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ONE HUNDRED FIRMS BLACKED OUT

Alistair Buchanan has set sail on the good ship Discovery to find a solution to Britain's twin needs of meeting energy-security and climate-change goals.

But the Ofgem regulator might have better named his exploratory vessel Recovery, because this is a voyage to make up for lost time: it should have been launched years ago when North Sea supplies first started to run out and global warming began to be noticed.

Buchanan has been the target of criticism because he is the man at the helm, but the reality is that those who have really directed the energy policies of this country – past, present and future – are the landlubbers in Whitehall.

It is not so much Ofgem that has woken up to the dangers of the lights going out somewhat late in the day, but a government which has spent the last three winters insisting there will be no power blackouts.

As we know, this December the rhetoric actually ran dry, as 100 factories and plants around the country were told they were having their gas switched off with almost immediate effect.

Ofgem's Project Discovery is a consultation exercise airing a whole range of ideas about what might need to happen in future. These include enhanced subsidies for renewables with 20-year guarantees and even the creation of a centralised power-buying mechanism, possibly run by the state.

Much of it involves public money and state control. Project Discovery is in many ways an exercise which heralds the end of the largely unfettered free-market energy system and a return to the security of the past, when the publicly owned Central Electricity Generating Board ensured plenty of excess power-station capacity was kept ready for those cold winter days when power demand was greater than usual.

The Ofgem ship probably only had to sail from Dover to Calais to find much of what it was looking for. The government has been berating the French, Germans and others for their unwillingness to follow the Anglo-Saxon ideal in which most of the country's energy portfolio was handed over to the private sector and a competitive environment drove down consumer prices (temporarily).

The largely state-owned French companies, such as EDF, and German power behemoths, such as E.ON and RWE, kept their home markets relatively tightly regulated and protected for themselves. Meanwhile they took advantage of those innovative Brits, buying up all the assets they could find. So when a utility is needed to build a nuclear power station, it's no surprise that the only one left with the cash and the appetite is the Nicolas Sarkozy-backed EDF.

While the Dutch, Germans and others ensured their power companies invested in enormous gas storage capabilities, the UK has left it to the market, which did little about it, even though it has been clear for many years that the UK is becoming dependent on imported gas and needs somewhere to keep it.

The privatisation of the gas sector in 1986 and electricity in 1989 brought little in the way of strategic, long-term thinking and when the privatisation of the nuclear industry came in 1996 it swiftly brought problems, with British Energy having to be bailed out by the taxpayer within six years.

Now ministers once again are being called on to intervene because companies left to their own devices will not invest in new nuclear, wind and other low-carbon technologies. Having sucked profits out of the industry when government "interference" was a dirty word, they are – like the banks, railways and even car industry before them – keen to see the state step in and help them out with a greener and more secure agenda. The government should seize its chance.

Terry Macalister
guardian.co.uk


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