GP – MS: Britain’s energy crisis is a consequence of mad dogma…but the solution lies right beneath our feet! …
Guest Post – Marcus Stead:
Britain’s energy crisis is a consequence of mad dogma…
but the solution lies right beneath our feet! …
Greg Lance – Watkins
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Britain’s energy crisis is a consequence of mad dogma…but the solution lies right beneath our feet!
By MARCUS STEAD
WE ALL KNOW that energy bills are going to rocket in the months ahead. Barely a day goes by without yet another report on TV news bulletins telling us that huge increases are around the corner.
But when it comes to explaining why big price rises are coming, all mainstream news outlets (by which I mean BBC News, ITV News, Channel 4 News, Channel 5 News and Sky News) resort to lazy cliches.
You know how it goes – the newsreader gives us a thirty second intro before a report about rising energy prices. What happens next is utterly predictable.
The report begins in a house belonging to a little old lady or a disabled person on benefits. It’s small and pokey, the décor is outdated, and we see them turning on a kettle or lighting a gas hob during the reporter’s opening words.
The little old lady is then given free reign to talk about how outrageous she thinks it is that energy companies are allowed to make such huge profits while she has to sit there shivering because she can only afford to heat her home for a few hours per day.
Let me be clear – I’m not blaming the little old lady for making these comments (or the disabled person for that matter). They will have been told about the big profits the energy companies are making before the cameras started rolling. It is in no way their fault that these big profits haven’t been contextualised.
They have been manipulated by reporters who, at best, have little real understanding of the energy market or private enterprise (it never ceases to amaze me how most BBC reporters have very little interest in the private sector), or at worst are doing their bit to help Sir Keir Starmer into Downing St by encouraging the little old lady to endorse Labour’s proposed ‘windfall tax’ on energy companies.
Modern-day mainstream news bulletins place far too much emphasis on thoughts and feelings, rather than facts and analysis.
Here comes the bit that will really shock those of you who rely on the mainstream media for your information – the amount of money energy companies make from domestic customers in ‘profit’ really isn’t all that high, and constitutes only a tiny fraction of your energy bill. More on that in a moment.
Nor should you get too wound up when you hear this or that energy company has made ‘record profits’ or a newsreader puts a huge amount of emphasis on the word ‘billion’ when reporting profit figures.
Take SSE as an example. Yes, it’s true that the company made a profit of £1.064 billion in the year to 31 March 2021. It sounds outrageous, doesn’t it? But it doesn’t sound quite so outrageous when we consider they made £202 million from the sale of its stake in Dogger Bank offshore wind farm and a further £70 million from selling its stake in Seagreen windfarm.
Which brings me nicely onto my next point. It’s important that energy companies make healthy profits because the onus is on them to invest in energy sources. Our energy supply is reliant on the private sector for its construction and maintenance.
All six nuclear power stations in the United Kingdom are operated by EDF Energy, wholly owned by the French state owned EDF (Électricité de France).
Five of those six nuclear power stations are due to come to the end of their lives in the next six years. Only one of them will definitely be replaced by a new nuclear power station – Hinkley Point C, which is due to start generation in 2026 and is set to cost between £22 and £33 billion over a 35-year period.
The conspiracy that foreign-owned energy companies charge more to British customers to subsidise those in their own countries doesn’t stand up to serious scrutiny.
At its peak in 1997, 26% of the UK’s electricity was generated by nuclear power. Since then, that figure has decreased to around 19%.
So why are your energy bills so high, and why are they about to get a lot higher? This has little to do with ‘greed’ by the energy companies, and a lot to do with poorly thought-out and utterly illogical energy policies pursued by both Labour and Conservative governments.
Going by SSE’s figures, of a typical dual fuel bill, approximately 36% is spent on the wholesale purchase of gas and electricity by the energy companies.
A further 24% is spent on delivering energy to our homes. The energy companies have to pay other bodies such Western Power Distribution* to build and maintain equipment needed to distribute energy. Ofgem regulates how much money the distribution companies make from this.
>>>>[INSERT by G.L-W: Additional info. Western Power was until recently owned by a foreign Company/Investor but has now been purchased by The British Government.]
The operational costs of the energy companies themselves account for around 20% of our bills, which includes everything from billing, customer service and IT systems.
Around 13% is spent on government environmental and social schemes – more on those in a moment.
A further 5% is a VAT charge levied on all gas and electricity bills, which was mandatory when the UK was in the European Union.
