Overt energy company blackmail strongest argument for state owned utilities

An irresponsible but unsheathed blackmail stunt a few days ago by SSE has failed to attract the attention or the analysis it demands.

SSE is the company with three steel pylons falling down at Crossaig in north Kintyre because of ‘the weight of ice on the conductors’ – a matter whose accuracy must be investigated as the prevailing temperatures were very unlikely to breed ice at that level.

SSE owns Scottish Hydro.

It was reported on Friday, during our broadband outage, that SSE:

  • was cutting over 20% of its generating capacity – 2,000 MW – losing 160 jobs over the next 12 months;
  • was saying that this is being done because a number of its facilities are now not economically viable;
  • giving notice that it is delaying investment in new energy generation until 2015;
  • ascribing this decision to ‘uncertainty’ in the electricity market with the Energy Bill on passage through the UK parliament.

SSE’s CEO, Iain Marchant, announcing his company’s cutting of generating capacity, had the chutzpah then to warn of the ‘very real risk of the lights going out’. Well – Yes. He’s turning them off. That’s not a risk. It’s an act of war.

The energy companies are prepared literally to hold the UK government hostage by cutting capacity and making alarmist public threats.

Their purpose is to squeeze higher energy subsidies in the sector’s famous double whammy of generous subsidies on the one hand and constant price hikes to customers on the other. Nice work if you can get it. They can and they do.

The baldness of this blackmail stunt could not clarify more powerfully the follow of the privatisation of utilities.

Ambitious Home Secretary, Theresa May, recently said – in defending yet another proposed privatisation – that the public sector is not a natural service provider.

That is historically correct in the UK, in terms of inefficiencies, strikes, featherbedding and what the newspaper industry used to call ‘Spanish practices’.

However, it is irresponsible and feeble minded not to confront the alternative:  How can the state become a first class provider of essential services? Because it must.

These do not have to be run by those whose public sector background is inappropriate. Management teams can be recruited from the private sector, with their responsibilities, rewards and accountability intelligently specified.

Many places across the UK today – and pre-eminently in Scotland and Northern Ireland, have been without power for days on end.

In the same time frame, a major energy company with so great a delivery responsibility here, chooses to step into the public spotlight to hold a gun to the head of national government in saying ‘We’re turning off over 20% of our generating capacity until you guarantee us greater subsidies’.

How much more warning do we need of what lies ahead if we don’t start thinking newly of what we must control and own ourselves to guarantee our sustainability?

This SSE move was surreally bold and can only have been made in the certainty of its perception of a susceptible central government at Westminster.

Imagine the ducks and drakes they would play with a new and instantly swamped independent Scottish government and a flash flood of newbie civil servants.

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29 Responses to Overt energy company blackmail strongest argument for state owned utilities

  1. Pingback: Overt energy company blackmail strongest argument for state owned utilities – For Argyll | greentomorrows

  2. The recent energy report by the new think tank ‘Options for Scotland’ proposes the creation of a state- owned generating company in an independent Scotland, plus a Scottish grid under Scottish control.

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    • Wonderful idea – there is already £180 per annum waiting to be added to the Scottish people’s electricity bill (presently being paid by the whole of the UK) for ‘windy pops’ so in a few years that is to be trebled by the SNP = £540. Of course our normal electricity bill of around £600 will still have to be paid so the average Scots leccy bill will be almost double that of the rest of the UK. What a sales gimmick ! That is going to attract commerce and Industry north of the border !!!!!!

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      • You forgot to mention the UK charge to Scottish generators toe be connected to the UK national grid.

        Funny how that escaped from your bilge?

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  3. The BBC news reporter commenting on Scottish & Southern’s move to reduce generating capacity and ‘lights going out’ warning made the point that some of their cuts were completely unexpected, and that did leave me wondering about Ian Marchant’s game. And this summer he’s stepping down – apparently with no big golden handshake.

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  4. There’s nothing unexpected about it; Cockenzie has been on the closure list for years as it’s an old plant and the remaining life of the machinery plus the power output make fitting it with scrubbing equipment like Longannet uneconomic, largely because of the insane carbon tax and equally bonkers rules on power stations.

    As for bawjaws giving it the ‘very real risk of the lights going out’; give it a rest! They could throw up an equivalent gas-fired plant inside 6 months if they put their back into it, he’s spouting a load of hogwash. If the lights go out we have Teflon Tony and Prudence to thank for the 13 years they spent fiddling while the UK’s power stations got older and no new ones were planned or built.

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    • db you’re mistaken – the BBC reporter wasn’t referring to Cockenzie (which as you say has been on the closure list for years) – he was referring to some much newer capacity, including, as far as I can remember, gas-fired plant. My recollection was that the SSE explanation was that it was ‘uneconomic’.

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      • Guff, bluster and brinkmanship in equal measure; there are several gas-fired plants that were either partially dismantled or mothballed some years ago as wholesale gas prices rose and the impending end of coal encouraged the power companies to squeeze as much use out of the coal plants as possible before the axe fell. In addition without shutting some newer gas plants there would have been a surplus of power and the price would have dropped, which is bad for the shareholders’ blood pressure. This isn’t a power crisis so much as a gas crisis, if the govt stopped dithering and allowed shale gas drilling it wouldn’t be a problem much longer.

