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Home / Tim Worstall /A certain incompetence to this argument about electricity privatisation

A certain incompetence to this argument about electricity privatisation

Summary:
It is The Guardian, of course, that tells us that if only the electricity system were more communal, communitarian even, then things would be better. Freed from those vicious capitalists who just suck dividends and profits out of the system we’d be better off:The monopoly grid companies haven’t invested much in upgrading the system for renewable energy, but they have extracted huge amounts in dividends and interest. National Grid shareholders took £1.4bn out of the company in both 2020 and 2021, although that is still below their record take of £3.2bn in 2017. The private generators didn’t invest in renewables until we started injecting public money. The supply companies didn’t compete and just enjoyed extracting dividends, until even Theresa May admitted there had to be a price cap – a

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It is The Guardian, of course, that tells us that if only the electricity system were more communal, communitarian even, then things would be better. Freed from those vicious capitalists who just suck dividends and profits out of the system we’d be better off:

The monopoly grid companies haven’t invested much in upgrading the system for renewable energy, but they have extracted huge amounts in dividends and interest. National Grid shareholders took £1.4bn out of the company in both 2020 and 2021, although that is still below their record take of £3.2bn in 2017. The private generators didn’t invest in renewables until we started injecting public money. The supply companies didn’t compete and just enjoyed extracting dividends, until even Theresa May admitted there had to be a price cap – a humiliating acknowledgement of market failure.

The price cap is the market failure itself but let us leap beyond that and just feel how joyous it is to be free of capitalist exploitation.

This isn’t just theoretical. In other major western countries, most households do not have to play the market as in the UK. In Germany, public sector suppliers of energy are more trusted, and two-thirds of all electricity is bought from municipally owned energy companies (“Stadtwerke”). They avoid other problems of the UK system, too. Stadtwerke own and run the great majority of the distribution companies and have also played a leading role in developing renewable electricity generation. The Stadtwerke of Munich city council has been supplying enough renewable energy for the needs of every household in the city since 2016, and by 2025 will supply enough for all the local industries, too – your BMW will be made using public renewable energy.

Well, yes. Although we do need to add the one more little bit here. The EU tells us that the average price of electricity in Germany is .30 euros per KWh. That’s about 26 pennies in real money these days. The average price of electricity in Britain is, according to Go Compare, 17.2 of those real pennies.

German electricity is about 50% more expensive than British. Yes, true, some of that is the extra costs of the lunatic Energiewende plans but we’re not entirely free of such green levies here either.

This being the argument in favour of the capitalists plus competition of course. That in the absence of those two things prices will be higher. As they are in places without those two things. Therefore we all submit to that vicious competition and the exploitation by the capitalist classes because it makes us better off.

As Joan Robinson pointed out: “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.”

Just think how high fuel poverty would be if we were like Germany with those municipally owned companies and prices to match.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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