The UK has the highest domestic energy prices in Europe, and it's all down to poor regulation, political dogma, and the fact that we haven't got nationalised energy companies.
The audio version is:
The transcript is:
Energy prices are going up. And I do not think that they should be.
The energy price cap for the first three months in 2025 is going to be £1,738. Now that is the guide indicator issued by the energy regulator as to the amount that the average household with average energy consumption should be paying in the UK for its electricity and gas over the next three months, so it is not. what your energy bill will be.
That cap has gone up. It doesn't need to. It's now roughly £600 more - even after prices have fallen dramatically since a year or so ago - than it was in 2021. In fact, from 2019 until early 2022, the energy price cap hovered at around £1,100 or £1,200 a year. Now, after the latest change, it's over £1,700 a year.
This is a massive cost for many British households. We know that there are many households that are in energy poverty. They're spending a significant part of their total disposable income on energy costs. And that's particularly true of pensioners, who obviously have a very low amount of money available to them for the purposes of living in any case. And we also know that Labour made that worse by taking away the winter fuel allowance.
So, I want to explain why energy should not be costing £1,738 a year in the UK. And why, in fact, it is that we have the highest energy prices in Europe, quite unnecessarily. And that's all because of the way in which energy prices are set in this country.
We have a quite absurd energy system in the UK. We have a system that was, of course, privatised under Margaret Thatcher and her successors in the Tory party. And they pretended, and we still do pretend, that there is a market in energy in this country.
We also presume that people are totally efficient. In other words, if you don't like your energy price from whoever might be supplying you today - call it Eon - then you know that British Gas will offer you a better deal, and you can afford to move costlessly from one to the other without any hassle and time involvement on your part and switch back again tomorrow if the balance of favour has switched back in Eon's favour. That's nonsense, of course, but that's what the energy regulator assumes because they think you're a rational economic human being.
They also think that we have energy production companies which behave in the way that market theory of economics suggests they should.
In other words, these are small companies, but no energy producer is a small company.
And they assume that they are subject to market competition. But the very point of having an energy regulator is because there is no market.
And they assume that they must be profitable at the point where their marginal costs equal their marginal revenues, which probably sounds like mumbo-jumbo to you, and is even in theoretical economics. But let me tell you what it means.
We make energy from a number of sources. Particularly, we make electricity from a number of sources in the UK. They used to include coal, but they don't anymore. They do include gas, solar, wind, hydroelectric, nuclear, and biomass, which is the Drax power station in the middle of the UK, which burns wood chips, imported at enormous cost to supposedly be a renewable energy supply, but which is anything but carbon neutral.
Those are our sources of energy supply, and the regulator assumes that the cost structure must make sure that every one of those is profitable, because, of course, they're not all owned by the same people. And if the energy regulator is going to guarantee that all of those sources of energy are available to them, they must price energy so that every one of them is profitable.
Now, there's a dramatic problem with this. First of all, they use this marginal cost equals marginal revenue model, which is what economists would say is what defines profitability, even though I can promise you that is complete nonsense. But secondly, most of those sources of energy have no marginal cost.
There is no marginal cost to wind production.
There is no marginal cost to solar production.
There is actually almost no marginal cost to nuclear power production.
And that's because, in each of those cases, the vast majority of the cost of producing that energy is incurred up front, when you install the wind turbine, when you install the solar panel, when you install the nuclear reactor, or whatever. The actual cost of getting the energy after that is virtually nothing.
So, in those cases, there isn't a marginal cost to take into account with regard to determining what is profitable because there isn't such a calculation to be undertaken.
But there is in the case of gas. And there's a slight problem as a consequence because gas makes up, on average, around 40 per cent of UK energy supplies, although, on the morning that we're recording this, it's actually making up less than 10 per cent of UK energy supplies because it's pretty darn windy out there. But gas, because it has got a marginal cost, is the source of energy supply that is used to price all electricity.
