EDF has ConDems over a nuclear barrel
So much for the so-called virtues of the free market. The Coalition government, desperate to maintain energy supplies at any price, has abandoned its previous policy and will now offer nuclear generating companies cash to build new power stations.
French-owned global energy giant EDF has demanded – and is going to get – 40-year's worth of subsidies in what amounts to an outright state bribe to run new plant in the UK.
The ConDems swore after the election that new nuclear expansion would have to pay for itself. But now the government is frantic because the dash for gas has left the UK frighteningly dependent on a global market where a dwindling supply is meeting a growing demand.
The on-shore dash for gas opened up by the government will allow fracking and coal-bed methane capture. Even fully exploited, however, these deposits are small potatoes, leaving the UK reliant on ever-more expensive gas imports.
There are new sources of gas from wholesale fracking in the US but this won't reduce prices, only temporarily fill the gap left by giant north European fields that are now running down.
Two of the major energy corporations have decided not to bid for the UK's new nuclear plants, so EDF is the last firm standing. From that monopoly position they are demanding "contracts for difference" that guarantee a minimum price. If the market price falls below that, the government will pay the balance.
So as youth centres close, and elderly and sick people die lying in their own excrement, and months of austerity stretch into years to appease the financial markets, EDF will be shouting "Vive l’Entente Cordiale" as they rake in taxpayers’ money.
"a car-crash of an energy policy"
Alistair Buchanan, head of energy regulator Ofgem, is warning that UK customers face higher bills for years not as a result of subsidies for renewables (Tory Neanderthals take note) but because of reliance on expensive imported gas.
So what the 15 nuclear energy staff currently seconded to government departments (according to campaign group Nuclear Spin), are whispering in ministers' ears is something alone the lines of "come on you might as well agree a subsidy price, because it will probably never kick in. Prices will go on soaring for years, and we'll make a fortune, but the guaranteed minimum will help us borrow the £16 billion we need to build the new plants."
Now the gas plant owners are not happy. If nuclear is getting subsidies, they are demanding the same to build new gas plants to replace the older coal-fired stations that are closing.
And the oil industry – well that is already floating on a sea of tax breaks. A briefing published by Platform shows that BP's pre-tax profits tripled in 10 years from 2001 to 2011 but its UK tax payments stayed more or less the same. Profits went from $13.1bn in 2001 to $39.8bn in 2011 – tax payments from £707 million to £730 million. If the corporation tax payments had risen in line with profits that should be $2.1bn.
profits up 25% tax down 18%
Shell actually paid less tax – down from £958 million in 2006 to £783 million in 2011. This despite global pre-tax profits rising from $44.6 billion in 2006 to $55.6 billion in 2011. So profits up 25% – tax to HMRC down 18%.
The energy market delivers nothing but a lose-lose scenario for ordinary people. They pay ever-higher fuel bills, subsidise energy corporation profits through their taxes, get no help to make their homes more energy efficient, and suffer the effects of climate change and pollution. And they watch as the nuclear industry leaves deadly waste lying around in canisters for our grandchildren to worry about. It is, as Buchanan said, a "car-crash of an energy policy".
Access to energy at an affordable price should be a basic right. Profiteering corporations have all but converted that right into a privilege, like so much else in Britain. Lower fuel bills and a transition to a clean, green energy future demand democratic ownership and control of the industry. That’s a goal we’ll have to achieve ourselves.
21 February 2013