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Fall out from Ed Millibeans energy speech


CliveH

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It is not just US politicians that can bu99er things up.

 

The fall out in the energy sector from Ed Millibeans speech is now being seen

 

This research from Liberum Capital makes interesting reading.

 

http://www.liberumcapital.com/pdf/escjFZrL.pdf

 

The graphs they refer to are in the link - but the body of the briefing is here:-

 

"Investors Selling UK & Buying Europe due to Rising Political Risk

 

It is now a little over two weeks since Mr Ed Milliband, Leader of the Labour Party, announced that a future Labour government would freeze power and prices from May 2015 to January 2017. The Labour party suggests that this would cost the supply companies around £4.5bn over the two years. As we noted at the time this is a dramatic intervention that immediately increased the political risk faced by all particpants in the UK power market, not the suppliers themselves. We warned that a price freeze would chill investment in new generating capacity, something confirmed today by SSE who have said that moving to FiD on any major new generation investment was not possible until the outcome of the election was known.

 

But how have investors reacted? As the charts below show, equity investors have done exactly what we would expect i.e. they have been selling the UK sector (all of it not just the supply companies) and switching into Europe. Clearly the UK’s place as the safe haven of the Utility sector is under threat – if it hasn’t already gone. The consensus trade ever since 2010 has been long UK / short Europe. Given the sharp rise in UK political risk, that trade could now be unwinding.

 

Chart 1 shows the UK sector vs Europe (ex UK). As can be seen since Mr Millibands speech the wider UK sector has seen a 5.4% fall, whereas Europe (ex UK) is up some 5%. That’s a 10.4% swing.

 

Chart 2 shows the performance of SSE and Centrica versus RWE and E.On since Mr Milliband’s speech. The swing here ranges from 14% to 17% in favour of ther Germans.

 

Chart 3 shows SSE and Centrica versus the FTSE100. The two companies have lost 7% and 6% repectively versus the UK market. This is a combined £3bn hit to their market cap relative to the market.

 

...........................................

 

Now the one part of the energy sector rubbing its hands with glee are the diesel generator suppliers that have been tasked to put in emergency back up generators in Hospitals and other key centres to keep the power and lights on if the grid fails.

 

http://www.telegraph.co.uk/earth/energy/10220083/We-could-soon-be-paying-billions-for-this-wind-back-up.html

 

Amazing

 

 

8-)

 

 

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It all goes to show that the Thatcherite 'privatisation' of the energy business was all about benefiting the Tory party's cronies and certainly not to the benefit of our citizens.

There is only one answer to be gleaned from this -- re-nationalise the lot of them -- as soon as possible!

 

Colin.

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Not a fan of nationalised industry myself but neither am i a fan of nationalised industries being carved up artificially.

 

What I mean is - is that an industry that evolves by itself tends to run on market lines.

 

Those that become too big to fail like the Banks, end up being unmanageable regardless of their being Private or State owned.

 

Trouble is we cannot turn the clock back.

 

I saw this from the w/e as well re Scottish Power.

 

http://www.theguardian.com/business/2013/oct/11/scottishpower-labour-energy-price-freeze?CMP=twt_gu

 

It seems that whatever the options or the situation - a politician has the ability to muck-up. :-S

 

 

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One thing that can be noted is that although Margaret Thatcher did indeed privatise utility Companies in the 1980's it was under the Labour watch that many of them were sold to foreign owners and the Government did absolutely nothing to stop it. Since then all profits have gone overseas and also remember that foreign owners mean no corporation tax is paid in the UK. In fact G Brown encouraged it so the idea that Labour is the Party of nationalised industries does not always hold water.

 

I fully accept that prices are rising in the UK and are causing hardship but it may also be an idea to compare what we pay here with what people pay in other EU countries and are far as I can gather, they have paid higher bills over the years with their so called nationalised industries. We are catching up to their levels nowadays.

 

I suspect many people would believe Milliband a lot more if he 'promised' to remove all the green taxes he personally imposed when he was in power. That would drop bills by about 13% immediately.