But when you look at the total cost of production of electricity from gas and compare it with the total cost of production of electricity from solar, from wind, from nuclear - and they form the vast majority of the alternative sources of supply - what you discover is that gas is over three times more expensive than each of those.
So, the price of electricity might be set on the basis of gas, but gas is three times more expensive than every other form of energy, so we are therefore paying three times too much for our electricity.
Now, I'm not saying we're paying three times too much for our gas supplies. By and large, our supplies of gas are based upon the cost of supplying us with gas.
But when it comes to electricity, we are definitely overpaying. Because we assume that the gas producers of electricity have to be paid sufficient to keep them in the market, and everybody else must get the same price at the same time because that's what market efficiency supposedly requires, and, therefore, we overpay.
What's the consequence? Massive profit for some energy companies, particularly those who are producing nuclear, and solar, and renewables. That is not good. Absurd.
If we had a nationalised energy industry, we would, of course, equalise the average cost of production with the sales price. How much would the price of electricity go down by as a result? It could be by up to a third. And of course, electricity is a major part of that energy price cap that we have to pay. So if we assume, roughly speaking, that half of that energy price cap is for gas and half is for electricity, then we could reduce that price by at least a sixth if only we actually treated the cost of electricity production as an average and not as a marginal cost to ensure that the gas producers are profitable. As a consequence, we'd all save maybe £300 a year, and wouldn't we all feel better off as a result, and Labour would have a fantastic time?
How would they compensate the gas producers? Because we do know we need them. Well, quite simple. We would actually not pay as much to the producers of nuclear power and turbine power and solar power as we do to the gas producers. We would equalize things out on an averaged basis, as would any nationalized industry that was in place to meet public need. We could therefore eliminate this excess profit from the whole supply chain of energy to us the consumer in the UK and considerably increase our well-being.
It would be quite straightforward, and the process of equalizing those costs within the industry could be done by formula without any difficulty at all.
So, why is it that our regulators carry on using a model that penalises us, the consumer, to benefit the producers enormously, because we know that they enjoy massive profitability?
And why is it that our politicians put up with that? Is it because they don't know that this is going on?
Is it because they hope that we don't know that this is going on and, therefore, won't notice that we're being bluntly screwed by the electricity price gap?
Or, is it that they are simply in blissful ignorance of the true nature of the economy and of the economics that is being used here and, therefore, are unaware of the fact that they're being taken for a ride, and so are we. I don't know the answer to that question. But it's about time they looked at this issue because it is wholly unnecessary for us to pay the price that we do for energy. It's time for a change.
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Public services aim to reduce costs.
Private services aim to maximise profits.
We have the highest energy prices and rail fares in Europe, all privatised.
Profits before people.
And it’s not just a small increase above the average. For example:
In 2023 in Taiwan, the average electricity price was $100 per MWh.
In 2023 in the UK, the average electricity price was $420 per MWh.
That’s over 300% more. CEOs are rewarded with massive salaries.
Maintaining infrastructure is ignored in order to maximise profits.
Competition is non-existant.
Source: BloombergNEF via Financial Times via Express newspaper
https://www.express.co.uk/news/uk/1973497/graph-uk-electricity-prices-compared-world
Thanks
I was visiting a village near Hull in December – community energy. The local pub/hotel is paying the sort of rates for elec (circa £400/MWh) shown in the chart. We will reduce this to more like £100/MWh (10pence/kWh) by the simple expedient of replacing the old solar with a new much larger system plus battery. That should allow them to be +/- 65 – 70% independent from the rapacious bandits that generate & supply elec. Also, don’t forget, 25% of UK elec costs are due to profit-maximising monopolies that own fuilly amortised equipment – & in most cases households pay a fixed daily charge – result – monopoly network operators getting a 6 – 10% return on assets. Ofgem? Nutless, gutless, brainless.
I love real-world examples like this of people taking charge of their own energy supply to cut out the corporate middlemen. Better for the individuals concerned and better for the environment.
