Why Is Energy Expensive When it Shouldn’t Be?

Why are our energy bills rising like moon rockets when it really shouldn’t…

If a group of people own a power plant together, then they only pay for the investment and the amount of energy used. If all the “fuel” comes from their land, their faeces and urine, their ground heat, their water, air or sunshine, then they can expect to have a stable cost of power and heat.

If we invest in power plants through our local government or through our national central government, then we can expect to have the same results. The greater the reliance on our own “fuels” the greater the price stability and predictability of the power and heat.

Energy is a basic service and needs to have a relatively low and stable price.  

Why is this not happening here in Finland, when logically it should if we had wise politicians? Sustainable renewable power plants abound and innovation always moves forward with a quick adoption by municipalities and national governments in the past, and why not in the future:

  1. Finland has nuclear power stations that were built with massive state support. Once up and running the cost of power is fixed at around 3 cents a kilowatt hour. Now when electricity prices are sky high because of the war, the energy companies show huge profits. The management congratulates itself and receive huge bonuses alongside shareholders who receive large dividend payouts. Taxpayers bear the full burden of these monster plants. Taxes on windfall profits should be used to lower the cost of electricity tariffs this time round.
  2. Fortum and Neste are two strategic energy giants here in Finland. Both of them have the government as the founding shareholder, and the government is still the majority owner. It is hard to understand why they need to be controlled by private interests, especially when you glance at the losses made by Fortum’s crazy investment in Uniper and in Russia. Although Neste is making determined strides to develop clean energy, they are still mainly a fossil fuel refinery… Neste is now making huge windfall profits because of the war and Fortum is using it profits from cleaner energy sources to cover its massive losses caused by the war, the  risks of which were easy to spot for everybody except its top management. There is nothing wrong with 100% state ownership of strategic assets. Private sector interests are not focussed on long-term sustainability, but short-term gains from risk taking. This activity is called moral hazard when associated with natural monopolies and basic infrastructure services. This is well-known to every economic’s student, or should be. Moral hazard just privatises the profits and socialises the losses of such projects.
  3. State handouts for smaller private hydro electric plants and wind farms receive less state support, but they also produce electricity at a low fixed cost, and now make nice profits. Without rather these earlier taxpayer subsidies none of these projects would have been completed… Again there is a good argument for taxes on windfall profits that state subsidies have produced.
  4. Many municipalities have built and operate heat and power plants that local taxpayers have paid  with their hard-earned taxes. Operating costs are low in most cases, with reasonable predictable variable costs. When they make extra revenue that benefits of the local population, or should do… However, many have been sold off at low prices to the big energy giants, and that has not improved the lot of local taxpayers…

The present hike in the prices of electricity and other fossil fuels is because Germany and a few other big countries were deliberately blind, negligent or foolish to their increasing reliance on energy from Russia. This is and has always been a country that has no democracy, where the leaders rob the ordinary citizens, and where controlling and invading other sovereign nations is an acquired habit.

It should be no surprise to anybody that you cannot trust Russia as a long-term partner.

The Germans and other big countries should have pushed for a much faster development of renewables and weaned themselves off fossil fuels… but they love their fossil-fuelled factories for profits and fossil-fuelled cars for speed and convenience.

This has now resulted in price hike in the world markets where the rest of us are expected to pay up in the name of community spirit… that is moral hazard and nothing else and we should have the resolve to refuse. Let them bear the consequences of their short-sighted actions…

The privatisation of basic services of which energy is one is a fool’s game, and now we know because we are paying the price which we cannot all afford.

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