Selling off the family silver
March 29th, 2012
How can you market a monopoly product like water, electricity, gas and the railways? A few short years before his death Harold MacMillan called Thatcher’s behaviour “selling off the family silver.” Had it achieved anything useful there might be something to celebrate. All we have now is a campaign to bring the “big six” to heel for overcharging and less reliable supplies than we had in the 1970s, three day week excepted.
Here’s an account of supply problems from somebody in the business who clearly has a good grasp of what’s gone wrong since the 1970s and how close we have come to power cuts.
First one (in recent years) was 10th December 2002. We were some 2-3 minutes from initiating load shedding (rolling blackouts). I don’t know the cause — most likely a cold spell causing a shortage of gas so that commercial consumers on cheap gas tarrifs have their gas cut off, some of whom were gas fired power stations, so we lose electricity generation capacity at peak heating demand.
When a power plant wants to supply power to the grid, it contracts to supply so much power for so much time. If it can’t do it, it has to pay another power station to do so in its place.
The market between suppliers means they carefully look to see if anyone else unexpectedly drops off the grid, and immediately jack up their prices to make maximum profit out of the failed plant which now has to pay a premium to other suppliers to replace the electricity it contracturally agreed to provide.
On 10th December 2002, this mechanism forced the wholesale price of electricity to 500 times its normal price, and even then only just managed to keep the lights on by the skin of its teeth.
Planning for rolling backouts took place in the following winter, and only didn’t happen because the weather forcast was wrong and it didn’t get as cold as was predicted. I don’t have subsequent dates, but there have been a number of supply shortage incidents since then.
Prior to the 2002 incident, we’d had a supply infrastructure for decades with emergency capacity maintained in reserve which gave us one of the most stable supplies in the world.
It was decided to mothball the emergency plant to save money (which required a change in the law). It would have taken months to get it back up working again.
Andrew Gabriel, quoted from a post to the newsgroup cam.misc, some years ago.
https://www.guardian.co.uk/commentisfree/2012/mar/29/short-history-of-privatisation
As for water, it falls from the sky and we all need it to remain alive. What was the point in privatising that? A great potted history of the damage done and well worth keeping as a record of the destruction of the good parts of the post war settlement.