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Thursday, October 31, 2013

The True Cost of Electricity & How The "Debate" Is Being Dishonestly Restricted

From the estimable Register

Graphic showing past and predicted domestic energy price rises. Credit/source: RWE npower

   Shows how the electricity price rises from 2007 is largely "policy and regulation costs" ie direct state parasitism. The other is "transport costs" ie the grid, which is basically to pay for extending the grid so that windmill electricity produced in the outer isles can be transported to London. This is a hidden "green" subsidy and an extensive one.

   By comparison actually producing the stuff is barely up and by 2020 will be back down to 2007 costs. I presume this is the benefit of shale more than offsetting windmill parasitism. VAT appears not to be included.

   The alleged corporate greed of the "big 6" monopolists means supplier costs will go from 19% DOWN to 16%.

    So clearly, even within the terms of the official "debate" the fault lies with political price raising.

    But the official debate ignores the political effect of preventing the cheapest power sources (nuclear, coal & shale) being used.
    This is how the ruling class normally frame any "debate". The only thing discussed is a few percentage points made up of either profit or government levies according to villain. The graph above shows that the levies are rising fast and the profits, as a % of cost, falling.

    Unmentioned is that Hinkley Point is costing 4 times a much (and taking 7 years longer which pushes up interest payments) than comparable Chinese ones, and nuclear is considerably cheaper than average power.

   Undebated is that 90% of electricity prices (perhaps more) are government regulatory parasitism - you will never know it from BBC "news".
   Even the "big six" would much rather be damned for the largely false charge of price gouging than be shown to be running expensive obsolete equipment that could not compete with engineering cost nuclear, thus they do not call the MPs the liars they certainly are. This is common among dominant companies with fixed assets.
    Lets go for a best possible cost:
Nuclear is currently 40% of the average cost of our power basket.
China is building at 0.27 our costs.
Because China is building in 3 years and us in 10 we have 7 years foregone income while paying interest - assuming the normal 10% return that is 1.10^7 = 1.95
Assume China is not entirely without state parasitism - say 10% 
VAT 20%
How much could cost be reduced if it was allowed to mass produce reactors - 3 fold seems a conservative estimate.
60% X 0.27 X 1/1.95 X 90% X 1/1.20% X 1/3 = 0.0208 or 2.08% of current costs.
 97.92% parasitism.
   Way below current standing charges = "electricity to cheap to meter". Though this does not include transportation costs. However if the amount of power we use goes up anything like proportionately, handling costs will go down, not quite proportionately.
   I'm not standing by that exact figure though I would hold to each part as being either firm or a reasonable estimate. Nor does it matter much. If we can say at least 90% if electricity costs are state parasitism and can, over a number of years, be removed it doesn't immediately matter if another 80% reduction is ultimately possible.
   But if some supporter of windmillery feels the figures can be factually disputed I am sue they will do so ;-)

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