More gorgeousness

There is also no reason why, at this moment, the cost of electricity is being priced by the government regulator at the cost of the most expensive single way to produce it – which is by using gas.

If the electricity price was instead based on the average cost of its production its price would fall, which would immediately and significantly cut energy bills – whilst still allowing producers a profit. But the regulator won’t do that. They’d rather allow excess profit instead.

Can anyone think of why the system works this way?

Hmm, class?

Yes, that’s right, think it through from the position of one of those marginal producers. Any one of them and yes, economics does happen at the margin.

So, your electricity costs more than the average price to produce. Dunno, you’re a gas plant, Or maybe we’ve an oil one left, something like that. So your electricity – when they’re only paying the average price, not the marginal price for the last piece of capacity, what do you do?

You don’t produce any electricity, do you? So at this time of high prices an average pricing scheme would lead to less electricity production. And why are prices high? Because there’s not much electricity around – just the time we want to be dissuading production, isn’t it?

The producers of the higher than average cost electricity wouldn’t produce electricity if they were only paid the average price.

Is it really true that a man who has held no fewer than three British professorships cannot grasp this?

And still we have no windfall tax, or even a hint of it. And that is also bizarre, because the fact is that almost penny of the costs that are fuelling inflation is becoming profit in the hands of exploitative oil and gas producers,

Titter – that very cheap to produce solar is also gaining these high prices, isn’t it? So they must be windfalled as well, no?

In the face of a crisis there is an urgent need for unconventional thinking to tackle something out of the ordinary.

There’s unconventional and there’s idiocy…..