Now that Brexit has happened, the government could remove this 5% charge with ease if it wanted to, as it has already done for sanitary products. During the 2016 campaign, Boris Johnson pledged to do exactly that, but he has now backtracked on it, instead favouring a more complex system of taxpayer-subsidised loans.
The remaining 2% is the profit the energy company makes. So if you are an average household and currently spend around £800 per year on energy bills, just £16 of that is profit.
Yes, that’s right, just SIXTEEN pounds of your energy bill is profit. SSE has around 3.6 million domestic customers in the UK. In other words, to average that out very crudely, without including business and industrial customers, SSE would make a profit of around £57.6 million per year from supplying gas and electricity to domestic customers alone, which is hardly excessive.
Now, back to those ‘government environmental and social schemes’. There are currently no fewer than six levies on our bills which come under this heading, including subsidies towards the cost of wind farms and other renewable energy sources, feed-in tariffs, whereby householders are paid for excess electricity generated through domestic wind turbines or solar panels, along with subsidies for low-carbon electricity generation schemes.
The other levies are the warm home discount, where £140 is paid to those on low incomes; the energy company obligation, which helps low-income households upgrade their heating systems to more energy-efficient models, and a small levy to subsidise the cost of suppling power to the most remote areas.
Trade body Energy UK states that for electricity-only customers, the levies make up a total of around 25.5% of their bill, substantially higher than the figures quoted above for duel fuel customers.
All this can be traced back to 2008, when Gordon Brown was Prime Minister and future Labour leader Ed Miliband was Energy Secretary.
Mr Miliband, a committed disciple of the wobbly theory of man-made climate change, pushed through the Climate Change Act, which clobbered ‘green levies’ on households through their energy bills.
David Cameron became Prime Minister two years later, and himself was a follower of the ‘climate change’ cult, but he was no fan of the levies, and in 2013 was reported to have told officials to “get rid of all the green crap” from energy bills, but he was in coalition with the Liberal Democrats and they watered down his plans to do so, putting the cult before any pretensions of caring about the energy bills of the poorest members of society.
Boris Johnson, who now leads a Conservative government with a healthy majority, could pass legislation to remove these levies with ease, and being outside the EU means he could remove the 5% VAT with ease. But he has not done so, such is his (or should that read his wife’s?) commitment to ‘net zero’.
Let’s be grateful for one thing. Unlike many European countries, Britain is in no way dependant on Russian gas. Our gas supplies come from reliable countries like Norway. However, low supply from Russia pushes gas prices up for all.
The global gas price rises can be attributed to high demand from Asia, low supply from Russia, and fire affecting imported French electricity via a subsea cable, which is unlikely to be repaired until the end of March.
And, of course, events in recent days with the Russian invasion of Ukraine have led to a further eyewatering surge in gas prices.
Britain is in a favourable position compared to Germany, who insanely committed to winding down nuclear energy completely in response to the Fukushima disaster of 2011, leaving the country dangerously dependant on Russian gas supplies at a time of ongoing conflict in Ukraine.
That’s the good news. The bad news is that for the last 15 years, Britain’s energy policy has been guided by climate change dogma rather than prioritising national security, stability in energy supplies and keeping bills as low as possible for the British public.
In the past year, 39% of the UK’s energy has come from gas. Less than 20% has come from wind, 4% from solar, 16% from nuclear and 7% from biomass. The remainder came from sources such as hydroelectric and pumped storage.
And then there’s coal, which accounted for just 1.7%, down from 25% just five years ago. During the last decade, perfectly good coal-fired power stations such as Didcot A and Ferrybridge C have not only been closed (meaning they could be mothballed for future use), but they have been blown up, meaning they are lost forever, all in the name of ‘climate change’ dogma.
To put this absurdity into context, the UK’s whole electrical generation capacity, in all forms of power, is 85 gigawatts. If we gave up using electricity entirely, it would make no difference to the impact of Chinese coal burning, fuelled by enormous new coal fields in Inner Mongolia.
The UK has a plentiful supply of coal, and to wind it down, resulting in a much greater dependency on foreign gas, leaving consumers horribly exposed to global energy markets, is madness.
Nor has Boris Johnson’s government committed to alternatives. Aside from the closing of ageing nuclear power stations without planning replacements, there has been little sign of enthusiasm for making the most of tidal power in the Severn Estuary or elsewhere.
Earlier this month, the Oil and Gas Authority ordered the closure and sealing of the UK’s only two shale gas wells near Blackpool.
