The Reform Party’s Emergency Energy Plan
By Paul Homewood
h/t Gareth Beer
The Reform Party has published its own plan of how to return some sanity to our energy markets:
It’s easily readable, as it is in slide format.
The first few pages sum up the position at the moment, which we are probably all familiar with. The heart of the plan is below:
I have no idea about the legality or otherwise, but its simplicity stands out.
By forcing all UK energy producers to sell at a fixed price, based on 2021, all the other parts of the jigsaw fall into place. As acknowledged, it still leaves the problem of imported gas, and for that matter electricity. Obviously gas power stations, for example, could not afford to sell electricity at 2021 prices, if they are now paying higher prices for imported gas. This could be resolved though by subsidising such imports.
It is also a much more comprehensive and a cleaner solution than the windfall taxes proposed, which don’t cover all energy producers.
Best of all, this proposal ensures that renewable generators do not get away with fleecing consumers, as they are now.
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NOT A LOT OF PEOPLE KNOW THAT 
That price cap will force a lot of energy suppliers into bankruptcy, it’s an incredibly stupid idea.
Aren’t most energy retailers bust already?
Just down to the Big Six. One is owned by a French Nationalised company. One is owned by a German company that owns renewable generation. one is owned by second largest electricity producer in Europe, one is owned by one of the world’s largest integrated utility companies and a world leader in wind energy.
So all should be able cope with a short term fixed price
Eh? Why should they “cope”? Why should French taxpayers subsidise UK consumers?
@Phoenix44 , investments can fall as well as rise, income from UK consumers was not guaranteed.
Most of the retailers are owned by generators/wholesalers, subsidised by taxpayers in Europe. The whole thing is a mess created by governments, not least ours, so it’s up to governments to sort it out. Not that they will
Maybe. More likely they’ll just move offshore.
It was reported that 60% of the remaining small suppliers are technically bankrupt, with the remainder not far behind.
https://www.current-news.co.uk/news/60-of-remaining-smaller-energy-suppliers-are-technically-insolvent-says-price-bailey
I don’t think you have read the proposal correctly David it said energy producers not suppliers.
Production of wind, solar and nuclear power have not not risin in cost by about 4 times in the last six months only the cost of gas. The British customer is being charged European prices for ‘home grown’ electricity. The maximum electricity we can export if we use every inter country power cable to its maximum is 8.5GW, the power consumption of the UK on average is about 35GW so we should not be ’ripped off’ by producers threatening to sell abroad.
You have to look at this from the margin and not the average Roger.
If wholesale prices rise, demand will fall – at the moment, this is equivalent to rationing energy by price (although it does mean business closures and other personal suffering).
Coming from the other direction, if wholesale prices fall, there will be an increase in demand because this rationing effect is reduced.
Where does the marginal increase come from? Not wind or nuclear because they are all operating at their maximum capacity. Increase in demand has to come from either additional gas or coal or imports, so it’s going to be a higher price if the fixed sources are lower cost.
So the wholesale market will always gravitate towards the margin, as the marginal cost is the impact of a change of demand.
If you want to have the ability to use the market (e.g. select your supplier for a better deal), the impact of your decision hits the suppliers at the margin. They will price at their marginal cost, which is the wholesale market price, which gravitates to the marginal cost.
That’s the least of the problems in this God-like, simple (wrong) solution to a complex problem. I won’t go into the details of the stupidity exhibited by this populist group except to point out that they want to nationalize private businesses unless those businesses sell at a price set by the government. At least in the U.S. we have a Constitution that restricts the government. From this it would appear the UK government can do whatever it wants with its citizens.
No, forcing anyone to supply goods, services or utilities at less than cost price is the road to ruin. Venezuela tried it, now a basket case. all caps and floors should be removed.
If you are a UK producer of oil and gas from the North Sea then you are NOT producing at less than cost price if you cap the price at a sensible level. The market rate does NOT determine the breakeven cost.
The “energy suppliers” are mostly just middle men who have no production. Centrica will not go bust if the price is capped in the UK. There profits and margins will go down, but its not long ago they were receiving way lower prices for oil and gas and still able to turn a profit.
