PROFITS BEFORE PEOPLE

The news that the ‘Big Six’ energy cartel members are set to double their profit margins over the next year (and this is according to estimates by the regulator, Ofgem) probably won’t surprise anyone. Back in 2013, Ofgem estimated that suppliers would make an average pre-tax profit of £53 per dual fuel customer (a margin of 4%). Now, in the year ahead Ofgem expects the energy firms to make £106 per customer (increasing their margin to 8%). Naturally the cartel members have accused Ofgem of releasing inaccurate figures.

Ofgem has said that it was further evidence that the market was not working as well as it should. The big six (and the profits they make) have already been referred to the Competition and Markets Authority (CMA). Ofgem has also written to the suppliers asking why the falls in wholesale prices last winter have not resulted in lower bills for hard-pressed energy customers.

As part of the on-going struggle with the ‘Big Six’, Ofgem has also announced that electricity customers will see an average reduction of £12 a year on their bills, from April 2015. This follows plans to limit the prices that can be charged by Britain's six distribution companies, which carry power to homes and businesses. The price curbs could affect 29 million English, Scottish and Welsh energy customers. Ofgem's plans will also see the distribution companies spend £ 17 billion pounds to upgrade their networks. The distribution element makes up about 8% of a typical dual-fuel bill and is the only part controlled directly by Ofgem.

Five out of the six network companies (UK Power Networks, Northern Power Grid, SP Energy Networks, SSE Power Distribution and Electricity North West) were ordered by Ofgem to cut their prices. So far, only Western Power Distribution had its pricing and investment plans approved by Ofgem. The new energy prices will apply for eight years, from April 2015 until 2023. Ofgem will announce a final decision on the proposals in November 2014 after carrying out a consultation.

While this may bring a crumb of comfort to hard-pressed customers, it fails to address the fundamental problem with the so-called energy free market. The ‘Big Six’ can do because they are pretty much free from any meaningful and effective regulation. Any criticisms that may periodically emanate from Westminster can be pretty much ignored as the Westminster based political parties have little appetite to reform the deeply flawed energy market and even less inclination to curb the excesses of the ‘Big Six’ energy cartel members.

Meanwhile, in Wales, Plaid has been argued the case for the establishment of a ‘not for dividend profit’ company, simular to Glas Cymru which works within our water industry. This would firmly ensure that customers come before shareholders dividends and the City of London. An all Wales ‘not for dividend profit’ energy company would mean that all the profits would be reinvested back into the energy sector in our country. This would also ensure that Welsh families, households and small and larger businesses get a good deal on their energy and our country will end up with secure sustainable energy supplies.

A WELSH NATIONAL ENERGY FIRM

Plaid Cymru Shadow Energy Minister Llyr Gruffydd has rightly called for a new Welsh energy company to break the stranglehold of the Big Six energy cartel members on the energy market. Wales needs a ‘not for dividend profit’ company, along the lines of the way Glas Cymru works within our water industry. This would firmly ensure that customers come before shareholders dividends and the City of London. An all Wales ‘not for dividend profit’ energy company  would mean that all the profits would be reinvested back into the energy sector in our country. This would ensure that Welsh families, households and small and larger businesses get a good deal on their energy and our country will end up with secure sustainable energy supplies. 

Plaid Cymru Shadow Energy Minister Llyr Gruffydd said:

“For far too long, the big six energy companies have hiked their prices when the wholesale cost of energy goes up but don’t bring it down when they reduce.

“A Welsh national energy company, an Ynni Cymru, would follow the same successful model as Glas Cymru has done in the water industry.

“This Welsh energy company would buy gas and electricity at wholesale prices and sell direct to Welsh consumers and businesses.

“The company could be set up by the government at arms-length.

“Profits made would be used for protecting consumers from volatile wholesale prices and introducing energy efficiency measures to keep costs down for families and households.

“When we see that gas price hikes were the highest in Europe in 2011, and have risen consistently, then it is clear that families have not been best served by the private energy market.

“Plaid Cymru believes that we should move towards a system where investment and long-term development take priority ahead of shareholders’ profits.

