Common Wealth has exposed that we are paying privatised gas companies pretty much just for existing. In other words, we are paying rent to them for being ‘on standby’ for supply issues.
Renting gas for its existence, not its supply
In a new report, thinktank notes we have spent £12.5 billion through bill payments to fossil fuel firms for them maintaining their ‘capacity’ in the last ten years.
It points out that a significant portion of these payments went to a private equity fund founded by a foreign billionaire, as well as overseas states. £900m went to plants that Uniper owns (in turn, owned by the German state) and £320m went to plants that Equinor partially owns, which is owned by the Norwegian state. Why are citizens in Norway and Germany financially benefiting from our energy supply, as well as a foreign billionaire?
The thinktank recommends that the Labour Party government nationalise necessary gas power plants while we phase them out and bring in renewables. The thing is, we should go further and deliver the renewables themselves in public ownership as well. This would decrease costs for every person and business across the economy and particularly high energy services like agriculture.
Common Wealth points out that nationalisation of gas would eliminate “profits to quickly lower bills and enhance energy security”, while meeting “policy objectives and operating assets at cost”.
The thinktank further reports that during the transition to renewable energy, gas companies have even more leverage through the ‘standby’ system.
Extreme overcharging from gas companies
The prices gouged to prevent blackouts are ludicrous, as the report shows. VPI Energy charged an “astronomical” £5,750 per megawatt-hour (MWh) during a day in January 2025 when there would’ve been a blackout. In Europe, the market rate for gas was just €45 per MWh. And the so called regulator Ofgem is allowing this. The scam is reflected in our bills, with the average yearly payment rising to £1,849.
And those prices are from the ‘Balancing Mechanism’ alone, to prevent blackouts. That doesn’t include the rent we pay under the ‘Capacity Market’.
To conclude, Common Wealth states:
Transitioning to a publicly-owned strategic reserve of gas-fired power plants is exactly the kind of bold but actionable policy that a government focused on the cost of living and climate action should pursue. Whilst negotiating terms and transferring ownership would take some time, the Government should actively consider its options — and its leverage — as soon as possible, with a view to complete the process ahead of the next general election.
Featured image via the Canary
