Those power cuts - by Richard... Wednesday, September 02, 2009

Those power cuts - by Richard... Wednesday, September 02, 2009

Booker gets to follow-up on the "power cuts" story today in The Daily Mail. 

Necessarily written in the breathless style for which that paper is so loved, you have to read well past the headlines and deep into the text to find the core ofour piece yesterday. But Booker does tell us that the government hopes to save Britain's electricity supplies from disaster with a scramble to build dozens more gas-fired power stations. 

This means, writes Booker, that we shall be looking to gas to provide anything up to 80 percent of our electricity ... at a time when world gas prices are likely to be soaring. He adds that, even if, by this extremely risky gamble, we might manage to close the energy gap now fast approaching us, it could only mean a further massive hike in electricity prices, driving millions more into "fuel poverty". 

The price-hike is, of course, the issue. With the torrent of new CCGT plants coming on-stream (DECC estimates that there is 10GW new capacity in the pipeline), there is little real risk of power outages, especially if we see what amounts to rationing by price. 

Against current estimates, we are likely to see lower than anticipated demand as high energy industries (such as aluminium production) depart these shores, while hundreds of thousands of people "self-disconnect" from the electricity supply.

This is a little-appreciated development in the electricity supply industry. While compulsory disconnections used to be an unwelcome feature of any downturn, these no longer happens. Instead, delinquent customers are issued with pre-payment meters. Thus, in theory, supply is maintained. Customers then "choose" to disconnect themselves when they cannot afford to top up their meters.

With the advent of "smart" meters – at an estimated cost of £7 billion – that facility will be extended, as suppliers will either be able to ration or cut-off customers entirely, at will, giving a new dimension to controlling supplies. Given an anticipated shortfall, consumption limits can be imposed on selected customers, enabling suppliers to manage peak loads better.

For this reason also, the 70s-style "power cut" is not likely to happen. The political cost of allowing the lights to go out "all over England" is too great and the impact will be thus "managed".

The big problems, as Booker indicates in his piece, is the longer term gas supply problem. While numerous industry sources report lower than expected demand, increased supplies and falling prices, long-term forecasts are pessimistic. A substantial demand-supply gap of more than 500 million tons of LNG is expected to develop by about 2012. 

This is more of a financial than a resource problem, as infrastructure and development projects have been cancelled or delayed as a result of the "credit crunch". 

The problems are solvable, but they are going to cost, all adding to the long-term price pressure on supplies. Add temporary supply miss-matches and spot prices could soar, just as the UK is increasing its reliance on the fuel. The price-hikes we have seen recently were only a rehearsal. The real crisis is yet to come.

It is instructive, though, to see how readily other media outlets and commentators have bought into yesterday's Telegraph story, although even that paper could not quite make up its mind as to who to blame. While the leader had Labour in the frame, Irwin Stelzer later put the responsibility at the door of all politicians.

Stelzer is closer to the truth, albeit that - despite the excitable scribbling that we have seen of late - it is price and not capacity is the issue of the future. And that situation is unlikely to ease as long as the Conservatives are slaves to the green agenda – and the EU – and continue to support the fatuous wind-based renewable policy, as well as carbon capture which is holding back coal exploitation.

If the lights go out, therefore, it will be because we can no longer afford to keep them burning.

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Another "perestroika" think-tank - by Helen...

Readers of this blog who have long memories will recall the excitement caused among Western politicians, journalists, academics and other analysts Mikhail Gorbachev's concept of "perestroika", otherwise known as reconstruction. It was a wonderful get-out clause for those who fought hard against all evidence about the Soviet system. Here was a leader who believed in that system but wanted to reform it.

Some of us maintained that it could not be done and we turned out to be right. In case anybody is wondering, there was no mass resignation of all those experts who turned out to be wrong.

It is, however, a very useful expression and there are many "perestroika" organizations, both europhiliac and eurosceptic. We used to refer in those terms to the Centre for European Reform, but that has changed in the last two or three years and become europhiliac without much attention being paid to any possible reconstruction though they do, from time to time, call for reform of something or other in the European Union.

Its long-standing director, Charles Grant, Jacques Delors' biographer, has now turned up in another "perestroika" organization, Business for New Europe. Actually, it has existed since 2006 but has now turned up on my horizon or, to be quite precise, in my e-mail inbox as part of the regular information I get from the Stockholm Network, a pan-European network of market-oriented organizations.

So what is Business for New Europe and what does it hope to achieve? It "is an independent coalition of business leaders articulating a positive case for reform in Europe" and its aim is "to support the UK's active engagement in Europe, and a reformed, enlarged and free-market EU". This is rather a muddled set of aims as there seems to be no difference in the minds of those who wrote them between Europe and the European Union. Furthermore, the "reformed, enlarged and free-market EU" is nothing much more than a pipe-dream even if BNE and its talented staff could define what they meant.

Going past all the various refugees from the short-lived "Business for Europe", ex-FCO people, including Sir Stephen Wall, and Charles Grant we come to those who, presumably, actually run the place. Well, decide on the policy, at least, as it is run undoubtedly by badly paid assistants and unpaid interns.

