Business

By definition, deregulation is a term employed to refer to the simplification or actual removal of government regulations and or rules that serve to hinder the operation of prevailing market forces. Worth noting however, is that it does not imply the utter elimination of anti-fraud laws, but rather, it hints at the reduction of governmental control of how businesses are run, thus embracing a freer market.

As a brief anecdote, it is noteworthy to state that the rationale for deregulation has a lot to do with the assumption that simpler (and fewer) regulations are poised to lead to a heightened level of competitiveness, and resultantly, more efficiency and higher productivity are fostered, not to mention the lowering of prices across the board (Waddams  Salies, 2004).

The British case
Britain has historically pursued a vast programme of privatization, traceable to the Conservative government of one Margaret Thatcher (1979), which included the removal of barriers to entry for private operators to compete. Deregulation of the energy industries had positive externalities, in that the British gas and electricity customers were accorded the benefits of choosing providers while the cost itself was driven down (Braide 2001).

In the recent past however, the governmental regimes of Blair and Brown have argued the case for regulation, developing schedules for government departments to abolish, simplify or review existing regulations.

The bone of contention arises due to the opposing schools of thought, pitting arguments for and against the said deregulation of the energy sector side by side on the one hand, some scholars postulate that the initial step toward the creation of freer markets in the electricity sector is the repealing of federal regulations and statutes that constrain the choice(s) of consumers or competition in the electricity domain (Waterson 2000). The other side of the divide subscribes to the notion that the deregulation of electricity was geared to culminate in there being cheaper electricity prices and a wider array of suppliers at the householders disposal, but as the present state of affairs reveals, volatile wholesale prices and unreliable supply of electricity are the end game.

Fast forwarding to the present day, analysts forecast that the United Kingdom currently faces widespread power cuts, reminiscent of the 1970s era whence a three-day week was brought in to preserve coal reserves during a miners strike. Projections are so dismal, that its expected that demand for electricity from the business sector and home front will surpass the available supply within the same period (Whitehead 1985). A gloomy cloud of doubt looms over the Governments pledge that the lower outputs from coal and nuclear can be offset by the employment of renewable sources of energy (Smith 2001). Figures predicted in an appendix to the low Carbon Transition Plan indicate that this situation will worsen as time progresses by 2017, the shortfall will be as low as 3,000 megawatt hours per year, equivalent to an entire area, for example, Nottingham, going without electricity for a full twenty four hour day. By 2025, this will peak to some 7,000 megawatt hours per year, quantifiable to an hour-long power cut for over half of Britain over a one year period (Leach 2008).

Pundits however accredit the energy crisis to the scheduled closure  by 2015  of at least nine coal and oil-fired power plants, as part of the anti-pollution measures being imposed. This is in addition to the intended shutting down of four existing nuclear power plants (Evans 2009).

The dilemma herein has to do with there being an overwhelming need for new sources of energy, whereby the government has the urgent task of accelerating the deployment of a new generating capacity, whilst ensuring that, as a matter of national security, there is adequate capacity to provide a favorable margin of safety.

Other critics claim that the shortage in electrical generation can be traced back to the increase in demand level for energy (Tapsfield 2009), coupled with a growing tendency to build wind turbines, at the expense of what some deem to be more reliable sources of electricity, all against the backdrop of the United Kingdom struggling to balance its carbon emission targets with the production of new energy sources. Along the same line, the decline of the North Sea production, which facilitated Britains self-sufficiency in oil and gas, has been cited as a factor in the crisis (Evans 2009).

Present Scenario
The current case is such that the market-led approach to energy has failed, by way of there being the pursuit of short-term profit without corresponding long-term planning to match the same. The prevailing reliance upon companies, along with the liberalization processes and competition, are all sectors that need to be reassessed, not to mention the question of whether to allow state-controlled banks to invest in renewable energy (Acton 2009).