Scientists know nothing of business or economics.
At last year’s prices there was no great rush to catch up with the maintenance backlog, with shortages of equipment and labour making it costly too. I’ve yet to see signs of anything other than atrophy, in part because for so long BEIS has been so negative. Why spend when they want to shut you down?
Ah yes, the old “sensible” level claim. At what’s that level? You know it but the tens of thousands in the market don’t?
Amazing how many people suddenly know the “correct” price of stuff.
Centrica and other Suppliers certainly can go bust if they are prevented from recovering their costs. Many defunct Suppliers have already demonstrated that the cap can be too low (and too slow) for their survival.
If you are supplied by Centrica, every time you flick a switch to use something, you exercise your option to increase their wholesale liabilities. Centrica needs to get the cash in the door to settle its wholesale liabilities when due. They are absolutely dependent on the cash they receive from their customers to have the credit rating needed to continue trading in the wholesale market (for the energy you consume) and the credit rating to underwrite their Use Of System charges (for the use of networks to get the stuff to your door).
If there is a “credit crunch” in the energy supply industry, it is not beyond the realm of possibility to see a repeat of the breakdown of the LIBOR market in 2008, There is nobody who can be rated as “safe” in the market right now – producers or consumers. Why do you think the Treasury is so willing to throw money at it? They are probably bricking themselves right now.
The price cap was always a stupid idea, all the failed suppliers last October/November were sunk by the price cap, and now we are paying for all the administration costs of sorting it out. Thank god for OFGEM who sorted it all out and only doubled our standing charge to pay for all their great efforts! Just go back to free markets and get some competition going. As long as Reform sack OFGEM and probably OFWAT things will improve, but in reality the protest vote masses will vote for LibDems and Potato Ed Davey who’s credentials in the energy field are somewhat questionable. Lets hope Truss brings Lord Frost on board, only 2 years to election. Time is short.
And which bacon-bap-eating son-of-a-Stalinist (if memory serves) came up with the idea of the cap?
They were not sunk by the price cap alone, they were also sunk by having a strategy to gain market share by offering cheap deals to customers and assuming they could sti buy cheaper in the spot market for gas.
Works a treat when prices were falling. Leads to gamblers ruin when prices rise.
But that’s why the cap killed them.
No, they were killed by gross profiteering by Suppliers & Generators, the companies that went broke supplied “nothing”, they made their money as middle men.
But you can see by the last 2 quarters of actual supplier’s profits who is grossly profiteering off the backs of their customers.
Here is the latest example.
https://www.dailymail.co.uk/news/article-11146037/Oil-gas-provider-North-Sea-sees-profits-soar-twelvefold-thanks-record-prices.html
God forbid they take a cut in their profits and keep their prices lower.
AC Osbourn. For fans of the market, the excess profits of today’s suppliers should incentivise supply increase, and should encourage new entry into the market. Both of these will restore price to the market competitive level, and excess profits should be temporary. Those “excess profits” can be viewed as reward for a highly valued service, when it was in short supply.
If the market cannot achieve this, or if you believe that having a market (with the above mechanism) is the wrong way to go, there is a simple answer: don’t have a market.
It could all go back to a state-owned monopoly with an administered price …. if that’s what the majority want. It is ultimately a question for democracy to sort out.
If it goes back to the state, this is an exceptionally bad scenario for shareholders. They will deprive themselves of the future value of dividends. This does not mean prices will be lower – state owned industry tends to be lazy and inefficient, and avoiding dividends will mean the money is spent inside the industry instead.
As an expat living in Canada , UK policies regarding climate change and energy seem bizarre, self destructive, and destined to cause social unrest, poverty, and hardship. The ban on fracking, if reversed could alieviate much of the huge rise in costs to consumers and industry, but, that might be too common sense a solution.
Here, in Western Canada we have our own set of federal government stupidities where government policies against pipeline construction have resulted in locked in natural gas and prices collapsing to zero last week, while US natural gas prices are at close to $ 10.00 / thousand cu. Feet
…seem bizarre, self destructive, and destined to cause social unrest, poverty, and hardship… That, it what they are designed to do. In doing so they will ensure that people will clamour for the State to save them. God help us then.
