Episode 8 BBC News: The Editors

Welcome to Battersea Power Station in London. Can Government genuinely

provide clean, cheap and secure energy? Why can't we make up our

minds about the kind of energy we want? Is having only six big energy

providers bad for Britain? This was once the biggest building

in Europe. Now, it is one of the more derelict. Battersea Power

Station was built in 1933 by Giles Gilbert Scott and decommissioned in

1983. Now, it has been turned into a vast con Great Ormond Street

Hospital ration of flats, shops and entertainment centres. Once it

supplied half of London with electricity and was a major target

for German bombs in the Second World War. They always managed to miss it

year after year, but the area around about was flattened. The business of

generating energy has changed hugely since the 1930s. This was coal

fired, deeply damaging to the environment. Now, we want clean,

sustainable energy. But we want it to be cheap, and of course, we have

to make sure that the lights are kept on. These things are difficult

to deliver. Nick Robinson considers whether the politicians can actually

manage this three card trick. If you were asked to draw up a plan

for Britain's energy needs, where would you start? Almost certainly,

with a simple idea. It is energy which keeps the heart of the British

economy pumping. Keeping businesses alive and growing and moving. So it

is time to start thinking of those ugly cables along which our

electricity flows has more like -- as more like the nation's life

lines. So says the man who is Secretary of State for Energy in

Margaret Thatcher's first Government. Lord Howell is president

of the energy industry. Politicians are bound to be involved in energy

supply because it is life-blood. It is oxygen. If the lights go off,

then the social system collapses. Energy is vital oxygen for the whole

system. Politicians have got a duty to ensure the oxygen flows or the

blood flows. These are Britain's veins and

arteries, the principle power lines that link up to form the National

Grid. This is the country's national control centre in Berkshire. The

exact location is meant to be a secret. The job of the team here is

to keep the heart pumping, that means to make sure there is enough

power to meet the demands of businesses and homes which fluctuate

from second to second. You guys have to be an expert not just in the

weather, but in the TV schedules? We do our best. Which are the big

blips, Strictly? Strictly, sporting events, live events, you get the big

events like Royal weddings. Is it particular moments in the Royal

Wedding? The one cas waiting to for a kiss. After the kiss, the demand

came back on again. I have seen the kiss, I want a cuppa. I have seen

the kiss. Let's go back to what we were doing before. One man sitting

at his desk has the job of turning power stations, on, off and on or

up. Sometimes at short notice. He is doing it to meet the fluctuations in

demand. Some power sources are easy to predict and control, others like

wind, much less so. Getting the calculations wrong is unthinkable.

Well, almost. Well, if the frequency goes too high, generation will trip

off. If it trips off, you have the supply demand mismatch and we will

have power cuts around the country quickly and I'm talking about within

ten seconds or so. So he has to get it right? He has to get it right.

The good news is he always does. Massive blackouts, that's the

equivalent of a national heart attack. That's a prospect to give

any Energy Secretary nightmares. You could freufb forgiven for thinking

that politicians were obsessed with curbing the size of your energy

bill. The truth is though that they are trying to balance three things,

bills, combatting climate change, and ensuring the security of energy

supply. That's what they call in Whitehall, the energy trilemma.

The were first priority of any energy plan has to be keep the

lights on. Headlines have warned of risks in the years ahead, as old

dirty coal and owl fired power stations are closed. The safety

margin between how much energy we will need and how much is generated

is predicted to drop to around 4% by the time of the next election.

Recently, it used to be as high as 15%. If I was doing anything in life

and I only had a 4% margin of error, I would be worried? That's what we

tend to deal with in the co he will room. In any given winter, there

will be days when it is tying and where it is challenging. As long as

the market is functioning in the background and there is the excess

of potentially available supply over and above demand, we will be fine.

That phrase, "So long as." Is crucial. The head of a major British

company told me, they are so worried about the lights going out, they are

building their own generators to make sure they are independent of

the grid. Given that our energy comes from private companies, that

means convincing them that it is worth spending and borrowing and

building now in the expectation of earning money later.