 

Bluntly, the thought of going back to blackouts and 3 day weeks, as per the last time Labour decided to impose price controls is not something I am looking forward to.

 

However, if we want to hear what Labour is truly going to do if it gets power again we need to talk with Len McCluskey as he is the organ grinder, Millipede is merely the monkey.

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Agree once again Dave - how someone can introduce a highly dubious extra taxation and then in the next breath state that he wants to freeze prices is, to me, the sign of a charlatan.

 

i can remember the three day week. I was lucky to be working for a Pharmaceutical company at the time and so we were not affected. But I remember our importing two huge diesel generators from Sweden to keep the place going.

 

Now it looks like most essential services in the UK will be relying on much the same.

 

Not much changes in 40 odd years it seems. *-)

 

 

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CliveH - 2013-10-15 5:00 PM

 

i can remember the three day week. I was lucky to be working for a Pharmaceutical company at the time and so we were not affected.

 

 

I was on maintenance (the black gang) at the time so worked 5 days, more if we had a breakdown. If you remember it wasn't to much hardship, in fact a lot of workers didn't want it to end because after your 3 days waiting time you got 3 days pay (work) and either 2 days dole if your normal work week was 5 days or 3 days dole if you worked a regular 5 1/2 day week or 6 day week normally.

 

Dave

 

Ps. If you were in the navy ;-) the ship would drop anchor near a tropical island and the crew would go to the beach and play netball all the time 8-) :D

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If the government drops the green charges from the service providers bills who is going to meet the FIT payments that the government is now legally contracted to pay us solar panel guys.

 

Recon this will stop them from dropping the charges don't you

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So what's the reality behind these green charges? They are supposedly made to enable investment in greener energy, and yet when plans to build a barrage across the River Severn which has the highest tidal flow in the UK and would generate enough electricity for half of wales was planned, it was immediately scrapped because some 'environmental' group claimed it would have an adverse effect on birdlife in the area.

These conservationists need to wake up and smell the coffee, you either have alternative power sources such as wind farms, tidal power generators, nuclear energy or we continue to use fossil fuels and gas to generate it. You can't have it both ways, to stop one you need to do the other, it's not rocket science.

And finally, who's breeding all the Great Crested newts that miraculously appear at every development site even though they've never been seen within 50 miles of the area before?

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Yes, it is curious how the so called protesters always seem to manage to drive themselves to the various locations to set up camp etc Presumably they all stopped at the supermarket on the way to stock up with 'muinchies' but seem to forget how the supermarket is stocked and what powers the fridges so they can have cold beers.

 

All I know is that as soon as the lights go out the 1st time, mobs will soon remove any protester at a fracking site. Prevent people from watching Corrie etc and you are playing with fire. They also seem to ignore the fact that the UK's out put of so called polluting gases is miniscule compared to the big boys so whatever we do will have absolutely no effect whatsoever. I think the common term is 'cut of your nose to spite your face' etc.

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What makes me laugh is all the tents, the waterproofs, the groundsheets etc used by the protesters are all oil derived products!

 

The irony of that whilst they stand there in front of the TV cameras berating us all for us "not leaving carbon in the ground" is totally lost on them.

 

8-)

 

And yes indeed - as soon as someones granny or granddad starts to suffer from the cold when the lights go out and the heating does not work - see what little tolerance shown to these muppets now evaporates!

 

Whilst I like the idea of a levy on fuel bills now to insulate homes to reduce bills in the future (we have had cavity wall insulation and a significant increase in our loft insulation all at no direct cost to us) - the relentless increase in green taxes planned does not translate into a never ending "saving" for the consumer.

 

Clegg says cutting green taxes now will cost people more in the future only works if you assume an almost infinite ability to save by better insulation etc. But the reality is that the energy savings returns will level off. Cleggy's advisors have (probably deliberately) not apprised Cleggy of this.

 

Hence he has just made an even bigger ar$e of himself.

 

 

 

 

 

 

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The majority of what Clegg has to say is correct simply because if the FIT payments are removed from the electricty bills then it will have to be paid out of the taxes hence it will cost the government not the bill payer

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