“Look at the outcome. Infer motivation.” Jordan Peterson
‘UK energy producers obliged to sell to UK suppliers at 2021 average price or be nationalised’
Why so mean? Why not 1986 prices? Or 1966?
Gamecock can translate: “UK energy producers will be nationalised.”
Exactly Harry. But isn’t it ironic that now that it’s beginning to happen the climate alarmists have said nothing about Biden quickly taking oil from strategic reserves to make transportation fuels more available and at lower cost? Climate Guru, John Kerry finds that the war in the Ukraine is diverting our attention from the REAL problem…the climate change emergency. Maybe the design needs a reset?
John Wilson:
Living in Australia I prefer the description lunatic (or moronic).
Unfortunately there is another aim of persuading other Governments to do the same. (e.g. Australia where we are to be carbon free by 2050).
But frakking is stopped by the ridiculous requirement that holds earth tremors done to 0.5. Disclosure I have slept through the last 2 in the Adelaide Hills of 2.5 and 2.0, but I certainly heard the one of 3.5 (during breakfast time).
I’m a North American fossil fuel producer. Hope UK does what it suggested. UK producers will go elsewhere to sell their product. I’ll make more money. Keep up the good work.
HeHe!
If you can keep your head while those around you are losing theirs, you could making a whole heap of money ….
Number of commenter seemed to have missed the point about the proposal.
UK producers are very different to UK energy suppliers. Energy suppliers are dependent on margins between purchase price and sale price. North Sea producers can almost certainly make money from North Sea assets at 2021 prices.
Not saying I agree with the proposal at all, but it’s not completely stupid like the price cap is.
And? Will we then pay 2021 prices if they fall below that level? And are 2021 prices higher enough to encourage maximum extraction and exploitation? And how does that discourage the marginal user?
Prices are INFORMATION. Removing information makes us less well-informed. How is that sensible?
They haven’t said (and I understand why not) but they are also going to have to get very serious indeed with Putin’s lackeys and lickspittles in the GangGreen activist ranks.
If we can no longer have white male pilots and policemen who aren’t Gay Pride dancers and Judges who don’t defer always to the ECHR, then we need to get real and be recruiting some people with cojones who want the UK to survive.
I think this is still at the level of cheap sloganeering rather than working out what it really means. 2021 price is only a little below 2022 (by the inflation uplift) for a wind CFD generator, and not so far a great deal below market price in 2022. ROC wind generators were mostly getting something similar to CFD generators until they got boosted by the big rise in market prices from August onwards. Of course they get a lot more now with higher market prices.
That leaves the gas market and gas fired generation as the main element. Gas prices remained quite reasonable until a year ago, when they began the upward trek in earnest as wind failed across Europe and nuclear problems escalated in France. We can hardly tell the Norwegians to keep supplying us by pipeline at last year’s price. Our own gas will struggle to cover 50% of annual supply and in winter, much less. We await the Winter Outlook from National Grid Gas, but I suspect the forecast domestic supply will be down on last year.
Who would get the benefit of cheap gas, and who would have to pay more for imports? One plant might have contracts for supply from the UK North Sea, while another only gets Norwegian gas. Will UK producers be able to afford to invest in ramping up production at those prices? It all needs a lot more thought.
Meanwhile the simple sum is to cost 800TWh of gas and 250TWh of electricity (numbers cut in anticipation of price destruction of demand). Gas gas gone up by over £200/MWh and electricity by over £400/MWh, to we are looking at a problem of the order of £250bn p.a.. It needs supply side solutions and it starts to make furlough QE seem small.
Clearly there is no need of subsidies for renewables at these prices, so we should ditch ROCs, carbon tax etc. But green tinkering will cut perhaps £25bn of the bill. We can perhaps reduce the fever in the markets by announcing full support for speeding up new fossil fuel projects around the world at a G7 level, a complete suspension of net zero ambitions and hard action to support that by maximising coal burn and keeping nuclear running..