Sometimes that means big new power station or windfarms above the

ground. Sometimes it means digging massive holes in the ground to put

cables underneath it. To stop the lights going out, the power system

needs investment and that is what they are talking about. Huge tunnels

underneath the capital city to carry massive cables needed because London

alone is using 5% more electricity year in, year out. The National Grid

is spending ?1 billion on cables to carry electricity from TV Centre to

the Olympic Stadium. Investing in going green, much more so.

Particularly inside the Government. Big subsidies for wind power,

promoted by the department for energy and climate change have been

opposed on the other side of Whitehall by the Treasury who think

gas will prove to be cheaper and what's more, it is cleaner than goal

or oil. The split in Whitehall makes it hard to persuade firms to spend

their money on an uncertain future. Chris Huhne was Energy Secretary for

the first two years of the coalition. He blames George Osborne

for the fact that money isn't flowing into green energy as fast as

he wants. It was so important to bring on as much new generating

capacity as possible. It would be a lot easier to do that if there

weren't a mixed signals coming out of the Government and particularly

sniping from the Treasury. That's been unhelpful and I can remember

particular times when the Prime Minister for example, was attempting

to land big foreign investments in the wind turbine industry when

George Osborne decided that was the appropriate moment to say we have

got to be careful about subsidies for green issues. That was deeply un

ful. -- unhelpful. The Government are

hoping fracking will be a cheap new source of clean energy. It helped

American gas prices to tumble. The Lib Dems accuse campaigners of

fracking of undermining their green dreams. One of the people

campaigning, happens to be the Chancellor's father-in-law. The

Energy Department is in the hands of one wing of the coalition. I happen

to think they are being pursued in the wrong way and other departments

are bound to say, couldn't we do this better? The answer is yes, we

could do much, much better and we are doing badly at the moment and it

will cause suffering and difficulty for this country.

Next week, in his Autumn Statement, the Chancellor will say that he is

cutting bills by picking up the cost of some subsidies for green energy

and poorer households. The tax payer instead of the bill payer will be

picking up the tab. That won't resolve the largely behind the

scenes row about how to control the cost of what is really driving up

our bills. The headlines which energy is creating now is all about

the bills that we will pay now. And yet, the political decisions that

need to be taken, the impact of those won't be felt for a very long

time indeed. Critically, is our energy affordable? Is it green? And

can politicians make sure that the lights really don't go out?

The way energy is generated is something that seems to make us

angry. We know how we don't want it to be generated, we just can't seem

to agree on how we do want it to be done. Coal, too dirty. Think how

this place used to darken London. Nuclear, too anxiety making.

Fracking, too intrusive, perhaps too disturbing. Windfarms, not where we

can see them, thank you very much. Where does that -- what does that

leave? Not a lot. David Shukman asks why we can't make up our minds about

the kind of energy we want? Protests about power. How we get it,

where it comes from. Why is everyone so angry about energy?

I have come to Yorkshire, a land where the rocks hold which seems of

coal and where the winds race over the hills offering a very different

sort of power. No single kind of energy can answer all of our needs.

We have a mix and the question is how that should change?

The challenge with energy is that each type of it has pros and cons.

Burning coal, is cheap and polluting. Nuclear, offers a nice,

steady 20%, but it is expensive. Which leaves renewables like wind.

It is intermitt inintermittent, but who would want one of these on their

doorstep? Those are the choices. What do we want?

So how to decide what is right. Gary Smith is the conservation director

of the Yorkshire Dales National Park. His priority is challenge. So

he likes wind power, but just doesn't want it here. Why do you

keep objecting to windfarms? I think the answer to that question is

really is what we can see around us here. You wouldn't like a lovely big

200 turbine farm over here, but generating a lot of power? Yes, I

think as a society, you know, we ne energy. That's a given. But not

here? But not in this particular location. Does that make you a

NIMBY? Possibly. How conflicted do you feel personally as someone who

says they are interested in tackling climate change, but as the man who

not only doesn't allow wind turbines in the park, but stops many others

around the edge of the park? Climate change is happening, we think. It

seems like this. It. Scientists tell us, it is and we are seeing signs of

how that is changing the park, but it is a slow and gradual process.

It doesn't merit plastering this place with wind turbines? It doesn't

merit plastering this place with wind turbines right now. Even though

we are chilly. There is a still breeze coming off the hills. If you

were a windfarm director, you would think this is a cracking place. What

about the stuff that fuelled Industrial Revolution?