I actually had a letter ready for Rachel Reeves before Labour got elected entitled ‘Solar Panels for All’ because I had some silly idea that if the government had spent the £40 billion they used to subsidise households and some businesses during the peak of the energy crisis they could have (instead of giving those profits to the energy generators via the suppliers) spent the money on equipping 2.87 million homes with a 4kW solar panel system including batteries (ave. cost assumed £14,000). That would be 10% of the UK homes having solar panels. They could have selected the most needy.
Surely that would have been a better investment than just handing the money back (they will have taken £26 billion in windfall taxes from the energy generators by March 2028). Those homes would reduce their carbon footprint and their bills going forward for as long as the solar panels last. Not to mention the amount of jobs that it would create for the installers.
Dusting off my PhD in the bleeding obvious, given that the biggest cost in the production of solar, wind and hydro power is capital why doesnt The Government set up its own business to own these installations which it can build using money it has created?
Did it in the past – remember the CEGB? (built some rather nice technically advanced steam colliers as well) so can do it again.
I might also suggest that we have some sort of tiered tariffs so everyone gets at least some electricity at a reduced or free rate and higher users EG Sunaks Swimming Pool or Electric 4×4 owners pay a higher rate
Ah, the bleedin’ obvious, otherwise known as that which always passes the intellect of the neoliberal by.
I wonder what a neo liberal would make of this man
https://en.wikipedia.org/wiki/Tommy_Brown_(NAAFI_assistant)
Thanks for that Mr Boxall; always sobering but uplifting to read about the world’s real, quiet, unknown heroes. I note the museum that celebrated Brown (medals and a stained glass window); is now closed. And that ‘says it all’, really.
I can think of a whole raft of politicians, whom we are never able or allowed to forget – for trashing Britain, and leaving us deep in a neoliberal mess.
One of my grandfathers ended his ‘navy’ career in the NAAFI. I am todl he enjoyed it. Once he was ashore he spent forever wanting to return to sea.
The less electricity you use, the more you pay per unit. If you are profligate, eg heating an outdoor swimming pool in winter, you pay much less per unit. How can this be reasonable, let alone fair?
So you mean you want the state to crowd out the private market? That’s Not Allowed according to the neolib manual.
Good point Mr Boxall. Pricing electricity such that the more you use, the more expensive each kWh becomes. Rather than a linear increase, I would make it non-linear e.g. using twice the average amount used by a Uk household (circa 3MWh/year) would mean paying 4x as much (3x? 8x as much etc). There would, perhaps, need to be some legislation – renewables permitted, diesel generators not. Such a policy would focus the minds of those most able to make investments in renewables (&/or energy efficiency).
I entirely agree – progressive charging
BUT there would have to be allowance for household occupancy rates
Something we could do here but don’t.
“If your consumption is lower than the national average, check out the Discount Off Regulated Tariff Plan.”
https://www.cardup.co/blog/personal/oem-singapore-complete-guide
I agree with this:
“I might also suggest that we have some sort of tiered tariffs so everyone gets at least some electricity at a reduced or free rate….”
As a minimum, the standing charge should include the same amount of credit for free electricity……. For people using the minimum of electricity they can, the Standing charge is a ridiculously high proportion of what they pay.
Surely it would be wise to look at political donations from the energy companies who are benefiting from the lack of intervention by our elected officials, elected by us to look after us apparently?
The widely admired Sam Bright in his book ‘Bullingdon Club Britain’ (2023) makes this quite clear the relationship between this funding and political decision making.
I mean this is beyond the ‘bleedin’ obvious’ , this is the ‘bleedin’ outrageous’.
In plain sight.
Agreed
It was pretty evident when ex-Shell employee, then PM Liz Truss refused to levy a windfall tax on the energy giants, who had made record profits during the energy crisis, proclaiming proudly “But the way we bandy the word around ‘profit’ (as if) it’s something that’s dirty and evil, we shouldn’t be doing that as Conservatives.” Nothing to do with the £1.5 million in donations they gave to the Conservatives since the last election.
