Though it wasn’t simply a matter of the government choosing to close Rough. Centrica, the owners, had determined that it wasn’t commercially viable. Storage facilities work on the difference between summer and winter prices, which in 2017 had narrowed with no long-term sign it would change. The fabric has also been degrading and needed billions in repairs. Presumably if the government had provided the funding as requested that would have gone on all our bills since then?
Yet, strangely, it is fixable now. Using more of our less valuable 2022 pounds than a smaller number of more valuable 2017 pounds.
Everything was done on just in time. The situation now is we are self sufficient in gas from the north sea and liquid gas because of our refining capacity. It's Europe that does not have the gas or refining capacity for liquid gas. Liz Truss is in a strong position regarding negotiating international treaties with the EU; or will the EU ditch Ukraine to keep Ireland happy?
Agreed. It looks obvious in hindsight but a) hindsight is a wonderful thing; and b) we should, to James' point be cautious about simplistic headlines that lose all nuance, We also need to remember that government is constantly besieged by requests from voters, industries and interest groups to spend money. It can't be easy to decide where to spend!
That is true. However, one of the roles of government is to invest in critical infrastructure where it doesn't make sense for industry to spend on a purely commercial basis. (And, this goes back to the question of if utilities should be in private ownership in the first place).
It's not commercially viable for water companies to fix most leaks and treat sewage properly, despite how essential water is for the environment and our health. There are certain things "the market" cannot be allowed to handle, because when it goes wrong, it goes wrong badly without intervention (i.e. taxpayer bailouts).
Given the water company profits that most seem to be moaning about, it clearly is commercially viable. In the privatised era we also have higher investment and fewer leaks than before. Scottish Water leaks more than England & Wales on average (38% vs. 20%) and given how poor their monitoring is, it's far from clear that Scotland is any better when it comes to managing sewage.
For those who don't know the industry well, the point is that Scottish Water is public sector....
While I could go on a lot longer about this, as this is now irrelevant to this thread it'll have to wait.
There's no question certain EU members relying on Russia for gas was stupid, but there were things we and other countries not so reliant could have done to help them come round to that. For example, while in the EU (and we were when Crimea was annexed and NS2 approved) we should have called the reliance out more and offered proposals to help avert the apparent dependence. Maybe we could have offered to help Germany build LNG terminals back then, or helped push for a renewable investment fund, and/or come up with more credible arguments to counter the anti-nuclear lobby better in the eyes of the German Government at the time.
Well it was closed 3 years after Russia invaded Crimea.
It's worth remembering that per-house, scottish water must provide a higher mileage of piping due to the lower population density.
I mean even though as a central belt resident I'm paying a significant subsidy to cover the cost of supplying the Highlands, I'm still paying a great deal less than I ever did in England for a flawless service. I guess some people can't bear to see the the public sector or Scotland succeed at anything
I think it's a national disgrace water was ever privatised in England.
Well it still paid over £100m in 'interest' payments to 'bondholders' that's getting on for 14% of it's revenue.
It is since bond payments are fixed and not linked to profit. So as long as the business is generating enough revenue to cover the bond payments there is zero impetus to make any more.
How is that better? The company unless it defaults has to continue bond payments even if it isn't generating revenue. You don't need to keep making dividend payments.
But the company didn't sell bonds for kicks and giggles, it was to raise capital which - all things being equal - they will use to either increase revenue or lower costs.
Just like a company may issue shares.
Indeed. But there are differences between shares and bonds. Without getting too far into the weeds (where I would get lost!) shares are, compared to bonds, high-risk, high return instruments which are issued with the promise of returns in the form of dividends - which depend on the company making a profit, and the larger the profit the higher the dividend. They attract investors looking for a shorter-term gain and the board has an incentive to maximise those returns as a shareholder revolt can lead to them being replaced.
And so don't get voting rights.
No higher profit doesn't necessarily mean a higher dividend. You have to make a profit to pay a dividend but what level that dividend is completely arbitrary. The company could retain the profit, invest in the business, buy back shares or pay off debt instead of increasing the dividend.
Bond holders don't buy equity in the company but in case of a company default bonds rank higher than shareholders.
I think you might not be comparing apples with apples. 14% of revenue paid out to bond holders is not the same thing as 14% return on investment.
Indeed, there is no obligation to pay a dividend, however investors generally will - all things being equal - prefer to buy stock in a company which pays dividends over one that does not.
