"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Wednesday, February 06, 2008

There is something very badly wrong at OfGEM... The UK consumer is being suckered and they stand by and do nothing but bleat.

The Gas and Electricity Markets Authority (OfGEM) has powers and duties which are largely provided for in statute, principally the Gas Act 1986, the Electricity Act 1989, the Utilities Act 2000, the Competition Act 1998, the Enterprise Act 2002 and the Energy Act 2004, as well as arising from directly effective European Community legislation.

The Board, whose Executive Members consist of Ofgem’s Chief Executive and Managing Directors, oversee the activities of Ofgem.

Contrary to popular belief OfGEM do NOT regulate energy prices directly. They protect consumers (their 1st priority) by promoting competition and regulating the monopoly companies which run the gas and electricity networks.

By doing this they also help to ;
1. Secure Britain’s energy supplies
2. Ensure adequate investment in the networks, contributing to the drive to curb climate change and other work aimed at sustainable development by

A. Helping gas and electricity industries to achieve efficient environmental improvements

B. Help vulnerable customers, particularly the old and poor ( er .. low incomes) and disabled.


Under this heading on their website they claim," Ofgem endeavours to keep its operations transparent " - for example by :

1. Publishing the minutes of its Authority meetings
2. Have an open annual meeting of the Authority
3. Have full and thorough consultation in developing decisions (including the development of its corporate strategy).(They fail to say who they consult).

...er.... that's it

Therefore it is a little surprising that when the reader consults the media section of the OfGEM website ,under "Keynote speeches" , we find a single one, by CEO Alistair Buchanan at the World Energy Congress Dinner at the French Embassy in Rome on 10th November 2007. This starts..."Let me tell you a story about Jean – a man who lived in Paris." .. a bad joke at the expense of Trappist monks , one of several ....and they don't improve, the final one about suicide is in extraordinarily bad taste.

Anyway his final totally opaque message was ...( mystifyingly he talks of twins ) • First twin: “Vision plus delivery”.• Second twin: “Ambition with reality”. One is left with the impression that much electric soup had been consumed prior to and during the event.

Turning to the Press releases they are mix of the commonplace ..."Ofgem bids farewell to director of gas distribution" .. to the procedural .."All Britain's gas distribution network owners accept Ofgem's 2008-2013 price controls".

Which is odd.

The Financial Times under the headline "Setback for UK wind farm push" on Monday quoted " Andrew Wright, managing director of markets at Ofgem, the electricity regulator, told the Financial Times: “The Renewables Obligation is a very expensive way of providing support for renewables.” .. as did many other press / magazine / blog articles about the futility of ROC's as a method of directing energy investment.

The Herald (3rd Feb) - "Watchdog calls for faster grid hook-up for renewables" quotes without naming a human source "Ofgem, the energy watchdog, wants delays cut for Scottish renewable energy projects that are waiting to be connected to the national grid network......According to Ofgem, many renewable projects waiting for connections to the transmission system often face long delays in obtaining planning consent."

The BBC (2nd Feb)- "Renewables delivery under attack " quotes Ofgem again anonymously .." (OfGEM) also told BBC Radio 4's Costing The Earth programme (Grid Lock ? Thursday January 30 2008) that it believes the government is not listening to its calls for change. "

The report then continues to make some astonishing claims ..

"The main mechanism for delivering renewable energy in Britain is the government's Renewable Obligation Certificate Scheme, or Rocs.... Ofgem, administers this scheme for the government, but it told Costing The Earth, that Rocs is no longer fit for purpose.

Currently, the scheme is costing energy customers between £280 and £500 per tonne of carbon offset, at least five times the price of carbon on the European market.

Ofgem believes that the costs could be reduced significantly, but that the government is not prepared to change the scheme.

"We made these points in the government's most recent consultation and unfortunately they fell on deaf ears," says the regulator's director of networks, Steve Smith. (BBC listen again)

These attributable and non attributable remarks reflect the total absence of any official press statement when Ofgem met chancellor Alistair Darling in the W/E Jan 18th to discuss the energy market and the stunning price rises such as British Gas's 15% hike for gas - which followed Npower, who raised their electricity prices by 12.7% and gas by 17.2%, and EDF Energy, which shoved up electricity tariffs by 7.9% and gas bills by 12.9%.

Which, as Liberal Democrat leader Nick Clegg pointed out will hit Britain's poorest ... those "vulnerable" custiomers that OfGEM are there to help.

The poor spend a significantly larger proportion of their income on electricity than the rich (graph from the TaxPayers' Alliance report The Case Against Further Green Taxes):

In a January 26th 2007 BBC report "Energy price rises 'unjustified' " the reporter provides an anonymous remark that "Regulator Ofgem insists that the UK energy market is competitive."

This is outrageous, OfGEM is evidently not transparent, and there is no evidence that helps the vulnerable consumer at all - beyond making the bland and anonymous remark that ,"the UK energy market is competitive." and lying back and having it's tummy tickled by the French and German owners of the bulk of UK energy supplies.