“That is why at our party conference this weekend we will be having detailed discussion about the energy industry, including how we can ensure best value for hard-pressed families and a long-term energy policy for Wales.”

WILL WE BE DANCING IN THE DARK?

Despite the spin (which is clearly not working) the impression you get is that the Con Dem Coalition Government is actually quite shambolic. If you wanted a specific government department in Westminster and Whitehall to sum up the coalition then you need look no further than the Department of Energy and Climate Change (DECC). This pretty important ministry has gone through three energy ministers in the last year, which considering this ministry allegedly looks after one of the most complex areas of legislation in Whitehall, hardly suggests any minister has had time to gain an understanding of their brief. 

This resembles little more of an expense game of musical chairs. As noted elsewhere this farce is reminiscent of Labour’s approach to the defence brief, which for those who can be asked to remember managed to feature a largely forgettable cast of nonentities, something that barely made good politics, let alone suggested that anyone had a grasp of the complexities of their ministerial brief.  Back at the DECC, the ministerial game of musical chairs had also been paralleled with a significant turnover of senior civil servants, which does not suggest that the ministry is a happy ship let alone getting on with it’s job.  

A recent report on the UK energy sector by Liberum Capital suggested that the problems at the ministry may be the least of our problems, as they suggest that current UK Energy Policy is just not plausible.  Their view is that successive UK governments have grossly underestimated the engineering, financial, and economic challenges that are posed by the drive to decarbonise the electricity sector by 2030. The necessary move from a largely fossil fuel based power system to one dominated by renewables (and if Westminster and Whitehall get their way nuclear) in about a decade and a half, while keeping the lights on and consumer bills affordable, may well be simply unattainable. 

It has been estimated that the total required investment to deliver policy goals is some £161 billion pounds from now up until 2020 and some £376 billion pounds up until 2030. Even with the large projected increase in public support (which will largely fund the nuclear programme and its subsidy) provided by the Energy Bill, Liberum Capital suggest that it is difficult to envisage that the finance will be forthcoming when the large European Utility companies are actually reducing capital expenditure. The really scary bit, other than the prospect of periodic power cuts, is that even if the investment actually happens they consumers may see electricity bills rise by at least 30% by 2020 and 100% by 2030 in real terms. 

When the energy crisis (which incidentally probably won’t happen in Scotland) arrives, considering the current level of hostility being directed at the excessive profits being generated and directed towards the members of the ‘Big 6’ energy cartel, I would not be surprised if whatever government who happens to be in power does not move towards a return to some form of public or state ownership.  When we get there may be three main casualties, firstly  the government of the day who are unlucky enough to be in power , secondly the consumers (us) who may be left literally sat in the dark and the cold and finally thirdly the large energy companies (and their shareholders). 

I have no doubt that when that when the lights begin to flicker that whoever is in government (regardless of the party label) will move rapidly to protect themselves and the electorate (who also happen to be energy consumers) by securing control of the means of energy production and distribution regardless of the consequences for the energy cartel members. The real questions that may well never be answered will be why did it take so long for the Westminster government to wake up to the consequences of not really having an energy development policy and why did they leave energy planning to a cartel that were only concerned with ramping up profits?

The lights may not go out in Scotland, where successive Scottish Governments have consistently worked to tackle the threat of Climate change and develop sustainable energy reserves. Scotland is working towards a plan for a 42% cut in greenhouse gas emissions by 2020, rising to 80% by 2050. These proposals which were first unveiled in 2009 are far more ambitious than anything that has been proposed in Westminster,  where the 2020 target (set before the Con Dems came to power) for cutting carbon emissions has been set at 34%. The Scottish Government has already set out a wide-ranging vision to address climate change, which includes a drive to boost renewable energy such as wind and wave power.

Scottish Ministers also aim to see significant progress in boosting the energy efficiency of buildings, increase the number of electric vehicles on the roads and aim to cut in emissions across the farming and rural sector. This is serious forward thinking on the part of the Scottish government as energy experts have for several years been consistently warning of a serious future shortfall in Britain's energy supplies. Control of energy policy needs to be devolved to the National Assembly and it’s time for some original non nuclear thinking and a fundamental sea change in attitude from government in Wales when it comes to energy policy. 

