Energy market
Posted: Wed Sep 22, 2021 1:35 pm
What is happening now is classic.
In its ideology the Tory party thinks competition drives efficiency. So it privatises energy provision and sits back.
The industry is sold, so public assets move to the private sector and the revenue gained goes to....?
We have to erect a regulator to deal with the extremes of exploitation, and a raft of chancers move in, who do no energy creation but think they can make money buying smarter and billing for less...in practice the electricity and gas we consume arrives from exactly the same place as it did before, it's just that the bill comes from someone else. Along the way the customer foots the bill for sales and marketing efforts which were never needed before.
So when there's a major hike in supply cost most of those chancers don't have the reserves and working capital to continue. And their customers get moved back to one of the bigger players, who know that once they weather this storm they will have a bigger market share and less pressure on their prices from the novice suppliers.
This happens in every deregulated market; a flurry of newcomers and a latter culling. Exactly what happened in the US airline business, for example.
So you move from a national monopoly to a private oligopoly.
Our rash of 80s/90s privatisation was emulated nowhere else. Wonder why?
BTW wholesale energy prices have risen everywhere. But now the UK's are 2-3 times that in France and Germany.
In its ideology the Tory party thinks competition drives efficiency. So it privatises energy provision and sits back.
The industry is sold, so public assets move to the private sector and the revenue gained goes to....?
We have to erect a regulator to deal with the extremes of exploitation, and a raft of chancers move in, who do no energy creation but think they can make money buying smarter and billing for less...in practice the electricity and gas we consume arrives from exactly the same place as it did before, it's just that the bill comes from someone else. Along the way the customer foots the bill for sales and marketing efforts which were never needed before.
So when there's a major hike in supply cost most of those chancers don't have the reserves and working capital to continue. And their customers get moved back to one of the bigger players, who know that once they weather this storm they will have a bigger market share and less pressure on their prices from the novice suppliers.
This happens in every deregulated market; a flurry of newcomers and a latter culling. Exactly what happened in the US airline business, for example.
So you move from a national monopoly to a private oligopoly.
Our rash of 80s/90s privatisation was emulated nowhere else. Wonder why?
BTW wholesale energy prices have risen everywhere. But now the UK's are 2-3 times that in France and Germany.