Peter Atherton of investment bank Liberum Capital reports the result of a light hearted survey of investors.
...we decided to carry out a pop quiz asking investors to vote on which of the propositions below seemed the more credible:
- A. Liberum Capital / RWE: £150bn of investment to 2020 = circa 30% increase in power bills (or 19% dual fuel according to RWE); or
- B. UK Government / Committee on Climate Change: £150bn of investment to 2020 = 11% reduction in dual fuel energy bills.
The results are in..................
We had 55 separate responses. The headline result was follows:
- A: 100%
- B: 0%
Although not a serious survey, as Atherton goes on to explain, it is possible to draw some conclusions.
...what this poll does show is that the government is failing to convince a key constituent (the equity market) that its affordability projections are plausible. Nor given RWE’s intervention (and feedback on our research we received from the other leading utilities) does it appear that the major utilities find government assertions convincing either. This represents a dramatic failure by the government on what is the central issue on energy policy in the UK. So even if the government’s projections are actually correct, their failure to convince anyone outside Whitehall of the fact creates a major credibility problem.