Imagine what we could do if our Government (in Cardiff) possessed similar powers (and the political will and imagination) to develop the alternative energy sector here in Wales as is being done in Scotland. Rather than empty platitudes we need real direction when it comes to the development of safe and secure energy resources as power generation can provide the potential for real community beneficial and sustainable long term job opportunities. The renewable energy sector should play an immensely important role in creating more green energy jobs and make sure that our lights stay on rather than end up dancing in the dark!.

EXIT STAGE LEFT PURSUED BY SUBSIDY...

Now David Cameron made much of being a ‘green’ environmentally caring Conservative when he was busy re-branding the pretty toxic Conservative brand, his government's publicly stated that it wanted to almost completely de-carbonise the electricity industry by the 2030s. All very well and good, yet, in the Draft Energy Bill, due to be published on Tuesday, no guarantee such a target will oddly enough appear nowhere in the bill.

The UK’s unhealthy expensive obsession with its expensive, heavily subsidised and floundering nuclear industry will ensure that the UK gas-dependent for many decades to come. To get out of this hole the UK may well be reduced to purchasing emissions permits on the European market to try to keep to its much publicised medium-term emissions reductions targets.

A well publicised failure to de-carbonise electricity will end up diverting the UK from its plan to reduce CO2 by 80% by 2050 - unless the gas-fired power stations were made to run with carbon capture and storage, a technology that is unproven on a large scale. Actually increasing these islands dependency on imported gas from unstable areas of the world at a time of rising energy costs is hardly the brightest thing to do.

The draft Energy bill is being introduced so the proposals can be fully scrutinised by parliament should appear as a fully fledged bill sometime this autumn. The final decision, no doubt subject to some discreet nudging from Cameron and the pro nuclear lobby will end up before the Westminster Energy and Climate Change Committee. The pro nuclear lobby may even find itself nudging the Conservative PM to persuade the EU that a public subsidy for nuclear power is fine.

The 2030 plan was publicly endorsed by the PM back in November 2010 may be quietly added to the too difficult in tray. So it may literally be a case of exit stage left pursued by nuclear subsidy for any fleeting Conservative aspiration to de-carbonise electricity in the 2030s. One way of the other we have been paying (and will go on paying) for Conservative and Labour failures to develop sustainable and secure energy resources for many years to come.

HE WHO PAYS THE PIPER?

Almost quietly, almost unnoticed and certainly unheralded at least in this part of Western Europe the Nord Stream gas pipeline has come on-line which enables Russia to ship commercial natural gas supplies to Western and Central Europe. The gas pipeline, currently one of the world's longest submerged pipelines has not been without controversy. The pipeline project, which was actively pushed by the Russian government and agreed to by Gerhard Schröder's government of Germany. The project has not been without a degree of controversy for a number of reasons, especially the fact that it increasing European energy dependence on Russia.

Gazprom, nominally an independent energy company but in fact the energy arm of the Kremlin, has a bit a reputation for generously spreading it's largess around to help get what it wants. Some dubious activities may have taken place in Sweden and in Germany to smooth the path for the Nord Stream pipeline. Certainly it is a fact that Schröder, by coincidence after leaving the post of Chancellor of Germany, ended up as head the shareholders' committee of Nord Stream AG.

There is another factor that has set some alarm bells sounding and that’s because the new pipeline may enable Russia to bypass traditional transit countries Ukraine, Slovakia, Czech Republic, Belarus and Poland. Some transit countries are very concerned that a long-term plan of the Kremlin is to attempt to exert political influence on them by threatening their gas supply without affecting supplies to Western Europe.

In recent years there have been several seasonal and very bitter public Russian and Ukrainian gas disputes. Now with Nord Stream there is a real fear that France and Germany may sell the Eastern European countries down the river in exchange for cheap Gas. These fears have been strengthened by the fact that Russia has consistently refused to ratify the Energy Charter Treaty (ECT).

