What the Ofgem energy price news means for unions

In two words: more work. Unions will decry the profits made by ‘fat cat’ energy bosses, as they always have, but even if directors and shareholders do benefit from the rising prices warned of in today’s Ofgem report, at least the brothers in the engineering construction sector will be able to feel reassured that demand for their services – building power stations, liquefied natural gas terminals, oil refineries, flue gas desulfurisation plants (you learn something new every day) and more – is going to go up.

That is the inescapable conclusion from the Ofgem report. In 2008, energy companies’ capital expenditure was about £8 billion. The report models four possible scenarios, ranging from low investment and a lack of  new renewable energy generation (costing about £95 billion over the next 11 years) to a fast transition to green energy (costing about £200 billion over the same period). Even in the lowest cost scenario, which would see the UK miss its carbon reduction targets, there will have to be more investment in new plants in the years leading up to 2020 than there was last year – itself a rise on the 2007 figures.

If Ed Miliband/David Cameron wants to meet those carbon targets, there will have to be more new build power stations, probably including ‘clean’ coal and nuclear.

This can’t come too soon for the sector, which has admittedly (despite my own optimistic noises below) taken a hit during the recession, as the latest industry report shows. That trend looks set to be reversed in a year. Employment will rise and the pool of skilled workers will shrink.

If a new national agreement has been threashed out by then (which it currently hasn’t) that could mean more militancy and strikes. Alternatively if there is a new NAECI, it will help unions as more workers get jobs and pay their union subs. But in the meantime, this Ofgem report is likely to steel those workers and union negotiators holding out for a better deal…


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One Response to “What the Ofgem energy price news means for unions”

  1. Green Energy Best Option for UK – Ofgem Says:

    […] to face up to the cold reality that there are some tough times ahead. There has been widespread reaction from many interested parties (the FT Blog has a nice summation of […]

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