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Dieter Helm: An Analysis Of Labour’s Energy Policies

Dieter Helm, Oxford University


1. The leader of the Labour Party, Ed Miliband, announced in his autumn party conference speech a series of proposals for electricity prices and electricity market reform. These include:

* A price freeze for 20 months from the date of the General Election in May 2015.
* A Pool for the wholesale electricity market.
* The break up of the Big Six energy companies.
* The abolition of OFGEM and its replacement by a new regulatory body.
* An Energy Security Board.
* The decarbonisation of the electricity system by 2030.

2. These proposals are set alongside the commitment to retain the contracts for differences (CfD) in Energy Market Reform (EMR), and to give new borrowing powers to the Green Investment Bank. There will also be a route map to the creation of one million new green jobs.

3. In the aftermath of the speech most attention has focused on the price freeze proposal. This has undoubtedly been politically popular, as reflected in opinion polls, and has captured the concerns about the impact on the cost of living in a context of the squeeze on real incomes and the rises in utility bills.

4. There are many criticisms that can be levied against the price freeze proposal. These are detailed below. But it is also important to ask how well the package of measures fits together, and whether the other elements have merit and what their effects might be.

5. This paper looks at each of the components in turn, and at how they link together. Having examined each of the components in turn, the paper turns to some of the wider considerations raised by Labour, and the extent to which the consequences of these proposals are likely to be much more radical than so far appreciated. It asks whether the scope and nature of state intervention is likely to intensify, whichever parties form the next government.

Full paper