The ECT is an old international agreement which should provide a transparent framework for energy trade, transit and investments. The ECT process was originally based on plans to integrating the energy sectors of the then Soviet Union and Eastern Europe just after the end of the Cold War into a much broader European and world energy market.

Nord Stream’s critics have said that Europe could become dangerously over dependent on Russian natural gas supplies, especially if Russia faces a surge in both domestic and a foreign demand for gas. A Swedish Defence Research Agency study noted over 55 incidents since 1991, with "both political and economic underpinnings".

Back in April 2006 Radosław Sikorski, who was then Poland's defence minister, made reference to the project in terms of the 1939 Nazi-Soviet Molotov–Ribbentrop Pact. More recently Edward Lucas in his updated (2009) book The New Cold War: Putin's Russia and the Threat to the West, (which is well worth a read) has suggested that "though Nord Stream's backers insist that the project is business pure and simple, this would be easier to believe if it were more transparent."

The involvement of Gazprom in the project – a company that's as great a believer in transparency as its masters in the Kremlin - does not help matters and neither does the fact that Nord Stream AG is incorporated in Switzerland where it can take full advantage of effective banking anonymity. Russia's response has been that the pipeline actually increases Europe's energy security, and that any criticism is caused by bitterness about the loss of significant transit revenues, and political influence. Diplomatically that's as close to ‘Bite me!’ as you can get.

So there we are Russia is quietly supplying a significant portion gas supplies to Western Europe – how soon before we end up hostage to a Russian political agendas. Be silent and get your gas or criticize us over Human rights or when we attack a small country or chill in the leak midwinter! I have no yearning for a new cold war, but harsh realities, but the writing may be on the wall when it comes to energy security.

Relying on energy supplies that are at risk of interruption or are found in unstable regions of the world is just plain stupidity, as is consciously choosing to become more increasingly dependent on imported gas. If you think that the members of the big six give customers a hard time just wait until one or two of them get bought by Gazprom no doubt ably assisted by the city based friends of New Labour and the Conservatives, ever eager to chase a quick profit at our expense.

Here in Wales, a small country on the fringe of Europe, we had better take note and hope that we can rapidly make our small country energy independent. We need to develop a flexible self-sufficient energy development strategy that encourages decentralised micro generation schemes and by actually implementing it this could create jobs, useful skills and help to bootstrap the economy out of the developing recession as well as helping consumers. The peoples of these islands need to be entirely self sufficient via renewable non nuclear non market driven energy resources and quickly.

A LUXURY WE CANNOT AFFORD…

The Con Dem Government has announced that it is going to cut the subsidy for solar power by half for new installations from 12th December. Solar panel makers and solar panel installers are concerned that the cut may lead to the loss of thousands of jobs and a reduction in investment in this form of renewable energy. This decision also means that consumers who register for the scheme after that date (even if the deposit has already been paid) will see their return halved.

The Westminster government has launched a fast-track consultation on the change, which it says reflects falling panel prices. The proposed new tariff of 21 pence, which is down from the current 43p, will come into effect from the 1st April 2012 and be paid to anyone who installed their solar system after 12th December 2012. One interpretation of this is that the last few Westminster governments have just not really been serious about energy security and developing secure sustainable energy resources.

Sadly it certainly looks like the Con Dem Government is about as serious about developing renewable energy resources, as was the previous New Labour Government. That said, there may be other motives, perhaps no one (in Government) really wants micro-generation schemes to work because then we (the consumers) will have less need of the Big Six and of course profits / share prices and dividends could be hit, and we (sorry they) would not want that it might upset the chaps over dinner.

This decision certainly does seem to be a slap in the face for this sector of the renewables, let alone any consumers and customers seeking to develop sustainable energy. One interpretation could be that this decision will make life just that little easier for the energy cartel members. That aside, we appear to have a Westminster Government that's not serious about developing sustainable energy and that's one luxury that none of us can afford.

STANDING UP FOR WALES?

Plaid’s Jonathan Edwards MP has called on Welsh MPs from all parties to support a move which would transfer power over energy from a UK quango to the Welsh Government. The power to decide on a tidal lagoon in Swansea Bay or a tidal reef across the Severn estuary would be transferred to Welsh First Minister, Carwyn Jones, who has the Welsh Government's energy portfolio.