Coal lies in a great mountain down the road in South Yorkshire. This is

Britain's largest power station and because coal is polluting, it is

another target for protest. Coal is a dirty word for environmental

campaigners. Phil Garner represents the British coal industry. It is a

great day for wind. There is a nice breeze and the turbines are

spinning. Why do you think wind isn't the answer and that coal is?

Wind is not the answer in itself. It has got a part to play, but it is a

minor contributor when in comparison with a station like Drax. This

windfarm over its last 12 months generated less than 1% than what

Drax is capable of producing. You think that's an argument for keeping

our coal stations, but building more ones? By having more efficient

boilers and more efficient turbines, gives you the opportunity then to

put it in storage later. That's down the track. You accept that coal

right now is the most polluting form of energy, isn't it? Yes. You can't

argue with that? No. Do you accept then that carbon emission have a

role in climate change or could do? The answer is I don't know. I am not

convinced... You don't accept the science on that? I am not sure that

the science is proven, but equally, I am not sure that we can afford to

ignore it. As it goes now, that power station

is chucking out a lot of carbon dioxide. It is chucking out a load

of carbon dioxide at the moment, but equally, it is producing a lot

affordable electricity. If we don't want coal because it is too

polluting or wind because we think the turbines are an eyesore, how

about nuclear? To explore the nuclear option, I've

come to Hardwell in Oxfordshire. This is the old reactor hall. It is

amazing, isn't it? I am with Mark, an environmentalist who now sees

nuclear energy as essential. Nuclear is the bright new thing. This was

commissioned in 1956. It is freezing in here. It is bone chillingly cold.

What was it that, is as it were flipped you into being a green,

pro-nuclear convert? You have been talking about how you have been

reading into the science of climate change? If you want to deal with

climate change and you want to keep global temperatures rising, we have

to generate lots of zero carbon power. What about wind? They will be

a major part of the solution and I would like to see them upscaled, but

if you do that, if you take nuclear out of the mix, you can't rule the

world. Would you be happy to have a nuclear

power station on your doorstep? Nobody wants to have any type right

next to where they are living? No. The only acceptable form of energy

is magic! It could be high-speed rail or wind turbines and people are

against everything. If I had to have a power generating source near me, I

would rather it was nuclear rather than coal or gas. This is one of the

Government's hopes, home-grown gas, produced by fracking. But this faced

objections too. I was in Downing Street as an anti-fracking petition

was handed to the Prime Minister. A dairy farmer is worried that the

flaking could contaminate the milk. We have said we would welcome wind

turbines. I think they are attractive. I have nothing against

them. You would be happy with wind? I am happy with wind. I am happy

with solar. I am not a fan of windfarms. What about a big nuclear

power station? No one wants nuclear. How about a coal fired power

station? No one wants anything as ugly as that.

Back in the Yorkshire Dales, it strikes me, we are going to need big

energy projects soon and they have got to go somewhere. Whichever type

of power you choose, it is going to make someone angry.

Basically, only six big companies provide most of Britain's energy.

Not very many and not, it seems, enough to ensure that there is real

old-fashioned competition between them. Have we become stuck with

them? Is the energy market simply one big fix? A question for our

contributing editor this month, Hugh Pym.

The energy market seems shrouded in mystery. For many us of paying

electricity bills, it is hard to understand what is going on. How do

our power stations link up with those bills? Is there enough

competition to ensure households and businesses have enough choice? Is

the market really working? I've been on a journey to try to get some

answers. Starting in Suffolk near the nuclear power station, Sizewell

B. There has been regulatory and

Government failure. I met Catherine from the University of East Anglia.

She is one of the leading academic experts on the domestic energy

market. She has been following it closely since privatisation in the

1990s. There is some competition in this market. I think there could be

more. I think it is worrying the way profits have gone up in recent

years. I think we need to really understand what isn't working. But

in all the ars, you have been studying it, is it less competitive

since privatisation? It certainly seems a comfortable deal that's

happening at the moment. So I think there are reasons to worry about it.

One issue I wanted to get to grips with, was the structure of the big

energy companies. How are they organised? Do they dominate too much

of the landscape? Is it a cosy club, unwilling to allow in new members?

