Windfall tax: a conservative measure

Tim and Ross both do a good job of opposing calls for a windfall tax on energy companies. What they don’t do, however, is acknowledge the general problem that’s given rise to support for a measure.
This is that our mechanisms for pooling risks are inadequate. There‘s little the poor can do to avoid the costs of soaring fuel bills, whilst they cannot share in the benefits of these. Risks, then, aren’t pooled.
But there are several ways they could be, without a windfall tax, for example:
1. Renationalization of utilities companies, turning them into consumer-owned co-ops, along the lines of (say) the Co-op or mutual building societies.
2. A more redistributive tax and benefit system. This has the virtue of partly pooling all risks; someone who does well - through rising fuel prices, getting a good job or whatever - shares his luck with others, whilst a high basic income means folk worry less about losing their job or rising fuel prices.
3. Give the poor grants to buy air-source heat pumps.
4. Encourage the development of retail futures markets in electricity and gas, perhaps by giving such futures away to the poor, and allowing them to either sell them or buy more, say through the post office. This would allow people to choose the extent to which they could protect themselves from fluctuating fuel prices.
These measures differ  from a windfall tax in one important regard. They all empower the poor (literally in the case of 3) by increasing their control over their own lives or over energy companies.
By contrast, a windfall tax doesn’t do this. It leaves unchallenged the basic structure of capitalism and perpetuates the illusion that only ad hoc state action can protect the poor, who are to remain passive recipients of whatever crumbs Leviathan throws at them.
This is not only wrong. It’s conservative in the worst sense.

Comments

[john b]

How does 1 work? Are you suggesting that if utilities companies were customer co-operatives, they'd be better-placed to cross-subsidise lower-income users...?

2 is obviously the right answer. 4 is kind-of cool as well, although I'm sceptical that people in the poorest social groups would fully understand and exploit the opportunity (as with tax credits). 3 doesn't work at all, because if you're poor then you don't have a house of your own to fit a heat pump in.

[chris]

I was vague about (1) because there are so many possibilities. Being owned by customers might mean customers getting a dividend or lower prices. The point is that there'd be no "them" ripping "us" off, as "them" would be our employees, elected by us.
All I'm asking for is the left to consider alternative forms of organization. There are alternatives to the top-down state and top-down boss-capitalist firms.

[Matthew]

Can you flesh out a little how a futures market would protect against fluctuating prices? If you bought forward your electricity needs two years in advance you would face exactly the same electricity prices just with a two year lag.

[Alex]

John, we can easily start with housing association and other social properties, and then move on to coercing landlords.

[Charlieman]

Is 3. a trick question to check who is still listening? Air-source heat pump heating systems have a capital cost of £7,000+, and even with increasing energy costs have a payback period of about twenty years, depending on what they replace. But the life span of the product is less than twenty years, and the initial capital cost does not include servicing costs...

Providing grants for specific types of home heating distorts the market. Grants may persuade consumers to invest in the wrong heating system for them, particularly at times when there is rapid innovation. What recourse would be available to those who were enticed into buying the wrong system? Caveat emptor doesn't seem to carry any weight at the moment.

Suggestion 4. may have some merit, but only in conjunction with 2. Poor people don't have savings and don't have the income predictability to participate in direct debit schemes that reduce the price of energy.

I have a half-baked idea that low income people should be given savings money, *in addition* to income supplements for day-to-day living. The savings money would be ring fenced (in order to pacify Daily Mail readers) for extraordinary purchases such as school clothes, energy during a cold winter or even a holiday. Would providing a savings account discourage or encourage personal saving/financial management? I confess that the idea is half-baked and can spot some flaws.

WRT 4. most people pay their fuel bills by direct debit, and most of them are in credit with the energy supplier. I am in credit by £200 with my dual supplier, so surely they should supply me with £200 worth of energy at the price when they took my money out of my bank account? Not at next month's price.

[Miller 2.0]

Can't agree with point 4.. If you're already poor, you will sell.

[improbable]

Option 4 amounts to this: allow people to buy insurance against rising energy costs. It certainly "leaves unchallenged the basic structure of capitalism".

Should it be easier to buy such insurance? Sure that would be nice. Should we force poor people to have it? I can't see a good argument for why.

Handing out futures is, of course, equivalent to handing out cash, so really falls under 2.

[Neal]

Note that point 1) sort of exists in Wales - Dwr Cymru (Welsh Water) is owned by customers.

Ironically, given Chris' post, it was the windfall tax in 1999 which pushed Dwr Cymru into the hands of consumers!