IT’S been written in the papers that Liz Truss has cancelled the Government attempt to help people reduce their energy consumption.
That does seem very wrong given that we are all subsidising our collective energy bills now on long term government debt...
I do, however, welcome the Government’s delayed announcement of support for household and businesses energy costs. But so far it is only a sticking plaster to limit the unit energy cost, and hopefully the total bill for now, it doesn’t fix the broken system.
We must have some long-term action on the broken energy market. It can’t be that we simply spend up to £100bn supporting the old system – after all as the PM said – ‘The status quo is not an option’.
But how to fix the energy market? I will be standing to become your MP for Newton Abbot at the next general election, and this is what I would look to do: Firstly, we must immediately build more renewable sources: making it easier and relaxing planning constraints for solar panels on roofs, and wind turbines, offshore and onshore. Also, we need to be investing in research on tidal energy and green hydrogen production via electrolysis using surplus electricity generation.
And of course, better insulation in our homes and workplaces. If the Government wanted to do so, at a stroke they could order the big housebuilders to improve insulation standards for new homes, install rooftop solar panels and batteries and largely eliminate gas boilers. If we did this as a country, we really would be building homes for the future. Here in Teignbridge, we have proved it can be done with our modern council homes.
Next, we have to de-link the cost of electricity from the rising cost of gas. But why is it linked at all? The argument is that sometimes gas must be used to top up the generation of electricity if Wind and Solar aren’t providing enough power. This theory of ‘marginal pricing’ says that to guarantee supply we must pay for all of the electricity as if it were generated from expensive gas rather than the cheaper renewables. This may have been rational once, but the idea has outlived its usefulness.
To guarantee electrical supply when gas is so expensive it makes more sense for the government to just subsidise the cost of electricity generated from gas when it is needed, instead of all electricity from renewables as well at its maximum theoretical cost. That would reduce the cost to the taxpayer significantly.
Then we need to change the tariff structure. We need to reduce our overall energy use. We also need to ensure that the basic cost of keeping a home warm isn’t at the most expensive units used as it is today.
Get rid of the standing charge, and have the first units of power cheaper, and then have units become increasingly costly as a household uses more. And lastly we have to have the hardest conversation.
Doing a deal with the oil and gas producers who are exploiting the UK’s oil fields. Oil companies don’t own the North Sea, the country does, through the Government. Big oil companies buy a licence to exploit an oil field, and UK Government has some continuing control over them.
We need a deal to agree to pay the oil companies a fair price – perhaps what it was last year rather than the price on the open market inflated by Putin’s war on Ukraine – and that the UK gets first call on what they produce.
This will curtail their profits back to what they were expecting. They will agree to a fair contract since the alternative is a windfall tax.
Most of the work involved is in amending contracts and agreements – but it can be done and won’t cost anywhere near the original £100Bn.
That means that if we spend even a fraction of that on growing our renewable generation we will be investing in our future, rather than simply subsidising the status quo – which as the new PM said is not an option.