The global financial turmoil of the 1970s decade forced the hand of various governments the world over to push for deregulation (Braide 2001). In Britain, this was coupled with the incumbent Conservative Prime Ministers drive (Margaret Thatcher) to inculcate the principles of an enterprise culture. She, alongside her counterpart, Ronald Reagan (the 40th President of the United States), was convicted that freer markets would bring economic gains, whilst also solidifying support for the conservative movement (Waterson 2000). The operative notion was that, generally, property-owners the countryies over would oppose higher taxes and assorted left-wing attacks on business, and that liberalized markets made conditions for homebuyers to get mortgages vastly easier due to the abandonment of credit controls and the entry of more lenders into the home-loan market.

Furthermore, various arguments have been juxtaposed as regards regulation and deregulation (Braide 2001). One side of the coin is of the view that deregulation not only increases incentives for enhanced productivity and growth, but also, instances of political interference  which spawn massive inefficiencies - are curtailed. In addition, competition readily increases due to the splitting of government monopolies, which has the direct consequence of reducing prices and improving service delivery, not forgetting the innovation in the range of available products (Waddams  Salies, 2004).

The other side of the proverbial divide argues that such deregulation may result to the development of monopolies, which may go on to record supernormal profits at the expense of exploiting the general populace (Chandler 2002). In the same breath, many are oriented to thinking that public services should not be carried out for commercial interest, and or that the element of public borrowing increases in one way or another, since the government of the day loses out on the income from organizations, regardless of the fact that it still receives tax amounts, and that most nationalized industries were initially non-profit or even non-loss making.

Different contenders have it that regulation would be necessary to facilitate the subsidization for social gains, along with ensuring equity of distribution and the development of a natural monopoly. In light of this, the government of the day ought not to infringe upon the freedom of the individual and or private entities, commonly referred to as liberalism the ideal scenario should be one where there is a combination of the merits of a freedom of commerce, whilst a safety margin is upheld against the disastrous consequences of a completely free market that is reliant upon the eventual working out of blind forces, as held by one John M. Keynes (1945).

From the above arguments, it is widely discernible that the fragility of Britains power infrastructure cannot entirely be blamed on the deregulation mechanisms (Braide 2001) that were employed in the recent past, but rather, other contributory factors can also be cited, including the series of breakdowns at the ageing nuclear reactors in the country, even when the nation benefitted from extra investment in pipelines and import facilities in the year 2007 (Smith 2001). This situation is so dire, that the National Grid has severally issued statements to highlight the need for additional capacity to be generated, so as to cater for the increasing needs of the burgeoning populace especially during the peak hours of 1600 GMT and 1930 GMT when majority of the homeowners were utilizing the basic electrical appliances in their households. Consequently, approximately 30 surges in the price of gas and electricity have arisen, which might go on to translate into the domestic users bearing the brunt courtesy of the suppliers (Butcher 2008).

In addition, the steel, chemical and paper manufacturers will ultimately be affected since these industries directly utilize gas, not to mention its use in the generation of power to provide electricity. A point of note here is that the world over, gas prices are also influenced by the availability and prevailing value of oil, which has  in the recent past - become accustomed to hitting record levels of over 90 a barrel. Measures that could be implemented to ensure that the nations energy needs are not held hostage by foreign states, especially those of Middle-eastern decent (viewed as politically unstable) and Russia (increasingly being regarded as the worlds first energy super-power), include the adoption, by the government, of an energy policy that promotes not only new nuclear power, but also, clean coal technology (Waddams  Salies, 2004).

However, the on-going credit crunch has vastly slowed down investment into utilities infrastructure across Europe (Thornton 2006), hence, governments should not be too optimistic once the recession becomes a thing of the past. Analysts project that an investment of at least 1 trillion euros (790 billion pounds) needs to be injected across Europe over the coming twenty five (25) year period, if only to ensure that demand for energy does not outstrip supply over the coming decade (Macalister 2007).

The quantifiable loss to the British economy is pegged at some 108 billion pounds per annum, but the light at the end of the tunnel hints at the government aiming to cover 20 of the national electricity needs from renewable energy sources such as wind and wave power by the year 2020 (Leach 2008), which would require a multi-billion pound investment which is not fiscally feasible. Also, new, sufficient power stations are being built, as exemplified by the commitment of the French company EDF to spend some 12.5 billion pound on the delivery of new nuclear power stations (Smith 2001).