“…. maximising coal burn ” is the medium term solution for the UK until commercial fusion power arrives. Short term solution is gas, from somewhere 😦
‘Emergency’ powers to solve a fabricated crisis by government meddling with the free markets/liberties is what got us into this mess. There are two issues here, which require separate solutions. One short term relating to a cost of living problem from the spike in global prices and the other which is structural relating to government policies that have impacted energy independence and prices (including our foreign policy posturing). More government is the problem, not the solution.
Exactly. Trying to solve a mess created by interfering in markets by interfering even more in markets. Even if it does some good for a bit, it simply creates more problems in other ways. Just stupid.
I see the problem as more binary: does the UK electorate want a market in gas and electricity supply? (I don’t mean primary fuel extraction which seems to work quite well at a global level.)
If the UK electorate prefers the market, then you are correct and we should opt for less government interference. That will mean no more wind (doesn’t make money without government interference) and no more nuclear (ditto).
If the UK electorate is sickened enough to not want a market, then the whole shebang should go into the hands of government (repeat, not primary fuel). The Government can then opt for nuclear and wind generation, and it will have to answer to the electorate if prices are too high or if security of supply is not satisfactory.
At the moment, we have had Government policy which has expected security of supply and prices to be left to the market, while the Government has increasingly dictated market entry and exit (certainly in power generation) and Government who now dictates retail prices (for voters, not industry). This half-way-house has failed and it is the Government who finds itself trying to limit the damage to the electorate, and this means it has to step-in to prop-up the industry.
I just hope that whoever has cobbled together this “emergency energy plan” hasn’t released this as ‘party policy’, unless they are going down this interventionalist route. Even on a basic political level, why chose this, of all hills to die on? This is not our mess, but the consequence of governments selling out to the WEF green agendas including getting embroiled in a dispute between a couple of the most corrupt states in Europe. Unless they have been paying off our politicians to the same extent as in the US, this is not our fight and we have no national interests at stake to protect, unless you include Hunter and the ‘Big Guy’. This is their problem, let them wear it!
As per the small dead dude’s quote: “Never interrupt your enemy when he is making a mistake”
The people have felt the rises,we need to buy back our energy,even if it means a household investment by everyone able too,we always come to the rest of the worlds aid but seem to get nothing in return,time to really get this country back on its feet,these etonian children need putting back in there play pens or should i say 50k dollshouse lol,massive respect,rant over.
I don’t know how you can accuse renewable generators of fleecing the public. We all know that renewable generators are not interested in making money; they are only interested in tackling the climate emergency (or crisis, or whatever the current term is) and saving future generations from extinction. We know this because that is what they say in all their planning applications.
Tee hee.
Somebody got my memo !!!
The Green Pit of DOOM
“Great Britains Second Industrial Revolution and a New Prime Minister”
The coming of a New Prime Minister got me thinking so here are some thoughts from an Englishman in the USA.
The United Kingdom is a GREAT country but looking at it from the outside for the last 20 years I now fear for the word GREAT in “Great Britain”.
My focus is on something we all use, we all need every day and is required to keep the world moving ……. “ENERGY”
Like in many other parts of Europe and the World it looks to me like crazies have taken over in the UK. Green policies and Net Zero Emissions are leading England into the madness of so called renewable energy. This is not a fanciful observation, UK and European radicals think that Solar Panels and Wind Turbines will power the future saving us from a mild manageable temperature increase which is absolutely no threat to any British person let alone mankind.
They cannot save us from a non existent threat and now Germany is in the midst of that realisation. Germany is the European poster child and has spent vast sums of money over many years to get just about nowhere. What they have ended up with are outrageously high domestic and industrial electrical prices, no Nuclear, dependence on Russian Gas and now the fact that digging up coal is about the only choice they have of keeping the lights on. If they really had been worried about Co2 emissions in the first place they would have followed the French down the Nuclear path and saved themselves a great deal of pain.
Back to the United Kingdom and its prospective new leader. None of them have yet to my knowledge mentioned Green Polices or Net Zero. The British population sits atop a vast potential supply of energy which is in the form of Natural Gas. In a similar way to the USA we could be Energy independent. We already have an existing Gas infrastructure and if we moved forward with Fracking the existing gas under our feet just think how far ahead of Europe and the World we could be in the next few years.
