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Give customers simple prices & end energy market confusion

Man standing outside a large maze

As another winter of inflation-busting energy price hikes bite, how do you feel about your supplier? Are they top of your Christmas card list? I very much doubt it!

When it comes to trust, the energy industry has just dropped to an all time low. More than half (54%) of the public now say they don’t trust energy companies, putting them second only to car salesmen in the low trust stakes.

It’s no surprise that people feel like that when you look in more depth at the recent price rises. You’ll have seen the recent headlines announcing average increases of 7, 8 or 9% depending on which supplier you’re with. But actually, where you live and how much energy you use could mean that you’re facing a much bigger increase in your monthly bill.

Take SSE customers in the North East. If they’re on the standard dual-fuel tariff, paying by cash and are also low-energy users, they are facing a whopping 17.15% rise for their electricity. Or think about Npower customers in northern Scotland. Low-energy users who pay by direct debit are facing a 15.91% price hike for their electricity, rather than the 9% average.

Energy price rises worst affected regions

It doesn’t have to be like this. Steps can be taken by the government to make competition in the energy market work and keep prices in check. And following the Prime Minister’s commitment in October to force energy companies to move people on to their cheapest tariff, we’ve finally got an opportunity to make this happen.

Single unit price for energy

However, this requires the government to go a step further with its proposals and introduce a single unit price for energy. This will ensure that prices can be easily compared at a glance, like on petrol forecourt displays, allowing people to find the cheapest deals with ease.

Why is this so important? Well, prices will only be kept as low as possible if there is more effective competition between suppliers in the energy market. And there will only be price competition if people can compare their current deal against other offers and easily switch. As things stand, the Prime Minister’s promise should help you get the best price from your existing energy supplier. His promise does not guarantee the cheapest price on the market or a fair price.

And what about switching? We know that some people have found the process frustrating and time-consuming when it comes to moving to another tariff. Switching must be made quicker and easier.

This is why Which? has set out how this can be achieved in a new report called ‘The Imbalance of Power’. Call it our Christmas present to the government and the energy suppliers to help them sort out our broken energy market.

Let’s hope they read it over the holidays and come back in the New Year resolved to ensure that we all get a fairer deal.

Comments
Harry Felgate says:
22 December 2012

The Standing Charge must go and it’s pseudonym, 1st Tier price, because it’s unfair. Why? Because the more energy you use then, the more wear and tear on the system and the higher capacity required. The capital and maintenance elements should be added to the rate for a kWh and a single price per kWh charged to the consumer. Of course differing discounts would be applied depending on your payment method because each method has associated costs. What would be wrong with a pricing system like that?

Laura says:
28 March 2013

The price of energy is already scandalously high, your half baked suggestion would only push the price up for many consumers who have no choice but to use the power they do.
Isn’t this is a bit like Turkey’s arguing for TWO Christmases each year.

Harry says:
28 March 2013

Laura, you can see by the votes my thinking on this is supported by others. I know a few people say there is plenty of energy and it’s not in short supply but! The oil and gas still available is very inaccessible, getting more and more expensive and dangerous to bring in without harming the rig workers and the planet. If you think energy prices are scandalously high now, you’re in for a big surprise in the coming years. The only way to reduce the price is to reduce the demand……pray for the return of the plague, that’ll help!

The arguments supporting tariff only vs. standing charges will not be easily resolved, as there are points for and against each method. Other conversations have explored these at length.

Paying a standing charge guarantees an income to the suppplier, whether you use a lot or a little. Paying one tariff only means all users are charged only for the fuel they use; there are fixed charges incurred by the suppliers, irrespective of your usage, so the low users will only pay little towards these, the higher users a lot more.

Different suppliers do offer deals covering these options. For example, go to ebico and they offer a single fixed tariff for gas, and one for electricity (the cost depends on which region you are in – why? Probably different distribution costs). There are choices out there already – up to you to find the best for you.

The real issue. it seems to me, is to discover just what wholesale fuel prices are and judge whether the suppliers are retailing fairly. You would think if there is a killing being made, some of the newer companies who retail fuel would be undercutting the big 6. That doesn’t seem to be the case from the comparison sites. So are they all in cahoots? Try petrol and diesel prices – they are all very similar in my area – is that collusion? It’s time some real work was published on the facts of energy cost.

“is to discover just what wholesale fuel prices are” not as straight forward as it could be as many of the big 6 are energy suppliers too, and I suspect they inflate their prices with others rather than sticking a a reasonable rate. The new Energy Bill will, I fear, completely miss this if they just push for companies to say how much they pay ( themselves ) for energy, rather than demanding to know what the actual cost to them is and hence what a fair wholesale price should be.

