A big week for energy – but we need radical changes

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.

” 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.

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.

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.

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.

I have not been following the energy debates, but I thought that companies are now supposed to inform customers if they could save money by switching to another tariff.

Sorry, Malcolm. I realise that this is not related to your discussion, but I thought you would know the answer.

Not sure how you found OVO 25% more expensive than nPower Malcolm. Admittedly I did a dual fuel comparison rather than gas only but on two sites I found that for my place OVO and nPower were currently about the same?
Spark were actually the cheapest but I’ve heard reports that their customer service is poor and error rate high.

But as I already buy from OVO and find that they behave themselves quite well, and because I enjoy interest on my modest credit balance with them I don’t think I’ll be changing for now. The potential saving was not significant.

I would agree though that buying energy at what is really the best price is not as straight forward as it could be or should be.

And overall far too expensive from whoever you buy from.
And increasing in price at a very alarming rate, from whoever you buy from.

Something needs to be done or we’ll all really suffer, many are in my view suffering very badly and very unnecessarily already.

Chris, I was comparing unit costs for gas only on a like-for-like fixed price deal when I was looking at switching. OVO were then 25% more expensive. To be fair, their standing charge was lower but even when I include this, on my usage OVO were still 10% more. I think it is important to look at gas and electricity separately – a dual-fuel deal from one supplier’s tariff may not be the best value.

Thanks Malcolm. I knew you would know the answer and it certainly had not occurred to me that buying electricity and gas from different suppliers might be a better option.

I have the ability but perhaps not the motivation to keep a close watch on energy costs. I just feel very sorry for elderly and disadvantaged people who may be struggling to pay their bills. I wholeheartedly agree with your comments concerning the need to understand the costs in supplying us with energy but is equally important that all fuel users get decent value for money.

willowe, I agree there does not seem to be any transparency in wholesale gas prices (nor electricity). I don’t see why there should not be. OVO suggested gas has not increased recently, Ofgem suggested it was 1.7% higher (but another suggestion was 10% higher). A parliamentary briefing paper I looked at shows it appears to have increased by around 10-12% over the last couple of years. It is complicated by the fact that energy companies buy a couple of years ahead to avoid big fluctuations. What Ofgem should find out is what the actual wholesale prices have been and what the forward prices used are so a real judgement can be made of the increase, if any, they make to what you and I pay. Is that beyond them?

See my new post third from top on the Spanish Governments idea that being connected to the grid even if you generate your own power means that you are responsible for its upkeep. Fair point.

Rather like my road tax and duty on petrol contributes to roads all over the UK even if I never use them.

Figgerty, the politicians have just proposed the solution to your problem – and for those who leave home for different times. Assuming normally your best tariff includes a standing charge, when you can change tariffs in 24 hours as proposed, do that to a unit-only tariff just before you leave home, and change back upon your return. Then no standing charge whilst you are away! Should even work for long weekends!

I would turn into a swivel eyed loon trying to keep track of which supplier was supplying me and for what period.

The idea of switching in 24 hours is just more political nonsense – just like a 20 month price freeze. About time these politicians forgot about points scoring and really tackled the fundamental problem of minimising energy prices and properly regulating them. I expect energy companies to make a fair profit – but let’s have transparency so we know it is fair.
Incidentally, I have just switched and have a 14 day cooling off period. So switching in a week makes it a three week changeover – or are the politicians going to abolish the cooling off period. You just have to wonder whether any of this has been thought through. It’s time engineers ran the country – at least they think logically (and scientists, doctors and a few others……)

Figgerty, the best way to avoid the need for switching more than annually is to go for a fixed-price deal; plenty around. However, I suggest you make sure there is no exit penalty in case you change your mind.
I thought about a 4 year fixed price deal (to 2017). However, you of course pay substantially more initially per unit – and can you guess better than the energy company whether you will win overall? My money would be on the energy company to win. So I stuck with an 18 month deal. You may decide to change from a 4 year deal before it ends – energy prices don’t rise as fast as expected (could that happen?), you come across a better deal, you move house… But in the early years you will have paid much more than necessary for your energy, so a big loss to you (but a big gain to the energy supplier). So not for me.

I agree. When I switched in Feb 2012 I had the choice of a fixed price tariff ending in June 2014 or one ending in 2017. The first saved me £80 per annum and the second was costing £13 more. I chose the first one as I hoped the energy companies would have a competitive price by the end of the fixed price period and I was protected for two winters with the first option. Of course if I could have foreseen a 10% hike then I may have made a different decision. Perhaps the switching websites should allow us to factor in a % increase.