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Good vs Bad
http://www.x404.co.uk/forum/viewtopic.php?f=19&t=20376		 Page 1 of 1
Author:  paulzolo [ Wed Oct 09, 2013 2:37 pm ]
Post subject:  Good vs Bad
So, let’s see if I have this right.

This is bad:
Quote:
Labour would freeze gas and electricity bills for every home and business in the UK for 20 months if it wins the 2015 election, Ed Miliband has said.

http://www.bbc.co.uk/news/uk-politics-24213366

And this is good:
Quote:
The rail industry's power to increase fares in England is to be curbed as part of a government drive to overhaul the rail fare system.

http://www.bbc.co.uk/news/business-24449784

As I see it - two political parties both suggesting the same thing - price control. It’s just that one is “socialism”, and therefore “bad”. :?
Author:  l3v1ck [ Wed Oct 09, 2013 2:45 pm ]
Post subject:  Re: Good vs Bad
One is a free market the other is an industry heavily subsidesed by the tax payer. There's a big difference.
Author:  Amnesia10 [ Wed Oct 09, 2013 2:55 pm ]
Post subject:  Re: Good vs Bad
l3v1ck wrote:
One is a free market the other is an industry heavily subsidesed by the tax payer. There's a big difference.

The energy market is not that free, as a utility industry they have failed to invest adequately except offshore and so we are still facing blackouts at some point.
Author:  ShockWaffle [ Wed Oct 09, 2013 3:45 pm ]
Post subject:  Re: Good vs Bad
The difference is the costs. Price controls fix revenues at a given rate, but leave it up to the supplier to fix their costs at a lower rate. If they can't do that then they can't trade for long.

Rail company costs are mostly predictable. Their financing costs move around a little with the inflation rate etc, and their fuel bills change, but they know pretty accurately right now what it will cost them to run their business in 3 years time.

If gas companies are to maintain price stability for 20 months they will have to maintain cost stability too. So that means they have to fix their buy price with suppliers who are then taking all the risk burden for them. Risk is expensive, you have to pay a lot of money to have it taken away for you, which means fixing the rate very high.

So the difference between these policies is that one interferes mildly with a calculation on a spread sheet, and is boring. The other is totally self defeating grandstanding by an idiot.
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