Are the wheels falling off the electricity model?
30 years after privatisation, the electricity model looks to be in deep trouble. In addition to the collapse of 25 suppliers, and the knock-on increases in bills that customers will have to pay for what has, in some cases, been very poor management, and, in regulation, serious failures to scrutinise the businesses, several thousand people have been cut off from the distribution networks for over a week. That a storm could find the local distributors with so little resilience raises all sorts of questions about their behaviour since they agreed at the last price review that they had sufficient funding to meet their licence obligations (they did not appeal). This begs all sorts of questions about what they have and have not spent, and more generally about the highly geared financial structures that private equity has put in place. None of this bodes well for the complete decarbonising of the electricity industry by 2035 - in just over 13 years from now. It's time to get serious about the reforms in the 2017 Cost of Energy Review.