If an amendment to the Localism Bill (tabled by Plaid Cymru MP Jonathan Edwards) that has been selected for debate in the Commons tonight (Tuesday) is passed – the amendment to the Localism Bill would give the Welsh Assembly the right to decide upon planning applications for electricity generating stations in Wales, and offshore in Welsh waters.

In their recent election manifestos the Conservatives and Labour Party's pledged to double the current limit of Welsh Government powers to grant planning permission from 50MW to 100MW. Plaid argues that both figures are arbitrary, rather than evidence-based, and that a single consistent Welsh approach to energy would achieve the best results for renewable energy in Wales.

At the moment the Assembly only has the power to deal with applications of up to 50MW on Welsh land while the Infrastructure Planning Commission (IPC) deals with applications greater than that. At sea, the Marine Management Organisation has the power to grant consent for applications of up to 100MW, with the IPC having the power above that figure. The Localism Bill plans to scrap the IPC, with the powers being returned to the Secretary of State in Westminster. Plaid argues that it is essential for consistency that all energy decisions for Wales are taken by the Welsh Assembly.

Jonathan Edwards MP said:

“If Carwyn Jones is in any way serious about Labour’s claim to be standing up for Wales, then his party must vote to give him full powers for energy in Wales, not hang about on the sidelines and abstain.

“If only two weeks after the election, Labour fail to support this motion to give Wales the power to make a real difference to our energy policy, then we can only wonder where else they will fail to stand up against the coalition.

“After all, if their MPs don’t trust their own First Minister with these powers, what does that say for him and his government in Wales?

“Energy decisions being made in Wales is a matter of common sense and consistency.

“Our amendment would mean that instead of two agendas being in place, one in London and one in Wales, there would be just a Welsh agenda to develop and diversify our energy portfolio.”

Amendment to the Localism Bill – to be discussed on 17th May, 2011 (after 7:30pm)

Transfer of generating station consent powers to Welsh Ministers

Jonathan Edwards

NC11

To move the following Clause:—

‘(1) The Secretary of State must make regulations to transfer to the Welsh Ministers those functions of the Infrastructure Planning Commission and the Marine Management Organisation which relate to applications for an order granting development consent for the construction or extension of generating stations in Wales or in waters in or adjacent to Wales up to the seaward limits of the territorial sea.

(2) Regulations made under subsection (1) must be laid within 12 months of the passing of this Act and are subject to the negative resolution procedure.’.

COME CLEAN ON NUCLEAR COSTS

The Con Dem Government has claimed that our taxes won't be used to subsidise nuclear power. Yet the new Energy Bill that's being debated opens the way for public bailouts if the cost of dealing with nuclear waste spirals. Instead of risking a nuclear bailout, the Government should set this money aside for nationwide energy saving and investment in renewable power.

Now MPs have called for ministers to come clean and admit they are tacitly subsidising nuclear power despite promising that the industry would not receive such support. MP's on the Energy and Climate Change Select Committee have reported that Ministers are attempting to disguise the Nuclear subsidy and are distorting reforms of the energy market. They have also warned that unless the issue was resolved, the UK would fail to get the low-carbon energy system it needs.

The Select Committee's report focuses on the Con Dem government's plans to shake up the energy market.The shake up is needed to ensure the provision of affordable electricity without compromising the UK's climate change targets.

At the present, the current energy market exists to supply plentiful (allegedly) cheap electricity, but makes little provision for ensuring that any energy supplied has lower carbon emissions. MP's and some energy experts have complained that the UK Government is failing to attract enough investment in the infrastructure needed to meet energy needs.

The Con Dem coalition agreement allows the construction of new nuclear power stations "provided that they receive no public subsidy". At the moment the nuclear industry is refusing to build new power stations unless their are further inducements, Con Dem ministers have proposed threat the energy companies that build nuclear power plants get long-term contracts at a guaranteed price for energy produced by their nuclear power.

