Richard North, 23/09/2021  

I made a mistake yesterday with the heading of my piece, in using the "energy" tag. The piece was actually about politics rather then energy and, in particular, how one senior politician can evade responsibility for a failed policy which has brought the nation to a crisis point.

That issue is actually rather important and transcends the technical details of the policy, striking at the heart of the democratic process. Supposedly, we elect our representatives and then judge them on their performance in office.

In theory, if we are unsatisfied with their delivery, or their intentions, we vote them out of office. We then replace them with others, whom we judge are better equipped (or motivated) to carry out their predecessors' tasks.

In respect of the current crisis, that process has failed - and at several levels. In the first instance, it falls because of the extended timescale - the lag between a decision (or decisions) being taken, and the consequences becoming apparent.

Here, one must accept my thesis that the proximate cause of the crisis with which we are currently dealing lies in the decision(s) made on gas storage under the aegis of Ed Davey, the then Secretary of State for Energy and Climate Change, announced on 4 September 2013.

This was the point at which the government publicly turned away from intervening in the gas market in a way that would incentivise investment in building (and maintaining) a what was deemed to be a sufficient level of storage.

Ignoring for the moment any or all side issues, it immediately becomes apparent that the consequences of his decision(s) were not apparent by the time Davey's term of office came to an end in 2015. Therefore, had his performance in this respect even been an electoral issue, there would have been no means of assessing it. There could not be even the slightest semblance of accountability to the voters for his actions.

By the time the consequences of Mr Davey's actions became known, eight years had passed. Not only did the coalition government in which he served no longer exist, there had been three more general elections and the formation of successive administrations in which Davey took no part.

Therefore, even had it been the case that his responsibility had been clearly and unequivocally established – which is by no means the case – there would be no mechanism for holding him to account. He has currently assumed the entirely different role as leader of the Liberal-Democrat Party, a position which owes nothing to his performance (for good or bad) as Secretary of State for Energy and Climate Change in Mr Cameron's coalition government.

In the general context of the functioning of a representative democracy, it is an article of faith that, once the transgressions (or failures) of a particular politician become apparent, sanctions are applied. Either politicians in question are induced to resign or are sacked, or the electorate decline to re-elect them.

In all respects, none of those sanctions can be applied to Mr Davey, and nor even can they be applied in a more limited fashion to the government in which he served. There is absent, therefore, any mechanism for punishing this politician for his (assumed) failure. And what applied to Davey applies more generally. Largely, there is no way ministers can be held to account for their failures.

Before we can even get there, though, there is another hurdle to surmount. While I have established to my own satisfaction Mr Davey's culpability in relation to this crisis, it has been by no means established officially, nor even generally agreed that he is the man in the frame. And it is quite evident that Davey himself does not believe himself to have done anything wrong.

Except in the most extreme circumstances, where there might be an official inquiry, there is no routine mechanism by which, systematically, the performance of a minister can be fairly judged. If it is left to the vagaries of the political system to pass judgement, though, that, for a whole range of reasons, is unlikely to deliver. But then, even official inquiries rarely come to a satisfactory conclusion.

To the range of oversight mechanisms, of course, we can add the media but there are few who might accept that the fourth estate is an any way capable of exercising a moderating effect on the body politic. Many would regard it as part of the problem.

This brings me to a third level, which to an extent blurs into the second. By way of an illustration, The Times is running a report headed, "Regulator was warned of energy price danger two years ago, MPs told".

This brings into focus that there are other agencies which can scrutinise and report on ministerial performance – albeit indirectly. In this case, there is the regulator, Ofgem, which maintains an oversight over the market functions. It is perfectly placed to point out weaknesses and failures.

But the Times report illustrates a more profound and separate issue, the essence of which could best be encompassed by one word: "complexity".

For narrative purposes, as I did yesterday, one tends to simplify issues and ignore matters not directly related to the theme being addressed. To that extent, I have focused largely on the security of supply issues but, alongside that, we have the progressive (and, as yet unchecked) collapse of parts of the retain market as firms fail under the pressure of record wholesale gas prices.

What we learn from the Times is that ministers and Ofgem were warned two years ago that the retail sector was vulnerable to price shocks, a detail coming via Emma Pinchbeck, chief executive of the suppliers trade body Energy UK.

She says that she was told when she took up the role a year ago that her biggest challenge was going to be the "vulnerability of the retail market". And while attention is on the "short-term crisis", her view is that the regulatory market is flawed, giving rise to significant fragility in the market.

She accepts that there is a resilience and security of supply risk in the future, but the current crisis, she days, has been exacerbated "and arguably caused" by our regulatory design.

In any normal market we have companies that fail, she says, but right now good, well-run companies will fail. And that's a function of both the pricing shock but also market design. "Naturally", she adds, the conversation defaults to resilience of our infrastructure (and security of supply is critical), but our retail regulation needs a long hard look.

Other comments offered by Pinchbeck are unhelpful, as she argues that the crisis shows why "we must continue the low-carbon transition and further reduce our dependency on fossil fuels", but her substantive point stands. While, in my view, the resilience of our infrastructure (i.e., the level of gas storage) has had a dominant effect in the ongoing crisis, the complex (and flawed) regulatory system also has an effect.

Thus, while Davey is very much in my crosshairs for his role in disrupting the provision of gas storage, he isn't necessarily culpable for the parallel regulatory failures which, by Pinchbeck's account, have added to the damage.

And, if that adds to the complexity of the situation, it is by no means the only factor to do so. Davey's action (or inactions) must be seen in the broader context of the reliance or renewables as the primary source of electricity generation, the over-rapid removal of coal generation.

Add to this, the poor choices made for the replacement of our nuclear fleet and the effective failure of the programme, and we have a highly complex policy scenario, only part of which is the direct responsibility of Davey.

There, we have the ultimate problem. Energy policy is a slowly evolving quantum, comprising multiple decisions made over decades, by many different actors and generations of politicians. And where so many people are responsible for the end result and the crisis that has emerged, in effect no one person can be judged culpable. Responsibility is so diffuse that there can be no meaningful accountability.

All this makes the very idea of democratic accountability somewhat moot. And if there are no effective mechanisms to bring politicians to account, it is hard to see how in this highly technical sector, we the people, can force a failing system to improve.

Perhaps we can only rely in the Admiral Byng strategy, pour encourager les autres, in which case I would happily nominate Davey for the firing squad. Others, though, might be reluctant to stop there.

Also published on Turbulent Times.

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