Thank you, Malcolm; a good summary. But as it has been said elsewhere, william, the problem of discovering true wholesale prices, though real, is caused by the big companies being vertically structured. They have divisions to explore, build the extraction kit, extract the fuel, refine it, distribute it and retail it. And accounting between the divisions can be managed ‘creatively’, such as by the extraction division charging their own retailers (but not on the open market) an artificially high price.

The solution must be to have each stage separately accounted, with ‘creative’ items open to scrutiny not just by tax officers but also the competition commission. And this must apply to all divisions of any company which operates in the UK, wherever those divisions are based to avoid UK taxes.

Harry Felgate says:
22 December 2012

There are fixed charges in every business but I don’t pay more for my bread because I live further away from the bakery. Regardless of how many loaves I buy the price per unit is the same so why is power or gas different? Energy use results in CO2 and if a single price/kWh results in higher users paying a bit more AND looking at their useage a bit closer, that’s a good thing surely. As for guaranteeing energy suppliers an income, who on the planet is going to pay a standing charge and use no energy? I don’t think that argument holds water. Find out raw material prices and then what? Set a maximum additional price the supplier would be allowed to charge…lol. So I want to sell my house, who would determine how much I could charge for it? Or the hardware store sells nails so we ask how much they cost him and what is the legal markup? Everybody sells their stuff according to demand not cost of acquisition plus preset markup. Is that capitalism moderated with state control? Petrol price is mostly taxes so the bit that is left is quite small and will not differ much among stations. I think a single price/kWh is the ideal solution. Simple to understand, fair and will encourage conservation. Just what we need.

Harry F, you haven’t contracted with anyone to come to your house with bread, even if you choose not to have it. But the point made is that the fixed costs have to be paid for one way or another, and we all have a choice as to how we pay. All the arguments are elswhere for both sides, and not readily resolvable. Choice is the current solution.
Lets concentrate on organised consumer power to get a better deal?

Harry Felgate says:
22 December 2012

I’m sorry but I don’t agree. Lets use the analogy of the Milkman, he delivers to my door. If I buy 10 pints and nextdoor buys one, we pay the same unit price. We don’t pay a visit charge plus a price per pint. Your argument isn’t valid. It’s been traditional to charge the standing charge, when street after street of terraced houses used virtually the same amount of energy for their lighting and maybe a radio. This out of touch now and energy use varies widely among households. There is no valid reason for the charge and that goes for water too. The more you use the more you should pay towards system installation and maintenance. Single price per unit used is the only fair method. As for organised consumer power…we can’t agree with each other. Low users want single price, high wasters want standing charge…organise that. I wonder if our readers know that the efficiency of a gas, coal or oil fired power station is at best 35%. That’s why electricity is 3 times the price of gas.

My slightly out of date experience with milkmen is that I did pay a delivery charge on top of the cost of the milk.

Harry Felgate says:
23 December 2012

I can only say what my man charged. He charged per pint with no extra charges for delivery.

Harry, this is a converstion to exchange views, so let’s disagree slightly. Neither of us is wrong.

Two sites that may be of interest regarding energy prices. One for electricity and gas costs – domestic and industrial – throughout EU countries, and one about supply issues from Qatar and Russia.
http://www.energy.eu/
It appears from this that UK industry pays between 100% and 64% for gas c/w the household rate, and 70% for electricity.
From these tables. it would also appear that the UK is between 6th and 8th cheapest price for electricity out of 27 nations, depending upon consumption, and for gas 2nd to 3rd out of 23, depending upon consumption. It does appear that distribution costs etc are included.

http://www.naturalgaseurope.com/natural-gas-competition-part-1-qatar-and-russia-in-the-uk

Peter Steadman says:
22 December 2012

Re the efficiency of electricity generating stations. Invigilating a GCSE exam last year I was surprised to see an exam paper quoting “one third lost in the power station, one third lost in distribution”. Today’s school leavers, it seems, have been let in on the secret. One wonders what they will do with that knowledge in the coming decades.

Harry Felgate says:
23 December 2012

The examee didn’t get that quite right. 2 thirds lost in the station mainly through the cooling towers, some through the flue and heat loss from hot pipes etc. Disribution losses are minimised by upping the voltage via transformers before transmission then reducing it at the other end. Not sure about figures but believe it’s in the order of single figures % wise. We have heard of hydrogen as a clean fuel but at present the only way to produce hydrogen is by electrolising water. It needs high power and forms hydrogen on one side of the plate and oxygen on the other. (- and + not sure which forms where but it’s simple). If we start with 100kWh of gas we make 35kWh of electricity. Put that through the electroliser and we make about 15kWh net of hydrogen. Until we can crack water a bit cheaper it’s a waste of energy.

the only way we will get fair and honest energy pricing is if the government introduce the same restrictions that are placed on Irish energy suppliers – a cap on their profits of about 3% per annum

Dennis Fuller says:
23 December 2012

Comment on
“Author: Harry Felgate
Comment:
Andy, my mother died of cancer aged 29, my Ist born son at 11weeks old of pneumonia, my father of heart disease at 56, my sister of cancer at 61.”