This really is beyond bonkers when we examine the facts. The process of fracking involves drilling down into the earth, after which a high-pressure water mix is directed at the rock to release the gas inside.
Water, sand and chemicals are injected into the rock at high pressure which allows the gas to flow to the head of the well.
The down side is that if this work is done irresponsibly, it can result in earthquakes. In August 2019, an earthquake with a magnitude of 2.9 on the Richter scale was recorded near to the site. The regulator concluded it was not possible to predict the size of tremors caused by fracking, and ordered the wells to be sealed. While this is not a legal ban, it has effectively put a stop to fracking in Britain.
Let’s put the August 2019 earthquake near the site into context. On 21 February this year, there was an earthquake measuring 2.1 in Walsall in the West Midlands. There were few, if any media reports, and there was absolutely no cause for concern.
On 23 February, there were two earthquakes in the early hours of the morning in Ramsgill, North Yorkshire, measuring 2.2 and 1.5 respectively. Again, there was little if any media coverage.
The reason being that you are highly unlikely to notice anything at all if the earthquake measures below 3.0.
At 3.0, you may notice a hanging object swing a little, but you are unlikely to feel anything unless you are sitting still or lying down. Even an earthquake of 4.0 feels like little more than a large truck passing by.
To give an even greater sense of perspective, fracking in Lancashire in 2011 led to two small earthquakes, and the government imposed an 18 month ban. When the ban was lifted, a traffic light system was introduced to regulate fracking and seismic activity.
A red-light event is when fracking causes an earthquake of 0.5 or greater, which means fracking has to stop for 18 hours while everything is checked. Yes, you read that correctly. An earthquake measuring just 0.5, well below what any person could feel, leads to an immediate shutdown and a safety inspection takes place.
It’s also true that when Cuadrilla started fracking outside Blackpool in October 2018, it triggered 57 small earthquakes in two months, the largest of which measured 1.5, which is still comfortably below noticeable levels.
Now here comes the really good news. The Bowland Field in Lancashire harbours 37.6 trillion cubic meters of shale gas. Even if we extracted just 10% of it through fracking, we’d have enough gas to be self-sufficient for FIFTY years.
The solutions to Britain’s energy needs are remarkably straightforward. The British people elected a Conservative government with an 80 seat majority. The government largely owes its majority to ‘red wall’ seats that broke the habit of many decades, in some cases a lifetime, by backing the Conservatives.
In modern politics, the big cities are largely held by Labour. Rural areas are Conservative. Elections are won and lost in medium-sized towns, which are often post-industrial areas badly in need of regeneration and opportunity.
People in these areas voted for Brexit for a variety of reasons. In some cases, it was due to concerns over uncontrolled mass immigration. Linked to that are concerns about an oversupply of cheap labour dragging down wages. For others, EU red tape was burdening their ability to ‘get on’ in life. A big factor was concerns about the lack of democratic accountability among the EU’s institutions. But the big overriding factor is that life just isn’t very good.
They voted in large numbers for a Boris Johnson-led government to deliver the Brexit they voted for in 2016, which, to be fair, he has done. But they also wish to see tangible benefits, not only from the flexibility that being outside the EU brings, but also from inward investment into their areas and big infrastructure projects.
The government could potentially wait more than two-and-a-half years before calling an election. Boris Johnson has an appalling track record in terms of his ‘what can I get away with?’ approach to life and his rather flexible relationship with the truth. This has caught up with him time and time again in both his professional and personal life over many years.
But as was often the case when he was Mayor of London, one of Mr Johnson’s biggest flaws is his lack of personal discipline and a lack of clear sense of purpose. He has a habit of drifting aimlessly from one thing to the next, with little regard for detail. This does not make for good government.
There are no winners from high energy bills. The poorest in society suffer most, but high energy bills are also bad for business, who need to pass on the additional costs to the consumer, which in turn once again hits the poorest the hardest.
Addressing Britain’s energy supply crisis needs to be put at the very top of Boris Johnson’s ‘in tray’. He could begin by passing simple pieces of legislation to remove all green levies and VAT from energy bills. Combined, these would lead to a reduction of 30% on electricity bills alone.
Then, he needs to stand up to his advisers, including his ‘environmentalist’ wife Carrie, and take rapid steps to make Britain completely non-dependent on other countries for our energy needs.
This does not mean cluttering up the countryside and coastline with ugly, noisy and wildlife-unfriendly wind turbines, but it DOES mean confronting unjustified fears on fracking by making the most of the shale gas that’s right beneath our feet.
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