Is it just my suspicious mind …

… or is this morning’s announcement by EDF Energy of swinging price increases (22% for gas, 17% for electricity) connected to yesterday’s news that they and Centrica are close to final agreement to buy UK nuclear firm British Energy in which the Government has a big stake?

Note: EDF Energy is the UK subsidiary of Electricite de France – the French state-owned nuclear utility which has 58 nuclear power stations in France.  In the UK it has acquired SEEBOARD (formerly South Eastern Electricity Board), London Energy (formerly London Electricity Board), and SWEB Energy.  The attraction of British Energy is said to be largely its portfolio of existing nuclear sites which are seen as the best bet for the location of the next generation of nuclear power stations planned by the Government.  Entirely by coincidence I blogged on one of the shortcomings of this plan only yesterday at almost exactly the time the takeover was being announced.

While it’s perfectly true that global energy prices are high is it just possible that the price rise will include an extra bit to pay the £12 billion price tag for British Energy?  With three of the larger UK utilities involved, the competitive pressure acting to moderate price increases is clearly much reduced.  Even the other utilities are not likely to be much help.  For them the obvious strategy is to play ‘price follower’ – slip streaming the EDF/Centrica/BE troika’s lead on price to trouser extra profit while bemoaning the ‘difficult’ world market.  Significantly, only a 10% gas price increase is expected in France according to John Hemming’s Web Log.

Meanwhile the BBC’s Robert Peston askswho gets the Government’s £4 billion share of the proceeds.  In theory it goes to the Nuclear Liabilities Fund to pay the huge bill for decommissioning and cleaning up existing nuclear power plants but Peston worries that it may, in effect, be used as an offset against public borrowing.  He has a good point.  (The comments thread is also worth reading).

So to recap.  It appears that we have a situation where countless people will fall into fuel poverty partly to pay for the acquistive strategy of a company wholly-owned by a foreign Government while our Government gets only a bung to cover it’s short-term funding difficulties while leaving the costs of clean-up to the next generation. 

You couldn’t make it up!

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One response to this post.

  1. […] has been grilling the bosses of the big energy companies about rising prices and concluded as I blogged last week that the energy market is simply not working properly.  Its Chairman, Peter Luff, was all over the […]

    Reply

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