Competition alone won’t fix the UK’s energy market, says the union that represents 24,000 managers and specialists working in generation, distribution and transmission. Prospect was responding to the House of Lords’ report into reforming the energy market. Comment from Dai Hudd, Prospect Deputy – General Secretary.
Prospect deputy general secretary Dai Hudd said: “The key recommendation that the UK’s broken energy market can be fixed by introducing further competition is flawed because no government would sit back and watch the lights to go out. We welcome the suggestions to reform the capacity market, set up an energy commission and provide more funding for research, but the report contains little original thinking on how to improve the security of energy supply.” The report’s conclusion that government intervention has ‘led to an opaque, complicated, and uncompetitive market that fails to deliver low cost and secure electricity’, is evident to everyone who works in the industry, said Hudd. The UK was the first to deregulate its energy supply market. But three decades on, deregulation has not improved the medium or long-term security of our energy supplies because profits go to shareholders who are mostly outside the UK. There is also little evidence, other than renewables, that deregulation has encouraged new entrants and maintained competition. “So we have a market that cannot create spare capacity to deal with fluctuations in load demand. Rigging the market to provide space for the private sector to invest hasn’t worked.
“Because governments have been wedded to competition. Over-reliance on the market and market regulations has led to tightened capacity margins and the highest industrial energy prices in the EU. Not all of that can be blamed on efforts to meet our carbon emission targets. This is an industry that requires significant forward planning and funding before any power can be delivered. The report highlights the urgent need for a wider national discussion on how to encourage investment and therefore new technology. The public’s reaction to the problems with Southern Rail should be noted – people will not tolerate politicians being absolved from responsibility for services, even when they are heavily regulated and in private sector hands.” Hudd concluded.
