Bishop Hill No hope, no change
Dec 9, 2013 Climate: Parliament Economics Energy: grid 
The foolhardiness of the current government's energy policy need hardly be reiterated, but word is getting round the political and economic mainstream that Labour is potentially just as bad. Last week Liberum Capital put out a briefing note estimating the damage done to the UK economy by the party's proposed price freeze:
The heightened political risk faced by the UK utility sector following the announcement of the Labour Party’s price freeze has materially impacted on the valuation of the sector and reversed the five year utility sector trade of Long UK / Short Europe. Total shareholder value lost so far amounts to between £7bn to £11bn. In our view, if the UK government is successful in politically neutralising Labour’s price freeze policy then some of this loss, but probably not all, could be regained. Some of the loss is likely to be permanent in our view because it is now apparent that UK politicians (like those in Europe) are unwilling to stand by the logic of their own energy policy and enforce the higher costs onto consumers that naturally follow from their de-carbonisation strategy.
Today, these remarks have been echoed by the OECD no less, which has damned the Miliband plan in no uncertain terms:
If you freeze the price of energy and the international price of energy rises, it means there's going to be a very big difference to pay," he said. "Who's going to pay the difference? Well, are you going to ask the investors to take the difference? Well, you know they'll probably go bankrupt. How are you going to get people to come in and invest to get their money back in 30, 40 years' time, when you are saying there's going to be a freeze? I think this is simply not consistent, not economically objective.
Reader Comments (52)
agrees with Bill....the engineers brought us the TSR2, Concorde, the AGR, the System X exchange - all of which would promote the UK as the centre of technical advance...and all of which cost far too much and did far too little and, a few of which (if any), were completed too late to prosper on export markets. Long live the engineers and hard scientitsts who led those initiatives! Those engineers were the stuff of greatness!
"...unwilling to stand by the logic of their own energy policy and enforce the higher costs onto consumers that naturally follow from their de-carbonisation strategy."
It's not just the logic of their policy, it's the raison d'etre for it. No price rises, no de-carbonisation.