Paul Hunt on rent-seeking and regulation in gas and power Post author By Richard Tol Post date November 14, 2012 Paul’s talk at the DEW in Galway is now available. It is worth a read for all interested in energy markets, and for all who argue, wrongly, that regulatory reform is not a priority for stimulating economic growth. Paul got limited coverage in the media: Independent; Times Categories In Regulation Tags Energy 7 Comments on Paul Hunt on rent-seeking and regulation in gas and power ← Debating the “Default Option” → Medium Term Fiscal Statement 7 replies on “Paul Hunt on rent-seeking and regulation in gas and power” Paul Hunt vindicated and re-habilitated! Now what does that remind me of? Not to worry, it will come to me! The endemic and pervasive nature of rent seeking The international energy industry is driven fundamentally by the pursuit and capture of rents. * Raises eyebrows * And let’s be clear. This is rent seeking that is legally authorised and, indeed, officially encouraged; these are not rents secured by the use of ‘sharp practice’ or as a result of corruption. Firms and individuals will always seek to capture rents, or to protect the capture of existing rents. Amen! Even those, commonly labelled right or centre-right, governments and political parties that most loudly advocate the first option – small state, low taxes, the rule of law, liberal democracy, free markets, economic freedom and individual responsibility, etc. – frequently and gleefully choose and apply the second option when it suits them. Right on! In this context the conflict that arises is not between the choice and application of these two options, nor is it the time-hallowed conflict between the ‘right’ and the ‘left’ – clothing their thrusts and counter-thrusts in rhetoric that resonates less and less with jaded and cynical voters: it is a conflict between different groups of rent-seekers aligned with either the right or the left. Preach! Preach! Powerful stuff this. A pity Paul Hunt will probably become a pariah, or else be attacked by the energy industry, for writing it. Also, I’m beginning to understand why Nationalisation was such a popular policy in times gone by. Who do we believe Paul Hunt or the Energy Regulator? Let me see now!! What I would like to see is the Energy Regulator being sacked and Paul Hunt being given his job. CER is a self serving quango and they have been spineless and gutless but most assiduous when it comes to their own salaries and pensions. The energy victims would be better off without any CER, that much is totally obvious, as they are only there to muddy the water and allow the energy companies to put clear blue water between themselves and their victims, sorry customers.. Every six months someone knocks on my door to tell me if I sigh up with them they can reduce my bills by 10% – 15% the whole thing is a very expensive joke. @Robert Browne +1 Thanks Paul for an informative overview of this area. It outlines well the misalignment of interests that occurs between different groupings within the country and the need for fair and effective regulation in order to balance this. The European Commission today published a set of documents on the “Internal Energy Market”. This includes a public consultation. http://ec.europa.eu/energy/gas_electricity/internal_market_en.htm A very readable account of rent-seeking, first in the publicly-owned, and then in the privately -owned, electricity industry in Britain is given in : http://www.lrb.co.uk/v34/n17/james-meek/how-we-happened-to-sell-off-our-electricity Comments are closed.