Dear Harry Felgate
We used to say “What has it got to do with the price of tea in China?”
In your case “What has your grieving got to do with the price of Gas and Electricity in the UK?”

I do know one old lady who died of Hypothermia because she only put a fixed amount in her gas meter every day and put up with the cold when her gas fire went out. It seems your relatives did not die in a similar way. Her family would be entitled to comment on fuel prices. Please try not to go off topic.

Harry Felgate says:
23 December 2012

You clearly are not keeping up ….do try!

Ibby, “a cap on profits” sounds good in principle, but Starbucks, Google and Amazon have a self-imposed cap on profits in the UK to ensure they pay little or no corporation tax. Perhaps the energy companies might think their offshore tactics are worth a look? Accounting rules and tax are so complex they defeat the regulators.

The companies that generate their their own power are already doing it. It just needs someone in power willing to do something, like say add a new tax on top of corporation tax ( a tax on profits ) called a sales tax ( a tax on UK based sales) sorted. With say a 20% Sales tax, if the amount or corporation tax is less than 20% of UK based sales, then you pay the difference and its only applicable to companies with overseas HQs or playing the we’ll buy our coffee from Switzerland at a mark up, but still have the coffee shipped direct from South America. Oh wait, I’m not in power so I can’t do that and the people who are in power can’t be bothered.

It all boils down to it doesn’t affect politicians so why would they bother.

William – VAT is the equivalent in EU countries of sales tax found elsewhere – you may remember that it replaced the old “purchase tax” which had a much wider range of % rates, according to the product.

These comments are going off-beam – though I must add, whilst hopefully closing the issue on VAT, that charging even 5% VAT on our energy bills is scandalous. Certain essentials were either exempt from VAT or Zero rated when it was introduced – eg food, gas, electricity, water, childrens clothes, insurance etc, simply because it was accepted that essential items should not provide a source of revenue into government coffers. That has changed and both energy and insurance are now providing revenue from the hard pressed public. I would favour a higher rate of VAT on “luxuries” (TVs, high tech gadgets etc) to replace VAT on energy and insurance, coupled with a good set of teeth for the regulator to exercise firm control over the energy companies to simplify their tariffs and make everything more transparent.

AQ – I wonder how the 5% being charged on energy bills compares with the apparent ÂŁ300 added to the average bill to pay for green/insulation/and another intuitive the government wants to pretend to be doing. I think I’d rather pay the 5% then all the other “rubbish” I’m having to pay for. And sorry I should have said “sales” tax as its extra to VAT and charged a the company level rather than the consumer level.

Good point William. Too many consumers don’t seem to realise that the previous government brought in legislation under their “green” initiatives to put the responsibility on energy companies to fund these initiatives to meet targets on reducing consumption. They knew, of course, that the cost would have to be passed on to the consumer through increased prices. This is why we see so many free or very cheap deals on loft and wall insulation – they are subsidised (with the blessing of HM Government) by the energy companies through these increased energy prices. So the moral is – as consumers are already paying for this subsidy, they would be foolish not to take advantage of these special deals, if their homes could benefit, thus reducing consumption and consequent bills. All very crafty really – but these initiatives are also funding schemes like the Feed-In-Tariff from microgeneration through solar PV panels and domestic wind turbine systems. So whether people take up these schemes or not, they are already helping to pay for them anyway through government inspired higher energy bills.

Anon happily married says:
5 January 2013

In 1993 the government said it would make fuel subject to the full rate of VAT.
http://en.wikipedia.org/wiki/Value_Added_Tax_%28United_Kingdom%29

I’d rather we paid more VAT on fuel. It would make energy efficiency and other green measures have shorter payback times. But I can’t see any politician touching it after what happened in 1993/4. But I suspect the lost VAT revenue is why the government messes around with taxes on the energy company itself. Without the strong incentive of high energy bills, they have to use inefficient subsidies instead.

Solar PV feed in tariff was near 41p/kWh, inflation proofed for 25 years, for those installing it until early this year I believe? A ludicrous waste of your money subsidising those home owners who installed it, when you buy it back for around 12p. It saved the Govt having to invest capital in building Solar PV stations on an industrial scale – if PV was so good. All to meet carbon reduction initiatives hastily put together. I wonder how long these pv installations will function satisfactorily, and how much CO2 was used to manufacture them?

On shore wind farms – another waste of space – again produces FIT about 3x what you pay per unit. And the UK FIT is about 3-4 times that paid in the rest of Europe (based on the figures issued in 2010).

Short term politics results in this. Much better to invest money in research and development into other renewables – e.g. tidal energy.

