Ed turns up the volume on Britain’s quiet crisis

By Claire Spencer / @thedancingflea

“So over time there is going to be upward pressure on energy prices.

But that makes it all the more important we get the best possible deal for customers.

So let’s break the dominance of the big energy companies.

Let’s call a rigged market what it is.

And get a fairer deal for the people of Britain.”

I have always supported Ed Miliband as Labour leader because his humanity and his experiences shine through his politics. The lines above are a great example of this: I can see a caring son, a protective father, and a man who understands, thanks to his experience at the helm of DECC, how the battle between resource depletion, climate change and energy prices is likely to play out. And on this issue, energy, this is something that Labour has to get right.

This particular battle has long since started – here in the UK, we are paying more and more for our energy. In some rural areas of Northern Ireland, fuel poverty stands as high as 80%. Average gas and electricity bills now stand at £1280 per year. So this winter, as last winter, and the winter before that, people all over the country will be rationing their heat, avoiding their cookers, and sleeping in cold, damp rooms.

This is the quiet crisis that Ed refers to. Quiet not only because of pride and human resilience, but because people go through it without thinking that things could be different – that things should be different.

Ideally, we want people to use as little energy as possible to live a comfortable life. Schemes like the Green Deal will (hopefully) make it easier for people to make their homes more energy efficient without punishing their wallets – and give people a greater understanding, respect even, for the preciousness of energy. But we also need to ensure that the energy that heats (and cools) their homes is priced as reasonably as possible.

This was fleshed out a little in Meg Hillier’s speech to conference, where it was suggested that the extraction/generation of energy will be separated from the retail. Any energy generated will go into a central pool, which any company will then be able to buy and sell on. This is absolutely the right thing to do. The market is not working as it should – the conspiracy of the Big Six has ensured that there is no incentive to drive down prices, just to collude to raise them higher and higher. There isn’t even an incentive to make sure that our country has enough energy for its needs.

What these changes should do is lower barriers to market entry for new generators – which should have a positive effect on the price, and the amount of energy available. It has been tried before (having been scrapped in 1997) – but the market it should have created was distorted by the hedging contracts held by players in coal and nuclear, not to mention the then generation duopoly. With the benefit of hindsight, and more and more communities generating their own energy, we can do it better this time.

Also, people need to know what they are likely to pay before they pay it. There are hundreds of tariffs available on the market at the moment, and even the most numerate of consumers would struggle to compare them correctly. As it is, only the digitally able are in a position to compare prices and switch suppliers. Further, people who use less energy should not pay more, on average, than high users do.

Both of these issues can be resolved by the proposal for a daily standing charge, and a set cost per unit of energy – this has been championed by Which? in recent years, as it is a solution that improves the ‘choice architecture‘, and puts the consumer first.

None of this will be easy. The Big Six will fight to protect this broken market, because it’s the arrangement that makes them the most money. But if we keep falling for their arguments, the silence of this crisis will deafen us all.