A Place to Stand

    Tim Worstall found an interesting remark from the boss of Centrica about electricity costs and how government parasitism affects it:

But there’s no uncertainty about the range of other costs which together make up about half the average domestic energy bill in the UK. So-called “non-commodity” charges rose by nearly 9% last year and will continue to increase well into the future, largely as a result of sensible government policies to make sure we have a sustainable energy market in the decades to come.


These costs include charges for the transmission of gas and electricity, the installation of smart meters in every UK home, huge investment in low-carbon power generation, and big energy efficiency programmes. The government estimates that the UK needs to invest a total of £200bn by 2020 to decarbonise its power industry and ensure that the lights stay on.

and says     I replied (links added):::

50% of your power bill is the crap that government addds to it. Should give the fuel poverty campaigners a target to aim at…..

 “Non-commodity charges” presumably means charges after producing power. “Non-commodity charges” presumably means charges after producing power. “Non-commodity charges” presumably means charges after producing power. “Non-commodity charges” presumably means charges after producing power.

Thus the fact that nuclear power is as or slightly cheaper than coal and about half the cost of the average basket we use isn’t included. Royal Academy of Engineering figures table p 9


Beyond that is the fact that more than half nuclear costs are government regulatory ones – allegedly for health & safety but nuclear is far and away the safest power generation method there is (people keep falling off windmills). Professor Cohen on costs of nuclear plants - what went wrong. Looking at it again while an exact figure cannot be given my assumption that only 50% of nuclear production costs are parasitism seems overly generous even assuming a fair part of safety regulations had validity.

Nuclear plants could certainly be made far more cheaply if we were allowed to mass produce them, at least 1/3rd cheaper & probably, with a long production run, under 50% of current costs. "the AP1000, will cost USD $1500-$1800 per KW for the first reactor and may fall to USD $1200 per KW for subsequent reactors" - that is not talking about true mass production but simply an extended run. If there were a factory or 2 turning out a reactor a fortnight they would be far cheaper - 50% looks like a high estimate.

So that is real costs being 50% to the power 4 (non-commodity charges X nuclear already being half the price of our basket X useless nuclear regulatory costs X possible mass production savings) = 6.5% of current costs. The remaining 93% is pure government parasitism.

I must admit to not having known of the final tier of “non-commodity” costs.

So what politicians are claiming to be against fuel poverty and recession?
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Some people think I am overly critical about our masters but repeatedly, when I have gone deeper into what they do it turns out, as with this example, that they have been even more parasitic and destructive than I first thought.

The good news is that the more we find our national income is being artificially depressed by such things the more certain it becomes that we could not only match but considerably exceed Chinese levels of growth if the burden were removed - as could easily be done simply by not applying all the unnecessary rules.

I don't say electricity bills would drop 93% immediately and standing charges less. Building 1 plant takes 3 years, even in Asia; replacing all our power with 60 units after that would take years; and because demand would go up as prices fell we would need to provide more than that. I think it would take 10 years to get that reduction but that is no argument for not starting immediately. Some people said this 10 years ago.

And starting it today would provide the business confidence to invest immediately knowing that rather than having productivity disturbed by blackouts they could look forward to far lower business costs (only 1/3rd of electricity being domestic though it currently costs the average family £1,200 and government intend to increase it to £5,000. Something for Mr Cameron, with his promised "relentless focus on growth" to focus on.