Given that we were so involved in that electricity privatisation and the design of the subsequent system, a little comment on something:
The obvious next question is why on earth you would design an energy system this way. The answer is ideological. In the 1980s, the Thatcher government had a problem. It was committed to privatising the power stations and grids that produced and supplied our energy. But its doctrine of efficient markets didn’t work for a system that, like the railways, was a natural monopoly. Its solution was to create a completely new, separate function of “energy supply”, whose sole purpose was to turn this natural monopoly into an artificial market.
The problem here is that if you’re entirely ignorant of even the words being used then you’re not going to be able to diagnose the system nor any problems in it.
A natural monopoly is a specific thing. It’s where a market or system will entirely naturally tend or trend to monopoly. A classified ads section perhaps. People advertise in one specific one because that’s where all the potential buyers look - the buyers look in that because that’s where everyone advertises. Or a social media network, there are 3 billion on the one of those because there are 2.999 etc billion other people on it.
There’s absolutely nothing at all which makes electricity generation a natural monopoly. There is no good reason why the people who own a nuclear plant should be the same as the folks who own windmills. Owning Drax doesn’t make any difference to the likelihood of the same organisation owning solar cells. Nor does owning any part of any one of those four things make owning a chunk of the next more likely, more affordable or even more sensible. Power generation just isn’t a natural monopoly.
Nor is power retailing, something which is largely a function of efficiency at running a billing system.
The grid, ah, now, yes, the grid is a natural monopoly. Wiring up the country twice is just one of those things which isn’t going to happen. Which is why at privatisation it was carved out of the CEGB and remained separate and highly regulated. For what actually happened at privatisation was to identify which exact parts of the whole system were a natural monopoly, therefore not to be left wholly subject to market forces, and which parts were not and which would function best when subject to as much market force as could be brought to bear.
The actual problem the electricity supply market is having now is that government has forgotten what it was doing and why. Introducing that price cap both limits the market forces being brought to bear and also bankrupts legions of the retail suppliers. Exactly what wasn’t to be done, limiting market forces in those parts of the whole system where market forces do and should be left to work.
But then as we say in the headline, if you’re ignorant of something, as The Guardian is here, then that’s not an aid to diagnosing, or even understanding, that something. The pity is that government seems to have made the same error.