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A big week for energy – but we need radical changes

Pound coin on gas hob

It’s been a big week in the world of energy, and its only Thursday. On Tuesday the Big Six were up in front of the Energy Select Committee, and today Ed Davey gave his Annual Energy Statement…

…and most importantly of all, we launched our ‘Cut them down, George’ campaign!

20,000 people have already signed our petition calling on George Osborne to take action to cut your energy bill. And with so many people worried about whether they’ll be able to pay their energy bills this winter, it’s important he heeds our call.

Big Six grilled by MPs

Tuesday’s appearance of energy executives at the Energy Select Committee did nothing to allay concerns that the energy market is in dire need of reform. The Big Six claim that they’re scrupulously fair with their charges, but the fact of the matter is, we just don’t know.

We’re being asked to take all of this on trust. And trust in energy suppliers is notoriously low – our research shows that this industry has the faith of an ever-dwindling proportion of the general public.

Ed Davey’s energy reforms

Today in parliament the energy secretary Ed Davey told his fellow MPs that he has been busy ‘taking on the Big Six with the stick of competition’. On the evidence of the price hikes we’ve seen from the Big Six, that stick is looking more like a twig. He committed to substantially reducing the amount of time it takes to switch suppliers, from five weeks down to one, and then further still. Too little, too late springs to mind.

Davey also charged Ofgem and other regulators with carrying out an assessment of the state of competition in the energy sector. The sound of the stable doors closing after the horse had bolted was deafening. Simply asking the regulator to do its job is hardly the radical action this market needs.

We think the Big Six needs to be cut down to size, with the Chancellor taking steps to ensure that energy companies’ generation and supply businesses are separated. Furthermore, we think the Government can take immediate action to cut the charges levied on our energy bills. Will you join us in asking George to cut them down?

Do you trust energy companies to act in your best interest?

No (97%, 2,139 Votes)

Don't know (2%, 45 Votes)

Yes (1%, 30 Votes)

Total Voters: 2,214

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Comments
Member

We need to know the facts about our energy bills.
How has the wholesale gas price changed over the last couple of years, and what are the forward prices being used to calculate tariffs?
Why have the transmission charges increased by 10% and who approves this?
Should the green levies and subsidies for the fuel poor be part of the energy bill or general taxation, and how much are they?
Is 5% an acceptable profit and, indeed, is it true or does it stem from creative accounting practice?
Totally separating generation and gas production into separate companies with quite separate accounts is good in principle but open to manipulation.
Surely some organisation can provide this information so that we can objectively see what we should be fairly paying for our energy. Signing a petition without the facts is surely a bit premature?

Member

I couldn’t agree with you more Malcolm. I think Which? are behaving as badly as a populist tabloid with this kind of campaign. We need hard detailed facts and, furthermore, it needs a proper proposal on who should pay for the green initiatives that apparently cost so much.
The impact of fracking on prices in the USA has been dramatic and yet the green lobby are up in arms about it. What could fracking reserves do to supply and pricing here?

Simply telling the Government to bring prices down is straight out of Ed Milliband’s speak. No plans, no costings, no facts.

Some of the BIG 6 energy company responses were quite reasonable. You cannot expect prices to come down whilst paying for expensive green energy and also guaranteeing supply.
Prices NEVER went down when the whole industry was nationalised.

Member
Derek Turner says:
2 November 2013

hi folks
Not quite what you are talking about but still needs addressing STANDING CHARGES
What’s the point of spending all this money on insulation condensing boilers also teaching us to save energy be it gas or electric in our homes and so cut our bill
all to be cancelled out by outrageous standing charges That are quickly adjusted to counterbalanced any savings we make
So my message is quite simple first you at which should take this matter up and of course our Government leaders stop waffling about and actually do something now to ease this winters bills

Member

” The government says that with increasing “self-consumption”, the income for conventional energy systems will decrease, but grid maintenance will cost the same.

“If I produce my own energy, but am connected to the grid, having the backup in case my production fails, I have to contribute to the cost of the entire system,” says Energy Secretary Alberto Nadal.

The government is hoping the energy reform will settle a debt of 26bn euros (£22bn; $35bn), which has built up over years as a result of regulating energy costs and prices. ”
http://www.bbc.co.uk/news/business-24272061

So the Spanish government thinks people DO need to pay for grid access even if they use little or no power. So you are going to have to pay to be connected !! Gosh ! How wrong is that!

And apparently if as a Government you manipulate the market you end up with debts that at some stage need to be paid.

Member

Seems perfectly reasonable to me. It’s like buying insurance. If you don’t want to pay, have a stand alone system with batteries or a diesel CHP generator for dull windless days. If the heat from the generator feeds a heat pump, then the system is very cheap indeed to run.

Of course as long as grid connected companies have to pay for energy, the solution is to have excess capacity, so the exported electricity pays for the grid back up. This does put the process back in the economic system and in some legislatures subject to taxation, but in others consumers can have meters that read backwards, so days of export can balance out days of import.

PV seems to be subject to a Moore’s Law. This will mean a time will come when it is the cheapest option. In addition, recent research has suggested a battery technology with the power to weight ratio of petrol.
http://phys.org/news/2013-10-nanotechnology-boost-next-generation-batteries.html
Not sure what it will cost, but this could change things again. There could be a future where only heavy industry is connected to an electricity grid. Everyone else will get their own energy from the environment.

Member

Its nice to see someone else reading Phys.org : )

I think in due course it may well be that technology allows for distributed micro-generation and it is just feasible it will occur before I die. There is an Italian company quoted on AIM – ACTA that even now is selling commercial solar to hydrogen power units to run devices such as transmitter towers and scooters.

Hydrogen generation is the basis for much research as electricity will never be the optimal solution for many requirements. And of course where industrial amounts of electricity are required a grid system will be needed so that data centres, smelting, and malls and offices can function.

Divorcing the public from the connection between supply and distribution costs, and generation costs of electricity does no one any favours in the transparency stakes. That there is a standing charge for connection common to all tariffs would provide the greatest transparency but there seems to be a feeling from some quarters that hiding it within a single unit price is preferable.

Member

The problem with hydrogen is the safety overhead. To make it as safe as diesel oil one has to add cost and weight, although metal hydrides may offer a solution. Another possibility is capturing water vapour and carbon dioxide from the air and using solar energy to make a hydrocarbon fuel by a physical process other than by growing and harvesting something. But this requires reliable and strong sunshine.

Member

Ofgem have made a response to the Annual Energy statement. This is the link:
https://www.ofgem.gov.uk/ofgem-publications/84215/improvingthetransparencyofenergycompanyprofits.pdf
It seems to me that the transparency of profits it looks for relies heavily on two things:1. The companies’ own accounts – can we rely on these not to be creative? and 2. an auditor – I don’t think they have a great reputation for independence.
Why does Ofgem not set itself up to audit these accounts – do we not have capable civil servants to examine them?
Maybe Ofgem should use data to produce a “model company” that takes in wholesale gas prices, transmission costs, green levies, and includes benchmark costs for operations and profit so there can be an objective agreed range for gas and electricity kWh costs. It can use data from suppliers and generators other than UK to help establish sensible cost data. We might at least then feel more confident about the tariffs actually being charged. Or is Ofgem not competent to really assess what we should be paying?