Monday, 15 October 2012

Rising Energy Prices ... Money for Nothing

It’s a long time since I ranted!  I’ve just been too busy with the day job, tbh … and still am, actually – I shouldn’t be writing this, but I am simply so furiously angry I cannot not rant.

I have just got my npower letter telling me of their 17%! rise in fuel prices.
It is simply theft, and they are pulling the wool over our eyes to try to disguise it.

Because, in reality, npower – and the other energy companies like them – are taking the money out of our pockets … for doing nothing.
I will explain…

1.  npower are not MAKING your energy
We all have this image of the energy companies as the makers of energy.  We associate the energy companies with drills, and pipelines, and cooling towers.  We get upset because we are told that the raw cost of energy is falling whilst consumer prices are rising, but we never question the basic assumption that npower are making the energy we are using.
That is mistaken.

npower DO make energy, but it’s not in that capacity that Customer Services Director Julie Jaglowski wrote to me today.  She makes this VERY clear in her explanation that she is raising her prices because, quote: ‘the energy we’ve bought to supply your home is more expensive than last year’.

Thus the arm of npower which is writing to you to take another £15-£20 out of your pocket every MONTH is not actually making the energy you are paying for.  It is an entrepreneurial activity buying energy from the primary suppliers (one of which may or may not be another arm of npower) and then selling it on to you.

2.  npower are not DISTRIBUTING the energy to you
‘But,’ you frown, ‘surely npower supply me with the energy-they-have-bought’.
Wrong!  No they don’t.  Ms Jaglowski makes this very clear too in her letter, when she explains also that she is raising her prices because, quote: ‘we’re having to pay more to the companies who look after the distribution networks that deliver energy to your home’.

So npower do NOT distribute the energy either.  They pay someone else to do that for them

So what do npower do?
When you think about it, therefore, npower does NOTHING but facilitate.  They are ‘entrepreneurs’ only.  (In this respect, they are like many other companies which are currently swarming into our public services at the behest of our government – an alarming prospect, because things will soon therefore be exactly the same for our care services, our health service and our schools … but I digress.)

So npower buy the electricity from the suppliers, pay the distribution networks to supply it to us – oh yes and, we mustn’t forget, charge us for it – making sure that along the way their directors take obscene salaries and their shareholders receive obscene profits.  They are thereby capitalist leeches upon the supply chain, growing parasitically fat.

And because energy is not an optional purchase, and because they are one of a cosy little cartel of energy companies all doing the same, they have us over a barrel.

Thatcher’s legacy
Thus was not always the case, of course.  In the ‘olden days’, we had a nationalised Gas Board and a nationalised Electricity Board which MADE the energy, and DISTRIBUTED the energy, and CHARGED us a price-without-profit for the energy.

It was Margaret Thatcher who, after a propaganda campaign to convince us that this was a wasteful, inefficient, outrageously-expensive way of supplying energy, handed over the goodies to the private sector, telling us that we would all be SO much better-off as a result.

It is only now, of course, that we realise that, by ‘we’, she meant the Tory Party and their rich entrepreneurial friends.  When you are now getting a letter from npower telling you brazenly that the answer to rising prices is to ‘use less energy’ – be colder, eat cold food, live in the gloom, bath in 6” of water (in fact, just go back to the 1940s) – it is the inescapable outcome of that denationalisation, all those years ago.

It’s just that I don’t seem so much wealthier and warmer, like I was promised.

The Solution
Ultimately, the answer is to re-imagine government as an activity there to benefit the people, and not merely as a procurement process there to benefit the capitalists, and to renationalise gas and electricity.  In reality, this is a long way in the future, since currently even the Labour Party doesn’t believe in nationalisation.

For the moment, therefore, my suggestion would be for the government to set up an arms-length, not-for-profit, state-owned energy company (let’s call it ‘govpower’).  People who did not trust npower to supply their gas and electricity at the lowest possible price could then transfer to govpower, who would operate within the market.
govpower would not have to MAKE anything.  All the npower-which-wrote-to-me does is organise the purchase of energy from primary-sources, and organise its distribution through an existing supply network – at base, it’s merely a matter of telephone calls, contracts and the flicking of switches.  I am sure they do so very efficiently, and I am not even bothering to try to find an alternative supplier.

But the presence of a state-sponsored, not-for-profit alternative in the market wouldn’t half ‘keep them honest’.