Pincer movement has Britain in grip of an energy crisis

…For years successive governments, both Tory and Labour, have been in the thrall of the free market, claiming that Britain’s liberalised energy regime was the envy of the world. For a while, they were right.

EnergyWatch, the consumer body, says that between 1996 and 2001, bills were 40 per cent lower in the UK than on the continent. The break-up of the Central Electricity Generating Board by Conservative governments in the 1980s and early 1990s looked to be a rip-roaring success. Remember PowerGen, Eastern Electricity, Seeboard, National Power, Scottish Power, Southern and the host of smaller entities created by the privatizing zeal of the Conservatives?


But as in many other areas of business, Britain played by free market rules, while others didn’t. A consequence of our openness was that it attracted predatory interest from the monopolistic power giants of Western Europe, which acquired large chunks of its industry, tantalisingly free of state protection. Npower is today owned by RWE, the former state-run German utility. Four out of six UK power companies are foreign-owned.

And while Britain was dismembering its utilities, separating supply and distribution companies from electricity generation and transmission, continental operators kept their empires intact under the eye of friendly governments. They agreed only recently to partial liberalization following intense pressure from the European Commission.

What has all this got to do with higher energy bills? EnergyWatch’s
chief executive Allan Asher says it is no coincidence that after the rash of continental takeovers at the end of the 1990s, British customers now face paying as much, if not more, than their European counterparts. ‘We have been exposed to the illiberal markets of Europe where the price of gas is linked to the price of oil, a linkage that Britain was shielded from in the past and which is wholly artificial,’ he says.

Guardian