Thursday, January 17, 2013

Miliband slated for putting up Energy bills

The leader of the opposition, Ed Miliband, has been slated by Yahoo's "love money" internet web financial advisor on the grounds that mistakes made by Red Ed when he was Secretary of State for energy are partly to blame for the current round of increases in fuel bills.

In a "Lovemoney" article called Miliband's mistake pushes up energy prices the analyst argues that a "sloppy mistake" by Ed Miliband as Energy secretary in 2009/10 was a major cause of energy price hikes such as the 8.7% by which E.ON's bills will go up tomorrow, costing the average customer £110 per year. There have been similar price rises well ahead of inflation from other suppliers.

The article describes how "one of the biggest mistakes" in recent energy policy was made in dealing with transmission investment costs. It says that

"The problem Miliband faced was how to transport the electricity created by new wind farms to the national grid. Expensive new infrastructure was needed to achieve this – especially from offshore wind farms.

"So what was Miliband’s solution?

"Offer a very generous package to potential suppliers so that plenty of businesses would want to build the infrastructure.

"So under Miliband’s plan, transmission companies were granted 20-year licences where revenue would be guaranteed, rising in line with retail price inflation. If the companies failed to fulfil their obligations, the largest possible fine would be 10% of their income."

The article points out that the House of Commons' Public Accounts Committee has investigated the licenses awarded under these terms and concluded that those granted so far

“appear heavily skewed towards attracting investors rather than securing a good deal for consumers.”

The author adds that

"It’s estimated that the transmission companies will receive an annual return of 10% to 11% on their investments, yet they’re taking minimal risk. These easy profits will be paid for by consumers like you and me, and we have Ed Miliband to thank." and

"... we shouldn’t forget under whose watch this system was created."

You can read the full article here.

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