To make life even more complicated there is the problem of the low price of carbon credits in the EU emissions trading market. UK ministers now plan to introduce a minimum price below which carbon permits will not be allowed to sink with any shortfall will be covered by revenue raised by taxation.

This is intervention in the free market (such as it is) to an amazing degree from a Conservative dominated government. The Con Dems have said that both these policies will benefit renewables too, yet, this ensure that electricity prices remain higher than they would have been without this blatant intervention to favour nuclear industry. This "one size fits all" policy barely disguises what is a subsidy to the nuclear industry, as has rightly been noted by MPs.

For many years, the UK nuclear industry has lived quite happily off massive subsidies from UK taxpayers, at the same time cleaner renewable forms of energy have been starved of cash and investment. Potential sustainable energy suppliers and developers have had to face a less than subtle pro nuclear bias from UK Government departments and agencies, something that has seriously slowed the development of secure and sustainable energy supplies in the UK.

Back in 2002 British Energy (BE) became virtually bankrupt, so the European Commission quietly approved the UK Government's decision to bailout the private nuclear power generator. Under the restructuring plan drawn up to save the company, the UK government agreed to indemnify the company against any shortfall in the nuclear liabilities fund which meets its clean up costs.

BE in return contributes 65% of its net cash flow to the fund, the National Audit Office says this uncertainty "places a significant risk in the hands of the taxpayer", effectively leaving the taxpayer according to NAO facing "a large and uncertain liability". It gets better, BE’s liabilities, all taxpayer subsidised, have risen to £5.1 billion, an increase of more than 30%, since 2003. The amount the taxpayer has to pay will depend on the company's future financial performance.

Now the UK Government plans to build new reactors in the UK (something initiated by Tony Blair and supported by Gordon Brown) and runs the risk of fatally binding the UK to nuclear power for decades, something that will continue to divert vital investment away from clean, renewable energy. It's time for the UK Government to finally come clean about the costs (financial and environmental) of the UK nuclear industry.

Back in 2008, Gordon Brown’s cabinet rubber stamped Tony Blair’s decision to back the nuclear option to solve the UK energy needs was both disappointing and short-sighted, but, was not unexpected. By making nuclear power its priority the failing Brown Government effectively abandoned any serious attempts to conserve energy, and significantly undermined its own commitments to tackling climate change. So far the Con Dems have brought little to the debate...

When it comes to power generation there are real job opportunities that need to be fully grasped; the renewable energy sector can play an immensely important role in creating more green energy jobs. We need to create a decentralised power generation system which can include a community owned and community beneficial sector which will create sustainable long-term jobs for local people, not damage the environment and contribute to providing our local communities with a long-term viable economic energy future.

Now is definitely the time for control of energy policy to be devolved to the National Assembly and time for some original non nuclear thinking and a fundamental sea change in attitude from all levels of government in Wales towards energy policy.

OUR ENERGY SAFE IN THEIR HANDS?

Back in February 2010 an interesting report called ''The Oil Crunch - a wake up call for the UK economy'' was published which warned that will of us faced a serious rise in the cost of heating, transport, food and other goods, the hard-hitting report largely slipped by under the radar. The report researched by the Industry Taskforce for Peak Oil and Energy Security, which rather than consisting of the usual Green suspects, are actually a group of British companies members including Sir Richard, Brian Souter, chief executive of Stagecoach, Scottish and Southern Energy boss Ian Marchant and Philip Dilley, chairman of consultancy firm Arup.

The report which pulled no punches saying that Government must recognise the risks to the economy and produce contingency plans for transport, retail, agriculture and alternative power. It suggested that the challenges facing the UK will far exceed those currently presented by the financial crisis and that the poorest in society will be the most vulnerable to potentially significant increases in fuel costs. There were further dire warnings that unless the Government gets its act together on alternative energy then there is a real possibility that during the term of the next government that fuel price unrest could lead to real shortages in consumer products and compromise the UK's energy security.

