Miliband’s energy price fixing pledge will do nothing to address the market’s endemic problems

26^th September 2013

ResPublica’s Caroline Julian argues that the policy will only tweak the failed market that we have, rather than transform into the market we need

True, our energy bills are soaring and more households are sinking into fuel poverty, but such endemic problems are the result of much larger infrastructural issues that the party leaders must address. Ed Miliband’s energy price fixing policy will only serve as a ‘sticking plaster’ solution to what has become a non-competitive market dominated by just a few players.

It is easy to pin the blame on the larger utility companies, but the nature of the energy market we have today concerns much more than simply the players within it. Due to the gradual nationalisation and liberalisation of the UK’s energy market in the late twentieth century, our national infrastructure and accompanying energy policy has historically been geared toward large and centralised models of generation and supply, giving way to the 99% retail market share that the ‘big six’ energy companies have today.

Such developments are in stark contrast to other European countries, which maintained a more local and municipal model for the distribution and supply of their electricity. In Germany, for instance, there are over 900 suppliers that cater for specific localities and support local generators. In the UK, there are only 30 national licensed suppliers that meet the energy demands of consumers from across the country.

The same is true of production. In Germany, community energy, which includes co-operatives, farmers and small businesses, accounts for 46% of all energy produced from renewables. In the UK, this figure stands at just 0.3%.

The development of such a concentrated energy infrastructure in the UK has effectively prevented market entry by local authorities, small businesses, communities and new suppliers. Private investment, in the context of market liberalisation, crowded in greater innovation and improvements to our national infrastructure, but it also crowded out localities and communities, and effectively dampened any ignition for home-grown enterprises.

Ed Miliband’s policy will only maintain the failed market that we have, rather than transform the energy market into the one that we need. It is stuck within the old discourse of post-war politics, which works within an either state- or market-controlled paradigm, rather than seeking to change the terms of debate by truly addressing the vested infrastructures that have created such a vast energy inequality.

What is needed is true reform: greater competition, choice, innovation and investment, and a greater appreciation of the potential for communities and localities to re-enter the market. A recent report by ResPublica reveals that if the right national and local policies are put in place, community energy could grow 89 times its current size, enabling more localities to benefit from a greater ownership stake and, in some cases, lower energy bills. This should play a key part in the forthcoming Manifestos.

Party leaders must step outside failed paradigms and think much more innovatively about the future of the UK’s energy market. Without such thinking, high prices, energy inequality and fuel poverty will simply not be addressed.
ResPublica will be hosting a fringe event at the Conservative party conference with the Minister for Energy and Climate Change, Greg Barker MP, his PPS, Laura Sandys MP, Andy Atkins of Friends of the Earth and Iain Peters of British Gas. ‘Keeping the Lights On: A 21st Century energy economy’ will take place in Lancaster Suite, Midland Hotel, in the secure zone, from 5:30 – 7:00pm.