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Who pays the bills?

Posted 29/05/2012 by sevans

Last week’s announcement by the UK government of its draft Energy Bill has drawn criticism for transferring the financial burden of its planned revival of nuclear power generation onto large industrial users like the chemical industry. For example, ceo of the UK Chemical Industries Association, Steve Elliott said: ‘The nuclear industry does need support but if that support comes through heaping the cost onto already hard-pressed customers then that customer base will diminish.

In our sector – where over 70% of companies are foreign headquartered and where we have a unique and underpinning role in making the products and technologies that deliver the green economy – an unaffordable business model will make it harder at the very time when we should be making it easier.

‘Manufacturing in the UK needs help and support to deliver the green future we all want to see. That help does not have to be free hand-outs but just a halt to crippling costs would be a start.

’Now he does have a point: when the chemical industry invests in new plants and other facilities it doesn’t impose an immediate charge on its customers to pay for the funding. Yes, it may try to increase the prices of its products, but it has to do so in the extremely competitive market environment that is also global. There is the additional hazard that ever-increasing costs will encourage those foreign headquartered chemical companies to look elsewhere for their future investment.

But for the power generators, who have a virtually guaranteed market for their products, despite the appearance of having strong competition, their investments appear to be based on other people’s money and they get to keep their profits too. The chemical industry uses it profits to help pay for its own investments, particularly at a time when borrowing funding from banks is nigh on impossible.

But that is enough about industry’s complaints, what about the consumers: you and me! Certainly we can change our electricity supplier but the jury is still out on whether anyone actually saves money in the long run. We too will have to pay for these investments by electricity generators.

If there is one thing anyone can say, it is that our hunger for energy is unlikely to go away, and the UK government seems to be aiding and abetting the generators in keeping our individual efforts to generate our own electricity well under control as the recent announcements on solar energy feed-in tariffs indicate. And in addition to these gripes, improving energy efficiency also does not seem to have been given the priority that it deserves.

Energy always comes at a cost – but is that cost being shared fairly?

Neil Eisberg - Editor

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    13/07/2012 08:40

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