Utilities

Is it possible that while one Whitehall Department is constructing a “secret” crisis centre to deal with cyber attacks, another located less than a quarter of a mile away is preparing to sell part of the UK’s national infrastructure to the very people behind those attacks?

The establishment of a cyber security centre was reported by the FT last week. Anyone who doubts that its primary focus is the Chinese should read the report produced a couple of months ago by the specialist US consultancy Mandiant.

The company identified attacks originating in a building occupied by the General Staff Department of the People’s Liberation Army in Shanghai which had targeted 141 companies across 20 major industries. China has denied official involvement but has not yet agreed to stop the attacks.

Unfortunately no one seems to have mentioned these developments to Ed Davey, energy secretary, or EDF, the company which wants to develop new nuclear power stations in Britain. If the price and risk allocation for that deal is agreed, and Mr Davey has said that agreement is close, the next question is how the deal will be funded. EDF does not have the capacity to find the £14bn required and so has been looking to Chinese partners to provide much of the cash. Read more

The rumours that Vladimir Putin is about to replace Aleksey Miller as the chief executive of Gazprom continue to swirl around the markets across Europe. As usual it is hard to know what is true and what is dreamt up by Mr Miller’s enemies. Removing Mr Miller would not, however, solve Gazprom’s problems. What the company really needs is a new strategy. What should it be. ? Read more

For an interesting and creative perspective on the changes that are occurring in the energy sector take a look at the material being put out by Alexa Capital. Alexa is the brainchild of Bruce Huber the long-term guru of the renewables business at Jefferies.

To illustrate what the report is about let’s start with a question – why has the power sector, particularly in Europe, lost so much of its value when electricity demand (other than from nuclear generation) continues to rise? Read more

After Nick Butler’s post on David Cameron’s energy policy John Kay writes about the complexity of retail energy tariffs and how the simplification of these will not be easy.

Last week, David Cameron told the House of Commons that UK energy suppliers will be required to ensure that all their customers benefit from the lowest tariff. Coincidentally, Britain’s energy regulator Ofgem published a document proposing simplification of retail energy tariffs. The document demonstrated that simplification will be complicated. Certainly more complicated than the prime minister’s statement implied. Read more

David Cameron is the first prime minister in living memory who has not employed a business policy adviser in Number 10. The lack of such an adviser is all too evident in the continuing shambles around the UK’s energy policy.

Picking up public irritation with rising electricity and gas bills, the PM declared that companies would be compelled to supply customers on the basis of the lowest tariff available. This signals a real lack of understanding of how business works. The rapid consequence of such a policy would be to push all tariffs up and to remove any incentive on any supplier to provide competitive packages to end users. Read more