Residential electric bills could come down to sensible affordable levels, domestic heating costs would plummet. Industry could become competitive again which could potentially lead to new jobs. Cheaper fertiliser could be sold to our farmers and then around the world. Our food, our manufacturing industry, our population could flourish. Our people could take advantage of an amazing cost effective natural resource that is the GREAT BRITISH ENERGY of Natural Gas.
All this can be achieved NOW with current technology and in a relatively short period of time. It needs courageous leadership to get the GREAT back in Great Britain and move us forward into THE SECOND INDUSTRIAL REVOLUTION.
A small benefit would be potential reduction in the emission of British Co2 which currently only stands at about 1% so in reality not making a big difference to the world. If we did this and politicians saw the light it could be a transition to a cleaner Nuclear future, we already have the makings of small nuclear power with Rolls Royce. Has someone in our government the courage to pull the United Kingdom out of the “ Green Pit Of Doom “ and up into the Natural Gas Light of a Second revolution ?
This energy revolution was already achieved during the last administration in the United States so it is a proven pathway to cheaper energy costs and energy independence. It is also plane to see that the current Green Progressive policies of the current American government have been an unmitigated disaster and do not work, sadly the USA is following the failed policy of Germany back into the pit.
DO NOT let the UK follow like a lamb to the slaughter into the catastrophic madness of so called Green Technology. WAKE UP and smell the GREAT BRITISH ROSE that is Natural Gas Energy and let it catapult us into a NEW INDUSTRIAL REVOLUTION
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Richard Bell, Well said. Lets hope our politicians take note and act accordingly.
Government will activate a Reform party energy proposal over their own dead body, and even then only at gunpoint!
It effectively destroys every component of Net Zero rendering the entire policy a disaster zone fit only for the political knackers yard, thus revealing the past 12 years of ‘Conservative’ rule have been a total waste of time and untold billions of taxpayer funds.
Anyone think the dripping wet, left-of-centre liberal so-called but entirely fake ‘Conservatives’ are going to admit that?
Admit it?
Yes. They will.
Eventually. However, it might take a Peterloo II or two before they do.
The green levy should be removed. Price caps are a bad idea. The energy firms need money to invest in drilling and new supply. Subsidising alternative energy has to stop. The alternative energy market has to stand on its own. The energy firms have shown they have the power to pass on any costs put on them and if you try caping the supply costs they will simply reduce supply. And coal more coal lots more. In houses and industry.
Of course we would rather not start from here but I haven’t seen another plan from our mainstream masters that both recognised the depth of shit we are in and at least offers a medium term solution to get us out of it. Some things missing (May be implicit) are scrapping the gas boiler phase out, scrapping ICE car phase out, and specific subsidies for heat pumps, hydrogen grids, hair brained storage schemes etc. I would also have mentioned coal as a viable energy source. There needs also to be a clear signal that the energy market will be returned to free market conditions with no more government meddling as the crisis recedes.
There are lots of ways the government could mitigate a cost of living crisis, not least by significantly the costs businesses have across the board. The UK has a high cost of living mainly due to government making it so. A radical government could reduce virtually all costs by 10-20% overall.
Wolsten says:
“There needs also to be a clear signal that the energy market will be returned to free market conditions with no more government meddling as the crisis recedes.”
Indeed. The mess is entirely the consequence of constant interference by successive governments for over 20 years attempting to “save the planet” etc etc. If, on top of all the huge surge in prices, the lights go out then the incumbent government will not be forgiven for a generation. That will leave us saddled with Labour and their £28 billion a year borrowing to “save the planet” plan, no doubt headed up under Sir Keir by Ed “climate change act” Miliband. You know, the man with NO brains.
The fundamental is supply is not sufficient to meet demand globally. An outcome caused by the disease of Net Zero and the “Energy Transition” to no energy.
The stupid is so big it hurts.
Ah well, yet another promising new party goes completely off the rails. Shame, I thought they showed promise.
Hang on in there as they need your input. Let’s see if this was just natural growing pains, or those calling these policies are just the same old big government wannabees.
