British households subsidising EdF French customers?

[Clair]

Foreign energy firms 'picking the pockets' of British consumers

[Logan]

The article makes a valid point. EDF applied recently to increase electricity charges by 5% in France. The government have ordered only a 2% rise from mid August 2008. So presumably EDF will subsidise their rising costs from the 22% increase imposed in UK where the market is unfettered by government. However nuclear energy in France is much cheaper to produce than gas fired power stations. France is now reaping the rewards of their nuclear energy strategy. The UK went in the opposite direction because of pressure applied by the anti-nuclear lobby. Misguided in my view.

[Will]

There was (probably one of many) a shock-horror rip-off-Britain story and associated discussion on the radio this morning. They all missed the point (as noted by Logan, but which is immediately apparent to anybody with experience of French energy matters) that we are not comparing like with like. Electricity as supplied by EDF to its customers in Britain is generated by gas, coal, oil etc - all things which have suffered an enormous price rise. Whereas in France the vast majority is nuclear, and not subject to the same increase.

[Tony F Dordogne]

Think it's called capitalism!

[babcock]

You can't pick and choose which bits of the regulations you will accept. You either have a free market economy or some state control.For example books cannot be discounted by more than 5% in France. Probably unacceptable to the UK thinking. Mortgages in France are restricted to a certain percentage of your disposable income and generally may not continue after the mortgagee retires. No 125% mortgages here.

[Richard-R]

You will find that  EdF are ripping of us in France even more. Thier profit margin here are very high and being used to fund thier global expansion. There was a report in Le Monde a while ago, stating that we over pay by about 20% on our power bills.

[Chancer]

As an EDF customer in both countries I know which bill I prefer.

Ther same goes for my water bills, the UK utility is again French owned.

I dont think that the French buyers of UK utilities have been particularly smart more that the UK has been particularly stupid to denationalise everything, ignore nuclear and then allow foreign ownership.

I learnt before the age of 10 years, as I am sure most did, that to win at "Monopoly" the very first thing that you buy are the utilities.

[Logan]

Nuclear power is enormously expensive to set up and also takes a lot of time. You cannot set up a nuclear power station in months it takes around 10 years. Gas fired power stations on the other hand are relatively quick. Nuclear energy requires investment for the long term and that investment requires a level of return. EDF have been very succesful for a state industry and their expansion abroad is just good business sense. I think it matters not one jot to the UK that utilities are owned by other states. What matters to the British people is if they deliver quality of service at an affordable cost. If they don't the public will soon migrate elsewhere. In France that's not possible and it's about time it was.

[Benjamin]

Britain will yet rue the day that British Energy and EDF failed to get it together because British Energys' shareholders got very greedy at the last minute.

Love them or hate them, but EDF are probably the best placed, because of their experience of French nuclear power, to provide a long term solution to the UK's energy needs.

[Graham & Brenda]

EDF state that the UK and French businesses are separate and stand alone. I have no knowledge or expertise to prove this but I would really expect it to be the case.

[The Riff-Raff Element]

[quote user="Logan"]The UK went in the opposite direction because of pressure applied by the anti-nuclear lobby. Misguided in my view.[/quote]

What a laugh! The UK went the non-nuclear route because that was what the Market wanted, not because the anti-nuclear lobby were taken seriously. Hence the "dash for gas."  Loony short termism comes home to roost. I'm all for free enterprise, but not at the expense of proper planning and common sense.

[Logan]

You are mis-informed Riff Raff. In the late 1980/90's there was a huge political debate in UK regarding the future of nuclear energy. The plan was to build more nuclear power stations. However the 'green lobby' mounted an effective campaign based around the problems of nuclear waste disposal.( remember the yellow sun face stickers 'nuclear power - no thanks). Public opinion turned against the plans due to worries about leukmia clusters in children and safety concerns with disposal. Previously the green lobby had also been very succesful in turning public opinion in Germany against nuclear power.

Then government found it much cheaper to build gas fired power stations with new technology just coming on stream. Those were the two principal reasons nuclear energy declined. Now gas is very expensive and causing electricity to rise in price. Public opinion is less divided about nuclear energy. However the old issues are still there. France (EDF) has offered the government a roll out programme of building new nuclear power stations across the UK without cost to the public purse. At the moment the deal has stalled due to some institutional shareholders holding out for more cash.

These issues are far more complex than my summary. It was not however a market question as such.

[The Riff-Raff Element]

I remember the debate. I was there. I even took a bit part in it 'cos I was working in the energy sector at the time. We were very excited about the possibilities of getting maximum value out of UK gas reserves before sufficient infrastructure was put in place to swamp the market with cheap Norwegian, Russian and North African supplies. That's how it looked at the time.

Nuclear power was too expensive to be acceptable to the Market. In the end, as I am sure you will remember, it had to be spun off as a seperate company to remain publically owned before the power sector could be taken seriously by investors.

Gas turbine generators were, indeed, relatively cheap and easy to install. They're just stationary jet engines driving a shaft, after all. They could be amortised very, very quickly - five to seven years, which is why they were such an attractive proposition at the time.

The idea of the government of that era taking a blind bit of notice of the bearded, sandal-wearing, lentil guzzling bunch of weirdos that the British public at the time perceived the green lobby to be is laughable. Where were those yellow suns usually to be found? On 2CVs or on BMWs? But if they were listening they were doing so selectively: the green lobby at the time were very vocal about the ill-advised step of relying on domestic gas supplies that not only had a finite life expectency but one that was due to be reached in the foreseeable future.

There was no attempt at long-term planning: the whole shooting match was handed over to the Market in the blind faith that it was "always right." But the Market was found wanting and now the poor British consummer is left to pick up the tab. Again.

[Logan]

I do agree with some of your conclusions Riff Raff. The truth behind political decisions however is always shaded in grey. Although not mentioning UK by name Wiki goes some way in support of my view:-

A general movement against nuclear power arose during the last third of the 20th century, based on the fear of a possible nuclear accident, fears of radiation, nuclear proliferation, and on the opposition to nuclear waste production, transport and final storage. Perceived risks on the citizens' health and safety, the 1979 accident at Three Mile Island and the 1986 Chernobyl disaster played a part in stopping new plant construction in many countries, although the public policy organization Brookings Institution suggests that new nuclear units have not been ordered in the U.S. because the Institution's research concludes they cost 15–30% more over their lifetime than conventional coal and natural gas fired plants.

Unlike the Three Mile Island accident, the much more serious Chernobyl accident did not increase regulations affecting Western reactors since the Chernobyl reactors were of the problematic RBMK design only used in the Soviet Union, for example lacking "robust" containment buildings. Many of these reactors are still in use today. However, changes were made in both the reactors themselves (use of low enriched uranium) and in the control system (prevention of disabling safety systems) to prevent the possibility of a duplicate accident.

An international organization to promote safety awareness and professional development on operators in nuclear facilities was created: WANO; World Association of Nuclear Operators.

Opposition in Ireland, New Zealand and Poland prevented nuclear programs there, while Austria (1978), Sweden (1980) and Italy (1987) (influenced by Chernobyl) voted in referendums to oppose or phase out nuclear power.

Read more here - http://en.wikipedia.org/wiki/Nuclear_power