OfGEM administers the Renewable Obligation Certificates ( full explanation of the process here) by which the energy consumer pays through their bills to provide a subsidy to "sustainable" energy suppliers , wind, marine, hydro etc.,

This is done by auctioning off the electricity supplied to distributors and other energy supliers so that they meet the Government mandated level of sustainable energy in their product mix which was 3% in 2003, rising gradually to 10.4% by 2010, and 15.4% by 2015 and guaranteed in law until 2027 to provide the financiers with a nice warm fluffy feeling. This is administered by Non-Fossil Purchase Agency Ltd which was set up by the 12 Regional Electricity companies in England in 1990.

This is the scheme that the BBC report ... Ofgem, administers this scheme for the government, but it told Costing The Earth, that Rocs is no longer fit for purpose.

So far this scheme is costing the consumer some £600Mn a year and will rise to £3 Bn by 2020.

The FT article quoted above poitns out that ;

"ROC's, combined with bottlenecks in the planning system, mean these cash injections are enriching the operators of existing wind farms well beyond their expectations.... electricity .... from renewable sources has scarcely budged in recent years – 4.2 % - 2005 4.6% 2006, (latest figures available).

New wind capacity added in 2007 was less than 75% of that built the year before

Last years Energy White Paper described ROC's as .." the “primary mechanism” for meeting its goals of reducing fossil fuel dependency."

Andrew Wright Andrew Wright, MD of Markets at Ofgem, says to the Press verbally : “The RO is a very expensive way of providing support for renewables.” and furthermore OfGEM told the FT that "wind farm owners could make more than £100 per megawatt hour." AS a guide British Energy realised price for lectricity generated by Nuclear Power was
Realised price (£/MWh) £ 38.4 in the 1st half of 07/08 and (£/MWh) £ 35.7 in 06/07.
Source half yr accounts.

Some people are making an awful lot of money via ROC's... and the more delays there are to producing alternative energy, the more they make ..MOD objections , planning , ( it would pay wind farm owners to fund objectors) and OFGEM are doing fuck all about it.. certainly not

"Help(ing) vulnerable customers, particularly the old and poor ( er .. low incomes) and disabled"

There are 4 non Exec members of OFGEM .. one is an interesting chappie who must have a few pals in the industry....

John Wybrew

Having served as Executive Director for Corporate Affairs and Planning on the boards of the successor companies of British Gas since 1996, ending with National Grid Transco plc, John Wybrew now has a range of interests including Chairmanship of the new Sector Skills Council (Energy and Utility Skills) and Chairmanship of the British Energy Association.

Previously, John worked for the Shell Group for more than 30 years and spent seven years on the board of Shell UK, the second largest Shell operating company. During the late 1980s, he also served a three year secondment with the Prime Minister's Policy Unit, advising on energy and transport policies.

The Chairman is John Mogg, smart guy. this is what the FT reported August 23 2006

"Sir John Mogg is keen to guard against complacency when it comes to the country’s gas supplies. But, in an interview with the Financial Times, the Ofgem chairman said he was “much more confident” of the UK having enough gas to get through the coming winter and was hopeful that gas prices would come down next year."

here is a fascinating graph of global gas costs.

Plainly he, and the staff at OfGEM haven't a fucking clue of

a: What is happening in UK energy markets.
b: What to do about it.

UPDATE Thursday 7/2/08 Independent. Millions paying over the odds to energy suppliers Again , another non attributeable quote ..." Ofgem, the energy regulator, estimates that customers could save £1bn a year by switching to cheaper deals.." ... and no Press releases on the website. The Scotsman quotes OfGEM to similiar effect in Scotland.

Pic from St Edmondsbury Cathedral, Suffolk who will receive a £250,000 heritage Grant for help with refurbishing stained Glass. Just announced.


George Dutton said...

Found this...


Shutter said...

It can never be said that the proponents of Peak Oil carry the thread of argument beyond the ineluctable forces of reason by the exuberance of their personality.

Anonymous said...

Many of your points are valid - not least that the reason for the soaring cost of gas on wholesale markets in GB is unclear - but I think you are harsh to lay blame at Ofgem's door for all the woes in the energy markets. You may have seen that.... they've fined National Grid £42m for market power abuse.... are investigating the retail energy markets for concerns over competition.... they are investigating SSE and Scottish Power for another market abuse (transmission capacity this time)... as well as looking into misselling of energy by npower. If any of these investigations show any evidence of market abuse, they will not be afraid to wield their powers under the competition act. Some may say the reason for soaring retail energy prices is not in the retail markets, but in the wholesale markets. If there is one area where Ofgem should be pressurised to do further work, it is there.

(C) Very Seriously Disorganised Criminals 2002/3/4/5/6/7/8/9 - copy anything you wish