A note on Reform’s attempt to ‘sabotage’ the UK’s energy supply

Worth stressing what an abomination this letter from Reform to CEOs of current UK energy supplier companies is. It largely follows Andrew Sissons’ excellent analysis on Bluesky but which explains a couple of bits for a non-expert audience and adds a bit on where I think there’s potential illegality even in sending the letter.

1/ It’s threat, four years in advance of Reform wannabee’s regime, that a Reform government from all contracts for Auction Round 7 (AR7) of the Contracts for Difference (CfDs) programme, begun in 2013, and currently underway.

2/ CfDs are the key mechanism to encourage commercial investment in wind and solar, principally, by offering a fixed price over 15 years. This promises firms income stability, in return for certainty of output to the grid.

3/ The letter is simply wrong about AR7 being a subsidy, since the fixed price offered is currently below the wholesale market price offered by the National Grid operator, because we are now not too far from the tipping point against fossil fuels, with most of our daily needs now met by renewables but with the non-fixed price still hooked to the most expensive form of generation, gas.

4/ Older auction rounds did offer a higher price than wholesale, because we were earlier on in the journey away from fossil fuel dependency and capital costs were relatively higher because of R&D etc, but these early contracts are coming to an end anyway in 2030–32 ish, so a Reform govt will end up costing the government more by cancelling AR7.

5/ Even more crucially, pulling the AR7contracts would do two things:

a) If it stops the drive to 100% renewable generation capacity (though there’s still a lot of grid reinforcement and battery storage enhancement to happen before that can happen without risk of power cuts), it exposes the UK to risks associated with buying in fossil fuels (or indeed purchasing electricity from Europe via the big wires under the North Sea).

b) It sends a message to investors that the UK can’t be trusted to honour contracts, creating obvious bond market threats to the wider economy 9think Truss debacle on steroids). The US can afford to do this kind of shit, at least short term, because the dollar is sovereign, but the UK can’t, whatever the Trumpian bombast at the end of the letter.

6/ So what this is letter is doing, right here right now, is to stymie AR7 for political purpose — essentially for it to fail to get the supply ordered, in follow up to the failure of AR6 (this because the Johnson govt provided an absurdly low offer, but that’s another story related to their failure to abide by the regulations set out in the Energy Act 2013).

7/ This then, even now, is an act of attempted sabotage of our national energy infrastructure and associated systems.

8/ As such, it is arguably an illegal act to send this threat letter under the terms of section 12 of the National Security Act 2023, which make it an offence, “liable on conviction on indictment to imprisonment for life or a fine (or both). to “engage in conduct that results in damage to any asset” where an asset is “of any kind whether tangible or intangible and includes in particular real and personal property, electronic systems and information”.

9/ Caveat: such an offence is only committed where “the foreign power condition” is met, and that essentially would mean proving Reform is doing the bidding of another state’s “agents”; the 2023 Act did not envisage that the USA would be one such nation, but the letter does actually suggest itself that a US model of renewable energy destruction in favour of Big Oil and planetary destruction is at play, and the likelihood that a) Reform is funded by dark money from the US; and b) the collapse in distinction between person and state in the US makes this more feasible than it was in terms of prosecution, were the Attorney General (ours not the US’s mad one) so minded.

10/ So, of course I don’t favour legal pursuit, but it is worth stressing how close Reform have come to the line in this letter as part of a political comeback.

11/ Hope this is understandable for an audience who may be even more ‘lay’ than I am in terms of understanding the financial complexities of how we keep the lights on.