It would be interesting to see how many shares she holds in Shell. Probably with a value of £69,999.99 exactly so she doesn’t have to declare them. And the rest she gifted to her husband.
1st rate post.
“How would they compensate the gas producers?”
a) Pay them their cost of production based on HOW they purchased their gas (at the moment gas elec is priced based on gas spot prices – but the generators buy ahead – gas price spike? charge elec @ gas price spike & trouser the diff composite gas price vs gas spike price/elec price).
b) with more REs in the system use a mechanism called “capacity markets” to pay the gas generators to stay connected/ready to generate – this could be/should be a small amount.
As for the politicos, the energy minister in Belgium proposed market split – which is what you propose @ an energy council meeting in Bx in Dec 2024. She is on my to-do list to contact (the Greeks proposed much the same in 2022 and got rubbished). In the Uk, given the current gov, probably total & profound ignorance.
Thanks Mike
I appreciate your approval
Excellent piece, Richard. Our Government energy policy is criminally irresponsible (save for the fact that the law is determined by the government ensuring you and all consumers are being ripped-off). I have one small quibble.
“[N]o energy producer is a small company”. The whole ‘market’ for energy in the UK is provided to consumers by “energy suppliers”; but an energy supplier may not, and often does not produce any energy. Only “energy providers” actually produce the energy that is sold and resold to domestic users. the energy supplier is a redundant “middleman”. What that tells you is that the market is fake. Energy supply is a monopoly. There is one gas supply, and one electricity supply in domestic homes; and one each energy provider providing the energy for each (and some providers may provide both).
I trust Mike Parr comments on your blog today.
The British energy market is a scandalous failure. Neoliberlism over forty years has ruined the British rail network, energy provision and the NHS. The economy, in no fit state after forty years of neoliberalism, has finally been wrecked by Brexit, and our infrastructure destroyed by long term austerity. We are literally being ruined by our own politicians.
Thanks John
My supplier (Ecotricity) is a privately owned renewable generator. Their electricity is 100% renewable (wind/solar), their gas is partly renewable (gas from grass). 100% of their profit is invested in new renewable generating capacity. The boss is Dale Vince (a new donor to the Labour Party, having switched from the Greens, although he may now be regretting that).
There are lots of things that can be argued about the Ecotricity generation model, and they are way behind Octopus on their tarriff structure and demand led pricing, but they are “disruptive” and they are a real generator of renewables. Yet they are trapped in a pricing and market structure imposed by government and fossil fuel interests. My bill standing charge includes the (small) gov’t imposed green gas levy, even though I am actually buying green gas, and of course the levy to pay for the supplier-speculator-profit-gougers who went bust dumping their customers on the market. It also includes a £200/pa standing charge for electric, which I pay on top of a consumption charge of £160/pa. I’m a bit sore about that having worked and spent/invested hard to successfully cut my electricity usage.
Yesterday I listened to BBC Songs of Praise (don’t laugh) focussing on environmental sustainability/creation care. The message was that we “all had to do our bit” (cycling, walking etc) and there was not a single mention of fossil fuels, carbon dioxide, methane or global heating. I suspect all mention of such things ended up on the cutting room floor/recycle bin at the behest of BBC senior management.
I feel I’ve done my bit, but it gets swallowed up ten times over, every time Elon Musk climbs into his private jet, and every day our government fails to reform our energy infrastructure/market and offers us the pathetic Great British Energy as a solution.
The trouble is Robert you may pay for green electrcity and gas from renewables but that is not what you get.
You get electricity from wherever it coems down the wire, and the same with gas.
This is the problem with a so-called market that is just a sham.
gas is over three times more expensive
Suppose we were in a situation where gas was 3% cheaper. Does your argument stand up?
Sure
Why not?
Historically, gas prices (Rotterdam TTF) split into 3 segments: pre 2021, the price spike and the post price spike.