How is the house Hold market for energy supposed to operate? And why

do some people argue it could be working a lot better for consumers?

Most people know the majority of household energy comes from the big

six suppliers, but what about power generation? Will the big six only

directly or through another part of the same business group a large

amount of the economy's generating capacity. Some of them supply their

own gas to households as well. Critics say this link between retail

and supply, so-called vertical integration, is not healthy because

it makes it a lot harder for new competitors to come in and help

shake up the market. Could this be an industry which

works better for it's customers than energy? Airlines and airports.

Ownership has changed. New competitors arrived and cut fares.

John is a former boss of the watchdog, the Office of Fair

Trading. He told me there are lessons here for how the energy

market might be regulated. How competitive are airlines and

airports? Consumers can compare fares easily. They can switch

airlines. New airlines can enter the market and airlines play the

airports office against each other. How does it compare with domestic

energy? In domestic energy, it is difficult for consumers to compare

prices and it is difficult for new players to come into the market and

thirdly, all the energy retailers are integrated. Is it like airlines

not owning airports? Yes, the airlines market would be less

competitive and the airline example is the way in which the energy

market might work better. He wants to see a full blown inquiry into

domestic energy by the main watchdog, the Competition Commission

just like there was a few years ago for the airport industry.

It is all about allowing a level playing field for smaller

competitors. Ecotricity is taking on the big six energy companies

supplying electricity to households. The founder told me signing up

customers wasn't easy. The switching process is complicated,

unnecessarily so. It is probably flawed from a customer's point of

view because the big six can make it difficult. He thinks complex systems

needed by energy suppliers could deter new players from joining the

market. You need a couple of million quid now to become an energy company

and you know, we did it back in the early 1990s with ?10,000. It is

quite different, but not insurmount ableg able. If you were starting

today, would you pursue it? I often say I wouldn't do it again because

it has been a battle being an independent energy company. So what

are the big energy companies make of this? How competitive do they think

the market is? I have come to one of the big six, E.ON to get the

company's prospective on how the market is working.

I was shown around the power station by Sara. She argued that retail

customers could see easily what sort of deals they were getting in

comparison with other offers. She said E.ON had a clear internal split

between its generation activities and supplying households. But her

company accepts that a full independent inquiry is the only way

to test whether the market really is working. The energy companies have

come in for a huge amount of criticism. Do you accept that you

have got a big job ahead of you to rebuild trust? I am really conscious

of the fact that you can't go out there and say, "We want to be

trusted." Trust has to be earned and that's what we are trying to do it.

We want to show people that we are open. We are prepared to have an

organisation come in and really look into our business. I think that

demonstrates our integrity and the way that we are prepared to be

tested if you like. So are things any better elsewhere

in Europe? How do the energy markets work there? I headed to Brussels to

find out more. In Belgian and Germany and the Netherlands,

competition is seen as more effective because their markets are

more connected. But in others, it is a different story. The commission's

top energy regulator believes there is a problem and it is one affecting

the whole European Union. Is the market for UK domestic energy

significantly less competitive than in other European countries? The UK

situation is mirrored elsewhere and it is worse elsewhere because there

are less competitors on the market. Some of our national markets have

only one supplier and that is an indication that progress is being

made, but it is not enough to simply to have more than one supplier. You

have got to have the information which allows you to make an

intelligent choice on switching which is not obvious.

I have come away having heard no claim that the working is working as

well as it should, but there are no quick fixes. There is growing

pressure for a robust competition inquiry, but this could take a

couple of years at least. Questions are being asked well beyond these

thors over whether consumers across Europe get a fair deal. While

wholesale prices rise, the debate will get noisier.

In a few years time, Battersea Power Station will be about as different

as it could be. From the purpose it was once built for. That's typical

of the way things in the advanced economies are going, of course.

Most, though not all of those economies, are moving away from

making essentials to providing the good things of life. Here, where the

clouds of CO2 once used to rise into the atmosphere, people will live and

enjoy themselves. Rich people for the most part, who won't even think

about how the energy it depends on is generated. Just as long as it

keeps flowing and doesn't cause them any problems.

Well, that's it from Battersea in London until we meet again, goodbye.