Zaki Cooper has been Director of Business for New Europe SINCE February 2006. Prior to that, he worked as the Head of External Relations for the Chief Rabbi, Sir Jonathan Sacks and in public affairs for One to One/T-Mobile between 2000 and 2003. He has also worked for a British MP and a U.S. Congressman. He has a BA in Politics and Parliamentary Studies from Leeds University and an MPhil from Cambridge University in Social and Political Sciences. As well as his role at BNE, Zaki is also an inter-faith consultant and commentator.

Vrey nice, too. All the right qualifications: degrees from good universities but dubious subjects; jobs in public relations and work for various politicians; inter-faith consultant (wot dat?) . I see no particular reason to suppose he knows anything about the EU but I may well be wrong. Certainly this letter to the Wall Street Journal, published on July 1, does not exactly fill one with any kind of faith (if I may use that word) in Mr Cooper's knowledge and understanding:

Wall Street Journal, 1 July 2009

EU Membership Is a Boon For Britain

It is ironic that there is still so much ambivalence and hostility toward the European Union at a time when the direction of travel has been toward Britain ("The Dis-Uniting Kingdom," State of the Union, June 30). Since 2004, the EU has expanded to 27 member states and has made progress on strengthening the single market, such as the services directive which liberalized services, accounting for 70 percent of the European economy.

Developments in the area of financial services illustrate that the debate has moved in a Britain-friendly direction. Britain's financial industry is an important component of the European economy and London has established itself as the leading financial market in the EU. The single market and in particular the free movement of capital has been integral to that process. The corollary of the single market is regulation, and again many of the efforts to coordinate the regulatory structure have helped the development of financial services. Obviously the financial crisis has necessitated some new thinking and changes to the regulatory system. But rather than a federalized single regulator, many of the ideas being considered aim to increase coordination as well as strengthen warning systems. Such measures could make the British financial services industry even more robust to withstand economic turbulence. While there are specific regulatory threats such as the directive on Alternative Investment Fund Managers, the EU can manage overall to help rather than hinder Britain's financial services dynamism.

Zaki CooperDirector, Business for New Europe

They do also have a Public Affairs Executive:

Arif Shah joined Business for New Europe in September 2008. Prior to this,he worked at Westminster for a Member of Parliament and a member of the House of Lords. Arif has been closely involved with various non-governmental organisations including Human Rights Watch, Médecins Sans Frontières and WarChild Canada. He has a MA in International Studies from Durham University and BA in Political Science from Dalhousie University (Canada).

A true denizen of the tranzi-world.

The Advisory Council gives us a list of all the usual suspects from the business world but it hardly matters. No think-tank ever asks for advice from its Council. They would be mad to do so.

What worries me more than anything is that I can easily imagine that the Conservative government, should we have one after May next year, will turn to organizations like Business for New Europe for advice because they are so on-message.

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We thought of it first - by Richard...

Joe Borg, the EU Fisheries Commissioner, has called for an end to "discards". Instead, we are told, he believes that fishermen should be limited by "effort". For example limiting the number of days vessels can spend at sea or where boats can fish. "Replacing quotas by effort can be a very effective way of reducing the environmental impact of fisheries, and in particular of discards," he says.

This has been picked up by the BBCwhich retails the Scottish Fishermen's Federation welcome for the idea, although SFF chief executive Bertie Armstrong also warns that simplifying issues may not solve them. "The consequences of using days at sea as the only control measure will require a great deal more thought. It is at best unpredictable and may, for some fisheries create more problems than it solves." 

"Nevertheless," Armstrong adds, "it is an encouragement that the Commissioner is prepared to be truly radical and look at all options. We will, therefore, be asking him as a matter of urgency for more detail on what he is actually proposing." 

Of course, if you want more detail of how a fisheries scheme could work, you need go no further that look at Owen Paterson's draft, dated January 2005, which we heralded on this blog. In pre-eminent position as one of our recommendations was: "Effort control based on 'days at sea' instead of fixed quotas," with much more detail of how that system could work.

Although then adopted by the Conservative Party as policy, it was quietly dropped when Cameron ascended to the throne and has been ignored even since by the Party. Now, nearly four years later, the EU commissioner is coming round to our way of thinking. But it also says a great deal that what was urgent those four years ago is still urgent, and the commission is still just talking about "reform". 

At least, though, the commission is talking, which is more than is the Conservative Party, which has long since abandoned the fishing industry to its fate. Our Dave doesn't "do" Europe, which is why some of the campaigners who were once at the forefront of trying to get the Party to move on this issue have given up completely – and voted BNP at the last euro-elections. 

But, in another five years time, perhaps, when the commission finally get down to offering formal proposals, to deal with what is left of the fishing industry, Dave can dust off Owen's paper and pretend it was his idea all along. We thought of it first, he can say, and all the little Tory boys can cheer at their good fortune at having such a far-seeing leader.

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Stop fighting wars! - by Richard...

The Armed Forces exist primarily to buy increasingly expensive equipment in order to keep high-paid industrial workers in jobs and to keep arms dealers (aka the defence industry) in the luxury to which they have long been accustomed. That much seems ever-more evident with the latest initiative from the Defence Industries Council (DIC) which is today launching a high-profile campaign seeking an increase in defence spending.

More on Defence of the Realm.