        Apropos nothing, with this kind of story you never see anyone quoted saying anything other than how wonderful the departing CEO is, regardless of if they’ve driven the company onto the rocks. Even people as abrasive as the late John Harvey-Jones get nothing but hagiography.

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  5. “SSE is the company with three steel pylons falling down at Crossaig in north Kintyre because of ‘the weight of ice on the conductors’ – a matter whose accuracy must be investigated as the prevailing temperatures were very unlikely to breed ice at that level.”

    BBC News had a number of pictures of ice build up on the 33KW lines, it is quite a common problem, usually after wet snow starts to stick to the conductors and so builds up to quite a thickness. It can bring down the lines down when not actually freezing.

    Similar could have happened to the grid line conductors and also a build up on the towers will increase wind resistance.

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    • I can remember in years gone by when something like 7 miles of timber poles snapped along the west coast of Kintyre, due to wet storm-driven snow, but I can’t remember any problems with the steel pylons on the main Shira to Carradale line.

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  6. You’ve actually omitted that 1000MW of the cut is due to the EU’s “Clean Energy Directive” which requires that older plant not meeting emissions criteria set in Brussels must shut down at the end of their allocated running hours.
    The Scottish and UK governments are relentlessly pushing their imagined renewables revolution at twice the price of conventional generation which restricts the price of the latter and the gas price is currently high so it is costing the companies money to run these plants.
    They have a duty to their shareholders AND customers to limit costs and hence price rises and are being forced to act however Ed Davey (Sec. of State for Energy and Climate Change) is sitting on a mountain of shale gas, development of which would price renewables even further out of the game – US gas prices are a third of UK gas prices! – and is determined to keep it in the ground.
    Tony Juniper, Friends of the Earth, was on the BBC’s Sunday Politics show yesterday and as snow falls and thousands of people in the UK die of cold in the coldest March for 50 years, I heard him say he doesn’t want shale gas because it would weaken the fight against “climate change.” Please?
    Meanwhile, the Met Office has acknowledged “no global warming for the last 15 years” and forecast no future warming for at least, 5 more years.
    Nationalisation, of course, would mean the politicians would no longer have their “whipping boys” to blame and would have to take responsibility at the ballot box for the mess THEY have created.

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    • You make a lot of strong and sustainable points.
      The issue with shale gas, as far as we are concerned, is transparency on quite how extraction on each applicable drill site will propose to deal with the toxic fluid wastes, sometimes called ‘drilling mud’, that result from the extraction process.
      These are of hugely substantial volumes and safe disposal is a serious issue. This material is often left in massive open ponds, carrying its own obvious dangers and pending decisions on disposal.
      Water table and river penetration is a genuine and practical issue with serious consequences.
      The ‘earthquake’ issue is the red-top headline concern but is of far less substance than is the disposal of these systemic wastes.

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      • I wholly agree that shale gas extraction must be properly regulated however the UK has vast experience in regulating oil, gas, mining and petrochemical industries and I suspect politicians wedded to the policy of extremely expensive renwable energy are desperate to avoid the embarrassment of cheap gas appearing on the scene when they have consistently claimed that gas prices will continue to rise, inexorably.

        DEpt of Energy and Climate Change (DECC) and politicians like Eds Milliband and Davey, as prime propagators of the climate change/renewable energy myth will be centre target if their own, home-made fertiliser “hits the fan” and have a vested interest in encouraging the likes of Friends of the Earth to fan the flames of every scare story imaginable, no matter how far-fetched. Many reputable studies have debunked all the nonsense about flaming taps, etc.

        Meanwhile, the BBC reports that the UK has the highest death rate from cold of any country in Europe, “including Siberia and Yakutsk” which they apparently think are in Europe, a lamentable state of affairs for a country with a mild climate sitting in the Gulf Stream.

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        • It’s surely because of the relatively mild climate that – historically – we haven’t paid much attention to insulating our houses, to the extent that they now account for a huge amount of our energy consumption – as well as threatening some of our lives when there’s a really cold spell.

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          • Okay. I accept politicians have been complacent about fuel poverty and deaths from cold however adding insulation isn’t necessarily the panacea we would all like to think.
            A Cambridge University study found that solutions like retrofitting insulation to homes are much less effective than politicians would have us believe. One of the authors is quoted;-
            “This challenges the prevailing view that large cuts in energy consumption can be achieved by focusing purely on technical solutions, such as retrofitting homes. In some cases, doing so may bring only half the expected savings, perhaps less.”
            Insulating houses indiscriminately deprives them of the benefits of sunlight which, even in winter, apparently has a signicant warming effect, leading to this counter-intuitive outcome.
            For these and other reasons like finance, the Green Deal is destined to be an almighty flop.

            @Tim McIntyre (below),

            I didn’t say it, Cambridge University architects said it.

