The price of hiding a failed energy policy

A week ago the SERV (Social-Economical Council of Flanders) calculated that our electricity bill could rise 30% soon. A couple days ago our Minster of Economy, Johan Vande Lanotte, announced a new proposal to counter this increase. So far so good. But what he proposed is what he calls a “bad bank” that takes over the remaining “debt of the green electricity cost”. He claims an amount of about 500 million euro to be paid over 20 years. This will be around 36 million per year. To me it didn’t make much sense, but at least there is acknowledging that something is not right with those subsidies.

Some background. It began when Government started to subsidize renewable energy. Generously. Companies and people could install for example solar panels on their roofs and Government decreed that the energy providers are obligated to pay a compensation for every 1,000 kWh produced by these panels. These are called “green electricity certificates” and are paid for production of solar or wind energy. Energy providers, not being charitable institutions, of course want to charge this directly to their costumers. Which they initially did a couple years ago and the energy price suddenly skyrocketed.

This was only the beginning. The minister saw the dark cloud coming. Fearing incredibly high energy prices because of their renewable energy policies, he decided to artificially freeze the prices of electricity. The energy provided were not allowed to raise the (electricity) for three years. This standstill ends next year and as a consequence it is to be expected that the providers will want to compensate for the three years of lost revenues. The providers are paying the bill now, but will not keep on doing it when the price is free again.

At least it worked. For a while our energy prices didn’t rise anymore. Problems solve, you would think. Very nice in an election year, but the hand that was giving so generously was the same hand that took it away in the first place.

Now the energy price will be free again it probably will make our energy prices explode in no time. Higher energy prices are a consequence of the renewables subsidies and the measures to hide these made things much worse. The same thing with this “bad bank”.

So far as I could understand it, but why the proposal of, of all things, a “bad bank”? To me that made not much sense. In the end someone has to pay for those high energy prices and borrowing money means paying even more in the long term. Vande Lanotte, as a Minister of Economy and of Consumer Affairs, should be aware of that. 36 million times 20 is 720 million euro. Over time this means paying much more, about half of the current debt more. This is not all. He surely underestimated that “debt”. It is not 500 million euro for Flanders, it is around one billion euro.

Then came the surprise: the proposal came originally from the Green party and, for whatever strange reason, they want to take the credit for it. Their credo was that it has to be absolutely avoided that families are facing a sharp increase in their energy bill. At first it was a mystery to me. Someone will have to pay the price. Whether it is via a higher price of energy or via a fund.

After a while it dawned on me. It means that the price now will be payed by the tax payer, not by the consumer. The most important difference is that this makes the price increase less visible. If the price is paid by the consumers, then the failure or their energy policy will be painfully obvious. It would be very clear that these subsidies make energy expensive, for more than a decade to come. When it is in a fund, it is out of sight and not connected with energy policies.

The scary thing is that the Minister and the greens are willing to add almost 50% to our current green energy debt, in order to hide their own failed energy policies…

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