New Labour, energy policy and 'competitive markets'

By the end of New Labour's first term four central objectivesof energy policy had become established: ‘cheap’energy, the relief of fuel poverty, a major reduction of carbondioxide emissions, and energy security through maintaining awide diversity of primary fuel supplies, all to be achievedthrough ‘competition’. After surveying New Labourenergy policy documents, the paper argues that New Labour failedto appreciate (i) the extent to which, under such a laissezfaire policy regime, these objectives were mutually inconsistent;(ii) that the apparent successes of energy market liberalisationduring the preceding Conservative Governments had little todo with ‘competition’; and (iii) that the transactioncosts of injecting increasing ‘competition’ intoboth British and European energy systems are likely to exacerbatethe growing threat to energy security. The paper concludes witha brief examination of the implications of transaction costeconomics for the organisational structure of the UK energysupply industry.