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          • That doesn’t make sense. Solar gain to buildings, which can be significant even in winter, happens because of sunlight shining through windows and insulation doesn’t stop that – in fact it helps greatly to keep the gained heat in the building.

            I suspect that the main reason why the headline savings are not achieved is that people benefit from insulation primarily by having more comfortable (i.e. warmer) homes, rather than much lower heating bills. In the case of elderly people especially, who may be particularly vulnerable to hypothermia, that’s still a very positive outcome.

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  7. This is not blackmail of the Govt, it is a CEO safeguarding the interests of his shareholders, as he is required to do by UK law.

    Gas powered electricity is now uneconomic because:

    a) the plants have to run 90+% of the time to give best performance
    b) they will not be able to do that because priority is given to wind generation, heavily subsidised by us
    c) the carbon tax starts next month and will reach £70 per ton by 2030, well within the economic life of a gas plant (30+ years) – shale gas will make no difference at that tax rate!

    So the CEO speaketh the truth. And he knows that green energy is very expensive energy. And he works for a company which is required by the EU to cut emissions from coal stations.

    The UK has embraced green causes and the EU through free choice. Clearly we have not used a long enough spoon when we supped with these particular devils!

    Meanwhile, Germany is building some 20 coal- fired power stations and India 450. When operating, these will emit more CO2 in a week than the UK does in a year.

    Tell me, just who is showing the way to a secure energy future here?

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    • It’s a fine distinction whether blackmail or not but it smells of blackmail.

      SSE have 4.5GW of both coal and gas capacity. They predominately generate gas powered electricity but this dropped by 72% and coal increased by 50% but from a much lower base. The pain on Marchant’s face (SSE CEO) would be clear to see. He’s got the wrong mix so you need to add d) to your list which is the price of coal generation. That is driving gas out of the market.

      What he needs is to be paid for doing nothing eg when wind generation is high, he wants paying, a lot, for having all of that gas capacity on tap and waiting for when the wind drops. The energy bill is all about this and I have a suspicion that the cost of SSE doing nothing is not going to be far off the generation cost. He’s “warming the gov up”, and us.

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  8. What a pity we’re missing out on the security of a new nuclear power station to secure our energy in the future and let us export the excess wind energy when it’s available and someone wants it. Not that I’m a big fan (pardon the pun!) of wind power, at least that would have been a more credible strategy.

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    • Agreed. We were anti-nuclear but, with wind power far from the green it it deceptively claimed to be and carrying very substantial negatives in unreliability, short life to decommission [now shown by research by Professor Gordon Hughes at Edinburgh University to be only 12-15 years] and irrecoverable impacts on historic landscapes – we have come to the conclusion that new nuclear is the unarguable choice.

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      • Really – what about the tonnes of waste that will take hundreds of years to decay?

        Really – why 20 odd years later are they still decommissioning Hunterston A and all teh other old nuclear stations?

        Really – who will be paying for this nuclear nonsense – it will be us as the utility companies aren’t stupid enough to do that, otherwise they would be falling over themselves to build them in engerlandshire?

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        • Hunterston A etc take that long to decommission because they were not designed to be taken apart; one of the main design tasks of 3rd generation reactors is making them easy to maintain and decommission. EDF are holding out for a fairly large subsidy because there’s no competition, if there was I suspect they would build Hinkley Point C for rather less danegeld.

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          • It’s still taking 20+ yrears though an dcosting an absolute fortune – yet still no solution for the waste apart from pile it high in sellafield

            I think I would rather subsidise wind than nuclear – at least if a windmill goes wonky – it ain’t gonnae kill us all and poison teh land for generations

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          • There is a solution for the waste; either the surface storage we have now at Drigg and Sellafield, or a underground facility like the Finns are building at Olkiluoto. The only missing part is political will to get on with it.

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          • Surface storage is not a ‘solution’ as it requires constant monitoring – which we certainly cannot guarantee for the next 100,000 years.

            The Finnish facility will be the world’s only deep geological repository when it is finished. Attempts to construct one here in the Lake District have been defeated by the usual outbreak of Nimbyism.

            Read more:

            Finland’s Crazy Plan to Make Nuclear Waste Disappear

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          • Regardless of whether people like or dislike nuclear power, even if there were never any new nuclear power stations built we still have to deal with the waste we already have. Irrational handwringing doesn’t help.

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  9. The first problem with “new nuclear” is it’s actually just the same “old nuclear” technology given a facelift – as said by others above, all the problems with Chernobyl-style potential meltdowns and, for all intents and purposes, “ever-lasting” radioactive waste are still there but EdF want twice the price paid for conventional fossil fuel generation.
    Britain has an extremely high – and rising – rate of fuel poverty and reportedly (BBC) the highest rate of deaths from cold of any country in Europe so why on Earth would we want to pay twice the price for something which, unlike wind, can actually generate huge amounts of electricity.
    Gas is supposed to be expensive at present so why the heck should we want nuclear, it wouldn’t be “cheap at half the price.”

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