Thursday, February 04, 2010

Electricity markets don't work in the UK either

Over the past decade, we've been learning the hard way that a free market approach for electricity generation and supply just doesn't work, producing shortages, underinvestment, and relentless price rises. The UK, which privatised its electricity system in 2001, seems to have learned the same lesson. Unlike us, though, they're planning to do something about it:

Gas and electricity could be sold to consumers via a state-controlled body under radical reforms, proposed by the regulator Ofgem, which acknowledge that the decade-old free market approach to energy is no longer working.

Ofgem has also proposed setting minimum supply obligations on energy companies to make sure the lights don't go out, in moves reminiscent of the new capital requirements that have been placed on banks to stop them going bust following the financial crisis.

That would be utter heresy here, but the UK's policy community isn't as enslaved by the doctrine of the free market as NZ's is - the fact that they can be persuaded by empirical evidence shows that. And so they get to fix their problems. Meanwhile, thanks to the dead hand of Douglas and Richardson, our own energy Minister is limited to re-arranging the deckchairs on the Titanic, and vandalising Meridian's all-renewable brand out of anti-environmentalist spite.