by Ofgem’s decision to jack up the energy price cap in response to the radical hike of wholesale gas prices.
Now it might seem that on this last problem, at least, the government is preparing to intervene, even going so far as to draw funds from the public purse to sort out the energy mess. However, it turns out that the beneficiary of this intervention is not going to be the thousands of poor families who will be forced to choose between heating their homes and putting food on the table. The cash is not going to increase the Warm Homes Discount deducted from energy bills.
Instead, it will be spent propping up the privatised energy supply industry. Sooner than address the economic disaster impending for the poorest sections of the working class, taxpayers’ money is to be wasted in yet another futile attempt to keep alive the pretence of a ‘free market’ in energy provision.
The reality is that when the energy industry was privatised back in the 1980s, the dream of companies competing with one another in the provision of energy services, to the benefit of a suitably grateful public, soon soured. The ‘free market’ vision was dispelled, revealing in its place half a dozen monopolies busily engaged in setting up price-fixing cartels to fleece the public.
It was as easy as shooting fish in a barrel, with a captive customer base defenceless against ruthless overcharging.
So blatant was the insatiable greed of these companies becoming that in 2019 Ofgem tried to rein them in, introducing energy price caps across the board and encouraging the public to get savvy about switching from supplier to supplier, supposedly to keep the monopolists on their ‘free market’ toes. It looked as if the ‘free market’ was back in operation (thanks to state intervention!), with small-scale suppliers offering deals to customers that put a downward pressure on bills overall.
But all that it has taken to collapse this delicately rebalanced house of cards has been a temporary glitch in global gas supply and a consequent spike in wholesale gas prices.
Many of the competitive tariffs offered by the new kids on the block depended on wholesale gas prices on the spot market remaining stable. When those prices went through the roof, it proved impossible to honour the cheaper tariff promises and many suppliers went bust.
Since the beginning of August 23 such companies have folded, leaving over 3.7 million households in a state of limbo.
The government hoped to palm off these customers onto the surviving companies like some poor waifs and strays, but the monopolists are pushing back, not happy with the idea of supplying gas to someone else’s customers under the bargain basement terms previously agreed to with the failing company, moaning that each customer they absorb under Ofgem’s ‘supplier of last resort’ scheme could cost them hundreds of pounds a year.
Instead they are pushing for the establishment of a so-called ‘bad bank’, funded out of the public purse (naturally), to take the hit and hoover up unprofitable customers from their failing rivals, leaving the big hitters free to keep ripping off the public unimpeded.
Which brings us to the case of the energy supplier Bulb, the most recent victim of the crisis. Unlike many of the small fry caught in the net, Bulb was a growing company, the seventh-largest and, in the classic phrase, ‘too big to fail’. Letting it just go to the wall would tear a gaping hole in the energy supply industry that would be hard to mend – other than by (perish the thought) abandoning the whole ‘free market’ set-up and restoring public ownership.
“The UK energy crisis has claimed its biggest victim with Bulb, Britain’s seventh-biggest supplier, to enter special administration backed by taxpayer money. The company said on Monday it had made the ‘difficult decision’ to support being placed in a process unique to the energy sector that will allow it to be run temporarily while alternative providers for its estimated 1.7 million customers can be found.
“One government figure acknowledged that taxpayers would end up having to pay hundreds of millions of pounds to support Bulb through the administration and beyond, saying the precise cost ‘depends on the length of time it remains in this state’.” (UK energy group Bulb to enter special administration by Nathalie Thomas, Jim Pickard and Arash Massoudi, Financial Times, 22 November 2021)
Millions to bail out the privateers, but no spare change even to increase the amount families can claim through the grudging Warm Homes Discount scheme. This is how capitalist Britain stands at the end of 2021.
