• The new normal: oil prices after the crash

    9th February 2016

    They did not see it coming and ever since the oil price started its precipitous crash from the $100 level, they have been reeling. The “they” includes investors, company directors and the resource-cursed governments. At first, they expected it to be a temporary and limited correction, settling at a new “more sustainable” level of around $70-80. As 2015 progressed, it was expected to be around $60, then $50-60, and now $40. Oil company executives predicted the prices would stabilise at every...


  • The new broadband utility and Openreach debate

    26th January 2016

    The prime Minister has said that we should have, by right, access to fast broadband and it should be thought of like the services for electricity, water, transport and all the other utilities. He is absolutely right, but the implications of treating broadband as a new utility are quite profound. Broadband is now a core essential service, everybody needs it, the economy relies upon it, and the absence of fast broadband has become a serious detriment to businesses and lots of people,...


  • Price setting in regulated utilities and the potential application to the BBC

    19th January 2016

    1. The determination of the BBC’s licence fee is the outcome of an opaque and non-transparent process, which contrasts dramatically with that which applies in the case of the regulated utilities. 2. In all the main privatisations from 1984 onwards, the utilities are variously required to carry out specified functions, defined in licences. An independent regulator is given the statutory duty to ensure that the functions can be financed, through the setting of prices. Most regulators were...


  • Flood defence: time for a radical rethink

    5th January 2016

    1. Flooding crises tend to follow an established pattern. First, there is immediate help and assistance. Then second, there is a “review”. On occasions, this leads to a third stage of genuine reform, but in most cases “sticking plasters” are applied. These are incremental and often sensible, but typically fail to address the core issues and hence provide only a temporary respite. 2. There are very good reasons why ”sticking plasters” will not work this time. The conventional approach to flood...


  • Stranded Assets - a deceptively simple and flawed idea

    22nd October 2015

    The stranded assets argument has an elegant simplicity. Start with a maximum of 2 degrees warming. Work backwards to the total amount of additional carbon dioxide that can be emitted, consistent with this constraint. Compare this with the booked reserves of the fossil fuel companies, and then identify the excess over the constraint as “stranded assets”. As far as it goes is fine. But that is not very far. It does not tell us anything useful about the value of the oil, gas and coal companies....


  • What to do about the railways?

    22nd September 2015

    Despite the sharp rise in demand and therefore revenue, it is widely agreed that the railways are in a mess. A significant proportion of the electorate think that renationalisation is the answer, and indeed Network Rail itself has been renationalised. Although there have been some successes, the overall performance of Network Rail has been generally poor, and at times appalling. Major electrification projects, like London to Swansea, are behind schedule, there have been problems around London,...


  • Reforming the FiTs and capacity mechanisms: the 2-stage capacity auction

    3rd September 2015

    Back in 2010, as Energy Market Reform (EMR) was getting going, I proposed a 2-stage auction as a way of combining mechanisms for meeting the carbon targets with the maintenance of a sufficient security margin. The first stage would be open to all, and the second constrained to meet the carbon budget if necessary, and if the carbon price is insufficient. Instead, EMR followed a complex path, with Feed-in-Tariffs (FiTs) to replace the Renewable Obligation Certificates, limited by the Levy...


  • The first 100 days of Conservative energy policy

    24th August 2015

    Amber Rudd, the Secretary of State for Energy and Climate Change, has had a very busy start. She has ended new subsidies for onshore wind, reined back the Green Deal, removed the exemption from tax for renewables, ended the zero-carbon homes plan, removed guaranteed subsidy for biomass, borne down on solar PV subsidies, speeded up the rules on fracking planning process, and at the same time fully come in behind the Paris climate negotiations and the UK’s commitment to tackling carbon emissions...


  • Penalty tariffs, open-ended regulation and embedding overcharging

    20th July 2015

    When, in the face of the sustained attacks from Labour’s Ed Miliband and Caroline Flint, OFGEM referred the electricity industry to the Competition and Markets Authority (CMA), many hoped the result would settle the controversies once and for all, restoring trust and putting the industry on firmer foundations. The CMA has now spent a year investigating the electricity market, and come up with its preliminary findings, and proposed remedies. Unfortunately these fail to convince on most fronts:...


  • British energy policy - what happens next?

    16th June 2015

    Ed Miliband may have been vanquished by the electorate, but one of his legacies lives on. As the first DECC Secretary of State, he is the architect of Energy Market Reform (EMR), and a return to a state-driven energy policy. His now largely forgotten speech to at Imperial College “The Rise and Fall and Rise again of a Department of Energy”, in 2008 set out explicitly to change direction from the path followed since the 1982 Speech by Nigel Lawson on “The Market for Energy”. Indeed Miliband...