Pre-2021 prices oscillated between circa Euro10/MWh through to Euro25/MWh with a mean of circa Euro20/MWh (2010 through to 2021). The price spike was a spike. Post spike prices move between lows of 25 and highs (now) of 50/MWh. Translated into electricity prices & assuming no CO2 emissions penalty and assuming all gas comes from CCGTs (50% ish efficient) and not OGCTs (30% efficient) then elec from gas starts to look in the pre-2021 best case (Euro10/MWh for gas) like Euro20/MWh for elec. The Portugese pre-2021 were building ground-mount PV at less than Euro20/MWh. Wind (on-shore) was more expensive than the gas best-case @ Euro50/MWh.
Post the price spike, elec from gas looks more like Euro50 – 100/MWh (again without any CO2 costs). Ground-mount MW-class PV continues to delcline in price even in the UK, onshore wind is around Euro60/MWh. What I’m showing is best case scenarios for gas powered elec. Real life, gas elec is more like Euro70 – Euro120/MWh, making elec from most renewables much cheaper. Of course things could change, the arabs could become charitable and drive down gas prices to the halcyon days of Euro10/MWh. I rather struggle to see this – what about you?
We are being ripped off, Mike, and we both know it.
Mr Parr, perhaps I am being obtuse, but could you tease out why the Middle East oil producers directly control the price of gas?
In reply to Mr Warren, biggest gas producer is the USA (circa 1.35trillon cubic meter). It is also the largest exporter, that said, the middle east states produce perhaps 2/3rds of the US production but export most of that. Do they define gas prices? probably not, but their output will influence scarcity/glut and thus price.
How are gas prices set? Different markets have different prices – US prices are lower than EU prices. From an EU/UK perspective, the lowest cost gas is North Sea. But that is priced @ what are claimed to be global prices (in this case Rotterdam Title Transfer Facility – TTF) & do not reflect extraction costs – which are in the range 2 – 4euros/MWh. Which puts the EU/UK in an interesting dichotomy – if gas was priced @ the cost of extraction plus “reasonable” margin then it would be perhaps sub Euro10/MWh making gas elec quite low cost. Carbon taxes could then correct that – & perhaps such revenues used to fund energy efficiency actions. Just a thought.
A good thought
Thank you; appreciated. So many of our problems are completely self-inflicted.
Who says we don’t notice we’re being screwed? Every time the household electricity bill goes up, despite no increase in usage & despite getting all the energy from a company that claims to use only renewable sources, I want to know why the government is so utterly incompetent.
This is indeed a scandal and one of the few issues I’ve bothered to write to my MP about – not that I anticipated any action from them as a result. I didn’t really appreciate the leveraging of electricity charging by gas prices until I moved from a gas centrally heated house to an electrically heated apartment. On top of the global energy price surge and inflation my monthly bills went from around £75 to peak at £275 in mid 2024. It’s insane. There is also some wrinkle in the pricing where the electricity rate is linked to the highest gas prices when gas turbines are used to top out the supply at peak times. Oh yeah. And I don’t get the winter fuel allowance now either.
Labours fantasy GB Energy scheme which is being marketed as the best thing since sliced bread is relying on £8 billion govt funding over The next 4.5 years to develop an almost completely renewable power supply. However this includes nuclear which as Hinkley C has shown has massively cost overttun and of Sizewell C goes ahead would probably gobble up the entire budget. Let alone the huge carbon footprint of building it and the impossible problems of nuclear waste and decommissioning. Also the fantasy of carbon capture and storage. Milliband is relying on the majority of the investment to come from the private sector who will demand their profits and dividends and as with water so destroying the whole objectives of GB Energy.
And then there are the stealth charges. 30% of our annual electricity costs are now eaten up by “standing charges”.
The evisceration just goes on and on.
I’m a fan of re-nationalisation, however as an interim measure might it be feasible for the private electricity producers to sell all their electricity to the Government instead of direct to customers. The Government then acting as a middle man averages the cost across the different generating sectors and charge us consumers directly?
Yes
Ofgem could be given that power
But really, nationalisation is the only rational answer.
“ … although, on the morning that we’re recording this, it’s actually making up less than 10 per cent of UK energy supplies because it’s pretty darn windy out there.”
