Last October, Brian Reade wrote an article in the Daily Mirror with the headline ‘The time has come to re-nationalise our energy and send the pirates in suits packing’.
This view is shared by many on the left – but not by the Labour leadership. The main reason they will not renationalise energy is the very high cost. We have to accept that renationalisation is not going to happen. And that means we have to look for other ways of ensuring fairness for consumers.
As we cannot renationalise, we cannot have the government as the main producer. But that still leaves the question of supply. So, can we have the government as the sole supplier? Yes, we can.
The government can set up a national energy agency which becomes the sole purchaser and sole reseller of all gas and electricity produced by the competing producers and brokers as at present. This will provide benefits to both producers and consumers.
Benefits for Consumers
There will be no need to negotiate our way through a weird and confusing market which favours those who are able understand it. There will be no more deals, no more switching, no more visits to price comparison web-sites. Our way of purchasing energy can return to the simple and sane ways of former times.
Pricing policy can be negotiated openly with government. This would lead to a scale of charges that people want. Abolition of standing charges and the setting of low charges for first units consumed could, at last, become policy. In addition, rising charges for higher levels of consumption would be more popular than charging more for first units consumed.
Government can regulate pricing policy to benefit the poor and those who consume less than the average. The scandal of higher charges for prepayment meters can be addressed.
Benefits for Government
The Government can be at the centre of decision-making in this vital area rather than impotently observing a chaotic market which is infuriating and confusing the public. The present system makes the Government look weak.
Imagine a law allowing users to switch after three months. Now imagine an app that did it automatically for users. Everyone would be switching to the cheapest deal every three months. It is only because suppliers lock us into deals for one or two years that the present system works. So we have no choice for one or two years then we must choose – then we are locked in again. This is not consumer choice. This is consumer manipulation.
The so-called competition in the current energy market relies upon ignorance, confusion, locked in contracts and marketing wheezes. That is not real competition. Government wants real competition. This system enables it.
In many areas, for example the NHS and defence, the government purchases goods and services by means of competitive tender, and the Conservatives support this process. Energy supply to consumers can fit into this pattern.
Benefits to Energy Producers
There will be no overhead for collection of payments. There will be no bad debt to manage. The Government energy agency will need to purchase all bad consumer debt when it becomes sole supplier. It would then assume responsibility for managing that debt, freeing the energy producers of that task. There will be no need to engage in marketing or devise deals. The marketing overhead is very expensive. Costs will be reduced.
With a Government energy agency as sole purchaser and sole reseller of gas and electricity consumers, we can return to a rationally managed market which functions for the benefit of all – and not just producers as at present.