They went off the rails before their first election. Apart from just a few headline candidates, all the rest were cronies, and quite a few very dotty cronies at that. A breath of fresh air it certainly wasn’t. Then there was the painful interview with Tice, manspreading in his over tight suit advertising his wedding tackle – that was just gross incompetence. Has he never been in business? Did he not know how to behave?
The electorate too one look and said “Nah”. They’ll not be back in their current form.
This again ignores the real problem. LACK OF SUPPLY.
All environmental and other artificial restrictions on supply need to be suspended pending abolishment. Fracking allowed as of midnight. All offshore oil and gas fields permitted to drill and pump as of midnight. All coal mines permitted to open and dig as of tomorrow. Coal fired power stations permitted to be built with a guarantee they can stay open and produce forever (signed by the Queen). All nuclear sites permitted with all planning rules suspended.
This is what is needed , not screwing around with prices that will further deter suppliers and mean the crisis is worse next year.
There are many libertarian’s out there such as myself who have been orphaned by the globalist ‘uni-parties’ and don’t need another, thank you.
Looks like this confirms my belief that the Reform Party offer no solution to our political stupidity crisis.
I am sitting here in the United States, fearful we are heading down the same path.
Despite the fact that we have enough fossil-fuel energy to last for the next 200+ years, our energy policies are becoming frightening like those of the U.K. and Europe.
Less than a year ago (October, 2021), at the Glasgow climate conference, the U.K. and the rest of the world’s 40,000 “experts” were celebrating the policies that were going to lead to our destruction, flying their private jets to the conference and hypocritically driving their rented electric vehicles that were being charged by diesel generators because the wind was not blowing.
Underlying all this is the fact that we could not create catastrophic global warming by the burning of fossil fuels, even if our life depended upon it.
Europe was warned by the evil “Orange Man” not to become reliant upon Russia for their natural gas needs. The U.K.’s response was to effectively outlaw the production of natural gas in their well-documented shale gas deposits which could possibly satisfy their natural gas needs for the next 100+ years, by making it illegal to produce more that a .5 Richter scale vibration while fracking, less than the vibrations of a rock concert or a truck driving down the highway. As in the case of the United States, the funding to fight fracking was largely provided by Russia. Makes sense.
I keep hearing the words “existential threat”. By now it should be obvious that our insane energy policies are the real “existential threat”.
It is only the western world that is hawking these insane energy policies, and it is only be the western world that will be destroyed by them.
O/T I know but our windmills are producing one point four percent of demand as I write. Big story for the BBC in today’s energy discussion. Not
Something seems soooo wrong here. There should be none of this energy price cap by government decree because it is a complete fallacy and this type of government mandated interference gets us nowhere: Only capable of producing price rises.
If the government was CONSERVATIVE, it would let the market decide the price. That price would be decided upon by the availability of the greatest number of people ABLE to pay that price, preventing us from freezing over the winter !
Meanwhile, the price at its present unsustainably high level is a massive incentive to FRACK for gas URGENTLY and, in the process will create the security and availability the market (The People) require.
Forget the Marxist Extinction Rebellion rubbish alarmists. Their feet should not even touch…. before they reach jail, and instead GET FRACKING and create gas at the price which would then fall soon as supplies normalised.
“Drill baby drill” as they used to say in the US. Amazing how the approx $50/bbl break even point for the US frackers ensured some price discipline and stability to markets, while also raising US production to achieve energy self-sufficiency. The more OPEC tried to raise prices towards $100/bbl, the more it opened up marginal supply and a great example of market efficiencies benefiting all parties. But then we got the green ideologues and the NWO agendas behind them to shut down production, distribution and refining and here we are today. Any proposal that fails to recognise and tackle the route cause is merely just going to perpetuate the problem.
Perhaps having all this blow up in their faces will at least help awaken more people from their stupor and government trust that they have been living under to effect real change.
The green levy should be removed. Price caps are a bad idea. The energy firms need money to invest in drilling and new supply. Subsidising electrical and alternative energy has to stop. The alternative energy market has to stand on its own. The energy firms have shown they have the power to pass on any costs put on them and if you try caping there supply costs they will simply stop supplys.