I mention this because many of us are in the process of or about to get hit by a hike in domestic energy prices, driven rather than by shortages but by some of the members of the energy cartel that happily puts profit before people and the national interest. Back in November I blogged on the need for a serious investigation into the competitive practises of energy companies by the regulator. Any investigation must be thoroughly in-depth and tackle the cartel-like behaviour of these companies.There can be no justification for profit margins to rise by 40% in less than three months while at the same time inflicting significant energy price hikes on consumers.

British Gas customers are to face a 7% rise in gas and electricity bills which comes into effect on 10th December. As a result of rising wholesale prices, said British Gas. oddly enough British Gas has become the second major UK energy supplier to announce price increases for the winter months - when there is a greater demand, and coincidently a greater profit to be made. Scottish and Southern Energy also intend to raise their domestic gas charges by 9.4% at the start of December, blaming wholesale prices for the increase in customer bills. This price increase announcement, was made just before just before they reported a 6.1% fall in pre-tax profits to £386m in the first half of the company's financial year.

Back in October 2009 the then Tory Energy Spokesman, Greg Clark (currently a Minister of State in the Department for Communities and Local Government) said that the "cartel" of the big 6 energy firms would be referred to the Competition Commission by an incoming Conservative Government. The then Tory Energy Spokesperson also condemned the unacceptable lag between the cost of wholesale gas prices and household energy bills - noting that customers were on average being charged some £74 pound too much for their energy per year.

Oddly enough that pre-election pledge for an independent inquiry into the £25 billion-a-year energy industry which has been subject to lengthy and repeated criticisms surrounding accusations of profiteering on electricity and gas, was quietly dropped by the Com Dem Coalition Government. Heaven forbid that principle get in the way of profit. If a freshly elected Government is not prepared to allow an inquiry into the energy cartel, then there is scant chance of an inquiry into the dubious (and financial rewarding (in cash and kind) relationship that exists between our political parties and the representatives of the energy supply companies who are pretty keen to shower enough goodies around during Party conference season (and beyond).

Anyone awake in the previous New Labour Westminster Government and anyone with half a brain in the current ConDem Government should be working with the devolved administrations in Wales, Scotland and Northern Ireland to develop a hands on energy strategy that will lead to an end to dependency on unstable overseas energy sources and dubious suppliers and lead to energy independence. I mention this because, all of a sudden all is urgency when it comes to speeding the development of all kinds of new (and not so new) forms of low-carbon forms of energy generation.

The writing is on the wall for all to see - you might have thought that Vladimir Putin's decision eighteen months ago to reduce further gas exported into Ukraine, through which 80 per cent of Russian gas exports to the EU flows, would have highlighted the real dangers of relying on imported energy. Especially as Russia has slowly declining cash reserves and its economy is still heavily reliant on its trade in gas – the risk of shortages (which raise prices) as a consequence of Mr Putin's geopolitical games is something we can truly all do without.

While other countries have attempted to protect themselves against external shocks to their energy needs; the UK's market driven approach has been proven to be entirely inadequate. France has storage capacity for 122 days gas and Germany 99. Yet the UK despite an increasingly desperate attempt to play catch up has relatively low storage capacity for gas - it was barely 15 days in April 2009; the old New Labour Government took almost a decade to recognise the need to increase storage capacity. The consequence is that UK has to sell gas during the summer because we cannot store it but UK energy suppliers struggle to purchase gas again when it is needed in the winter.

The problem was made worse by what can best be described as the complicit insanity of the Conservatives headlong dash to gas in the 1980’s has been compounded by a real failure in basic strategic energy planning and made worse by the current Government's perverse decision to half-heartedly look at developing diverse reliable alternative energy sources. The old New Labour Government repeatedly ignored warnings that it was setting the UK on a path towards higher prices and energy blackouts.

Over the next five years almost all of our old nuclear reactors, along with nine major coal and oil-fired power stations, will be closed, with nothing ready to replace them. We are now in the situation where we are now even more dependent upon imported gas from either unstable regions or dubious suppliers and we the customers face unnecessarily expensive bills.

Now the Con Dems have woken up, somewhat belatedly to the problem, but, can anyone trust this Tory dominated Government to put the people's interests before those of a fat profit for their dubious friends in the City? they certainly did not do that the last time they had their hands on our energy resources...

