Government needs to act on electricity prices now
The outlook for electricity prices is extremely concerning.
The market has been in a volatile state since the energy crisis started in September 2021 because of a significant outage with a gas interconnector in France.
Since February of this year, it has worsened, with energy bills seeing a sharp increase due to the Russia-Ukraine conflict, and Russia’s decision to cut supplies to western Europe.
Many energy market experts had hoped things would improve by the summer, but in July, technical problems and planned shutdowns at Nord Stream 1, maintenance at the Dragon LNG terminal, French nuclear outages, Norwegian hydro outages and Australian strike action created significant price increases again.
Experts are uncertain whether any repairs or improvements will be seen this side of winter, with long-term gas supply shortages forecast. Intervention from the EU to support the gas network has been suggested, but nothing has yet been confirmed.
The impact on farmers depends on when they last renewed their energy contract, as contracts signed two - four years ago will be on more favourable rates than contracts signed last year, when prices were already on the up.
Farmers renewing in recent months have seen exponential increases. We must remember that energy is not the only cost to go up – costs of many other inputs are up significantly too.
If the war in Ukraine ends, there will be some reduction, but not immediately to the rate of previous prices. Governments have realised the reliance on Russian gas is unsustainable, and alternative and local energy generation will be prioritised, but these won’t come on anytime soon. Things need to change but it won’t be overnight, and regardless of how much people shout, there will be considerably more pain felt before we’re through this. Governments need to stand up and make decisions.
As UK unions, we need to maximise at every opportunity our ability to produce our own power and energy whether renewable or not, almost regardless of cost as right now, this will be much more economical in the long run. Build, reinstate or take over fertiliser plants to become as near self-sufficient in fertiliser as possible to maximise food security. We need to stop allowing energy companies to export for profit whilst we still have a shortage here, this could be a short-term measure, three to five years until more home produced power is available and would be more accepting than forcing a windfall tax.
This will require legislative change and a mindset change through all governments to accept where there have been failings. The huge surge in cost of electricity is affecting every individual and household but when it comes to the impact on businesses, particularly those required to deliver food security and guaranteed food supply, there must be greater government understanding of what these price increases will mean.
Inflation is now currently running at over 10 percent. The rise in costs that farmers face for their key inputs, is well over 30 percent with some products, for example fertiliser, nearer 300 percent
It is up to the government to act on electricity prices now in the best interest of all our businesses - and ultimately all our consumers.
Acting now on electricity prices for food and farm businesses will help with food price inflation and keep home-produced food on everyone’s plates.