I’m sceptical of this number, where is it from? At this time of year, with most heating still gas-based and it being very cold, I doubt only 10% of UK energy use was gas. 10% of electricity generation maybe, but in that case say that.
Straight from National Grid data – for yesterday.
They publish it real time
Ah, ok so it wasn’t 10% of UK energy use, but 10% of UK electricity use. As I suspected. Thanks for confirming.
Nigel Goddard says:
January 3 2025 at 1:51 pm
“ … although, on the morning that we’re recording this, it’s actually making up less than 10 per cent of UK energy supplies because it’s pretty darn windy out there.”
The Data is for Electrical generation only as well, Gas is a major heating fuel also for industry and domestically. I’ve heard/seen a figure for electric as supplying of approximately 20% of the total UK Energy demand, excluding heating and transport. But I can’t find any good/easy to read sources for this however.
https://en.wikipedia.org/wiki/Energy_in_the_United_Kingdom#:~:text=9%20External%20links-,Energy%20sources,%2C%20and%20coal%20at%203.2%25.
And an artificially high price for electric must be also acting as a drag on transitioning to its wider use.
I hope that you will accept the relevance of this comment although I recognise that it is slightly off topic.
Greg Jackson, the Founder and CEO of Octopus Energy, has said that if the electricity grid were upgraded to fit the new distributed sources of electricity generation and prices were based on the local cost of generation, Scotland would have the lowest electricity prices in Europe.
The enormous benefit to the people of Scotland including the attraction of inward investment that would result means that the (English dominated) UK Government will never allow such an eventuality while Scotland is part of the UK and will continue to do everything possible with no hold barred to frustrate any move towards Scottish independence.
Thanks
Well, there is one item of good news.
Re the standing charge.
There are currently discussions going on that should see customers being given the option of standing charges being removed later this year.
https://www.theguardian.com/money/2024/dec/12/british-energy-firms-zero-standing-charge-tariff-ofgem-martin-lewis
It is annoying, but somewhat typical of the way things work (or don’t work) in the UK, that it is going to take a year to sort this out. At least, the days of the standing charge energy poll tax are near an end.
Also worth noting that current debt and arrears owed by customers is $3.8 billion. I suspect it will go higher after the latest price hikes.
Please don’t be silly, MarP. There are discussions about removing the standing charge, but those who opt to have it removed will also have to agree to pay a very much higher unit rate. So the overall cost to the consumer will be much the same. It is taking so long to introduce because of the need to work out the right unit rate so that the profiteers don’t lose out.
A request, if I might? Can we please show respect to long- standing contributors, even if dusagreeing?
Cyndy, I am aware that there will be a higher unit cost for the gas and electricity that we use. No one knows what that figure will be yet, but having the whole cost on each unit we use, gives the choice of how much we use.
As an example, I rent and the property has both gas and electricity. I rarely use the gas, and around 90% of my current gas bill is standing charge. They will not be putting all of that on the units I use. I will pay the same per unit for the tariff that I am on as everyone else. The unit cost will be higher, but I have the choice how much I use. I could probably get by without using the gas at all. In that case, my bill would be zero.
It’s widely accepted that low energy users will benefit from no standing charges.
Current high energy users will probably be better off staying with the standing charge option.
MarP I hope you are right that there will be some benefit for low users if the standing charge goes, but my inherent cynicism makes me doubt it. The fact they are making it a choice, so that those who use the highest amounts may still pay the lowest overall unit price, probably feeds my cynicism.
It will be interestng to see if you can use zero gas and still have a working supply for the property. As a fellow renter I am aware that I could not do anything that may jeopardise the gas supply.
That is a damning indictment of HMG/Labour.
I’ve told this story before…3 b/rm ex council 1934 semi, v high quality build.
Retired & moved in (3 adults) & decided to install PV/Storage system.
Capital cost, £12,068 June 2020.