A MATTER OF DEMOCRATIC ACCOUNTABILITY

Energy is one of the big issues that will affect all of Wales over the next 100 years, it has never made any sense for Westminster to make decisions in relation to energy development, power stations and big wind farm schemes in Wales, the development of which will impact on our communities in as many ways as we can imagine. The current set up means that any energy schemes applications where the proposed operating capacity is greater than 50 megawatts is made in Westminster, rather than Cardiff.

Peter Hain’s recent mutterings about devolving decision making to Wales (Dragon's Eye (16th June) are somewhat ironic considering that New (Old) Labour at Westminster did its best to block further devolving of decision making in a whole variety of fields to Wales. I would think that recent revelations about how the previous New Labour Government at Westminster worked to water down a proposal to limit the acceptable level of noise from wind farms enhances the case for decisions to be taken at the National Assembly.

Rhodri Glyn Thomas, AM for Carmarthen East and Dinefwr, said:

“Energy is a big issue in Wales and it is ridiculous that under current arrangements decisions about which projects should be approved are taken outside Wales, often by people who don't know our country and who in any case are unaccountable to our communities. As an AM, I feel powerless in this situation. When people come to see me about planning applications that are being made, I have to tell them there is very little I can do to help, despite having been elected to represent them. I think it would be much better if decisions about these projects were taken in Wales, based on reasonable grounds that help the drive against climate change while taking account of residents legitimate concerns.”

A fair point…especially as the ConDem coalition agreement states that the fundamentally undemocratic Infrastructure Planning Commission (IPC) is to be scrapped. The IPC, which one of dying New Labour’s more questionable creations, only became operational in October 2009, with its mission being to speed up the planning process for energy projects, many of which had been delayed for years because of lengthy public inquiries.

This Quango which was opposed by environmental groups and many others who see it as a fundamentally unaccountable body which would enable Government to ride roughshod over local objections to unpopular development projects, except in Scotland, where the Scots control their energy policy and energy development - unlike here in Wales. 

So with the coalition Government planning to bring in legislation sometime next year to abolish the IPC and transfer its functions back to Westminster where does this leave Wales and the Welsh people – so much for democratic accountability.

IN THE COLD AND IN THE DARK?

That Ofgen has said that there is "reasonable doubt" about the ability of the UK's energy market to deliver sustainable energy supplies in the coming decade, should come as no surprise to anyone with half an eye on what has been going on within the energy sector over the last twenty years. Neither should it come as much of a surprise when Ofgen goes onto say that the open competitive energy market, such as it is in the UK, may fail to deliver secure, sustainable supplies in the coming decade.

This is the result of a sustained lack of Government interest in the energy sector, particularly when it comes to developing the sustainable energy sector, especially when it comes to the development of realistic storage for gas and when it comes to developing sustainable green energy resources. UK Government interest in the energy sector and this applies equally to whoever has been and is in government at Westminster, has largely been focused on spending the funds received from the energy companies and profiting from higher tax returns when energy prices and energy company profits have risen.

Ofgen has effectively admitted that as a result of the credit crunch, the ongoing problems of maintaining international supplies, and dealing with the consequences of dealing with global warming that the UK needs to look for new solutions to protect security of energy supply. Ofgen, somewhat belatedly has also suggested that the private energy companies be required to deliver more generation capacity and gas storage. Things must be bad, because the suggestion has been made that the industry should revert to a form of centralised market control, which is potentially the most significant shake up of the complacent energy sector since privatisation.

The suggestion that the energy sector needs some £200bn of investment and stronger incentives to deliver sustainable and secure energy supplies for the UK within the next ten years, may prompt many people, who have been paying higher and higher energy bills since privatisation to wonder where all the vast profits that the privatised energy companies have been tucking away have gone?

And over the longer term who has really benefited from the privatisation of the energy market, save for the Tories and their money men and banker friends in the City of London, as we face in the short term yet another cold spell and in the medium term higher energy bills and in the longer term potential energy blackouts over the next few year, I suspect that the answer may turn out to be the few at the expense of the many.