Return on capital so far (self consumption of solar, load shifting of off peak imported energy, & a small amt of exported solar all add up to £3,020 (lost a few months waiting for smart meter, a bit more waiting for smart meter to be registered properly, and a bit more waiting to get on the export tariff (6p/unit!).
Incentive received from HMG – ZERO. Full VAT paid on installation.
Cavity wall already insulated, I also put extra insulation in loft. I don’t get flexible demand led pricing yet, but check weather every night on phone then decide how much to charge the battery o/night on 7p/unit.
Gas central heating.
We boil kettles for washing up, I’m thinking of a low-wattage under-sink water heater.
Current projected annual electricity usage = 292 peaktime units (when an appliance demands more than the legally limited 2.4kW inverter can pump out), that’s <1unit/day, and 861 offpeak units, that's 2.36 units/day, nearly all between October-March.
The return on capital (5.56%pa) beats my building society and beats inflation.
Newly retired, I had some capital from pension & an inheritance- a privilege I claim no credit for.
Points to note:
1. Total lack of gov support for this project, no grants, no tax relief, no subsidised export tariff & slow dev't of demand-led pricing by elec suppliers).
2. Hundreds of empty rented south facing roofs on our estate (millions across UK).
Gov't could have done what I did, particularly for those who couldn't afford it, & in the council-owned properties in this v deprived ward. They could have created the money and invested it in PV panels & batteries, & local SME (Small & medium enterprises) installers, with a good return in tax payments (income tax, corporation tax, VAT) & NI. And massive financial & social benefit to local economy as energy poverty would be seriously reduced so leaving people with disposable income which they would spend locally on mostly essentials. And a big environmental benefit too.
The arithmetic made it a no-brainer for me as I had the capital. The arithmetic for HMG is even more compelling because they can create the capital. But they refuse, and I am disgusted with their callous small minded irresponsible selfishness. Their wingeing cowardly unimaginative lying excuses are pathetic.
Will Great British Energy do this? Of course not, it's a deceitful sham.
That sounds very impressive
I understand the standard charges for energy are costs for Government & Environmental use, Operating Costs and for the Electricity Cables which are used for delivering energy, these costs are considered as the line rental for energy use. I therefore cannot understand why if ‘Standing charges’ are considered a fixed cost, then why would Ofgen allow a ‘Opt’ out clause for some customers on some future energy scheme. That is unless Ofgen know the system is broken and it is all about ‘smoke and mirrors’ to confuse the customers.
Who cares what they say it is for?
The reality is it is a regressive charge that could be eliminated with progressive tariffs covering the same costs.
There is no such thing as a fixed cost structure.
While I can understand the desire of the energy companies to keep the standing charges, it does seem to be a bit of a nonsense. Having an infrastructure to get the gas and electricity into properties is a cost of doing business in the same way as Tesco has to have an infrastructure to get their goods to be available for people to buy them. The cost of that is built into the unit price of the items Tesco sells. There is no reason why the same cannt be done by the energy companies.
Precisely.
The capital cost of my £12,068 worth of solar panels/inverter/storage battery doesn’t get built into the 6p/unit they pay me for exporting to the grid, nor do I get paid a standing charge for my infrastructure.
As Cindy points out so succinctly, its a mess, and one that government could sort out if it wanted to, given the massive public support for reform of our public utilities.
Instead it gives us an underfunded gov’t owned venture capital company called Great British Energy, and begs private capital to support it “because WE CAN’T AFFORD IT!”.
More energy lunacy!
https://www.bristolpost.co.uk/news/bristol-news/community-groups-barred-selling-renewable-9827901
If only Labour had a majority in parliament, they could change the rules..
Wait a minute, they do. They could.
One of the Junior Energy Ministers is Bristol East MP Kerry McCarthy. So they must know about the issue.
One of the community groups generating electricity locally, recently closed a deal to build the largest onshore wind turbine in the country.
https://bristolenergy.coop/lawrence-weston-wind-turbine-harnessing-community-energy-for-social-justice/
If only the Labour government had this sort of ambition!
Thanks