Malcolm

I think you are replying to a post on Page 1 of this Conversation. If you reply to the original message then your comment will appear in the right place.

I am not certain about solar PV but a friend with a large installation installed last year was bemoaning the fall in payments. I believe that it is right to offer people some funding towards energy saving measures (as we do with loft and cavity wall insulation) but not to pay any higher FIT than that person would pay to buy electricity.

Hopefully we will learn from past mistakes and find ways of using sustainable methods of power generation together to provide us with the energy we need. Cutting down on waste of energy could help buy time but some are not even prepared to try. Tidal energy has the obvious benefit of continuous generation, so it will work in the dark and when the wind isn’t blowing.

Agreed – short term politics is all we can expect from any government while they only look far enough ahead to the next general election. A real pity because, whatever the issue, what we really need are long term strategies that will benefit the UK well into the future. As the UK is becoming increasingly dependent on fossil fuels from abroad, we will become increasingly subjected to the vagaries of foreign politics, foreign economics etc, over which we have virtually no control. Forward planning on the scale needed to release us from such a dependence is massive, very expensive and not usually very popular with the electorate. The French went through this situation years ago (virtually no coal left in France) and rightly or wrongly embarked on a programme of nuclear power generation. Some 84% of France’s electricity comes from this means – and prices are stable. Whilst most people might prefer to pump money into renewables, we do need to remember that the payback time for this investment is well into the future. We need to accept that consumers of today have two distinct options (1) quick fixes to keep getting us by and hope for the best, or (2) pay higher prices to help fund the investment needed for longer term projects which will become our legacy for future generations. The latter, of course, could be better supported within the public domain, by putting a larger burden on better off people (through taxes) rather than energy pricing, which the less well off cannot always afford.

AQ

I certainly agree about the need for proper planning. While I agree that the rich are the obvious source of funding of research, don’t forget that some are poor simply because they are very wasteful. That is why I believe that domestic energy should be priced so that low consumers pay low prices and that higher consumers pay higher prices.

Harry Felgate says:
23 December 2012

Some of you may recall the size of the first mobile phones and how long the battery lasted. I believe that the efficiency and size of solar panel will follow the same path. A breakthrough in technology will make them much more efficient and compact and on and on like phones etc. Let’s hope so.

Good point Malcolm. How much energy is used and CO2 produced in manufacturing products designed to save energy and reduce CO2 output ? Generally speaking, we’ll never know most of those answers, but I do know from my experience in an office environment that devices fitted like movement detectors, which switch off the light when body movement is not detected, have never saved in their lifetime what was used to produce them. It just looks good that you’re seen to be doing your green bit.

wavechange – I have a family of 6 (all raised without any state subsidy apart from Child Allowance) so need 4 bedrooms. I also need to run electrical medical equipment. I have put in double glazing, extra loft insulation, wall insulation, a condensing boiler, thermostatic valves on all my radiators and CFLs,. Not a lot more I can do to be energy efficient (perhaps only eat cold food)? So why should I be penalised if I, of necessity, use more than a “typical” household. I am not wealthy. Perhaps those who waste energy by not insulating their houses should be penalised – but they may not be able to afford to.
So, can’t agree with you. Incentivise people to save energy by giving loans through their energy supplier to insulate and install controls, with pay-back through reduced fuel costs. There are too many sticks used these days, and not enough carrots (except feed-in tariffs).

There are many ways that we can and should support individuals and families.

As I have said many times, what concerns me is waste – and not just waste of energy. It’s not confined to the rich or poor but most of us are guilty and I certainly include myself. If you have taken the measures you have described you are probably not paying more than average bills.

Water meters are an example of how we can discourage waste and from what I have read, most people benefit from lower bills when they have a meter installed.

I’m perfectly happy with incentives to save energy but what do we do about those (rich and poor) who are wasteful. Think about this over the next week and you might see plenty of examples. Merry Christmas.

wavechange – waste encompasses so much. Overseas holidays (flying and cruising) leisure boating and flying, a drive in the country, living a long way from work, all waste fuel; buying unwanted presents at Christmas and birthdays, eating too much, and so on and so on is all waste. So you (not you personally, I’m sure) end up being a paragon of virtue and miserable, whilst those around you enjoy life.
We have no right to dictate to others how to lead their (lawful) lives, but can only hope that through education and incentives they balance their use of resources in a responsible way (at least, responsible in the view of some others). If they don’t, that’s their choice, whether others like it or not. As they say, that’s life.
Anyway, goodwill to all men (and ladies). Hope you all have a happy Christmas. We will over indulge with a happy family around us.

As you said earlier, this is a conversation to exchange views, so let’s disagree slightly. Neither of us is wrong.

I’m off to drive 450 miles tomorrow, so I’m hardly a paragon of virtue. I tried taking the train last year but two weeks without the car really did make me miserable. For me it makes sense to make one long visit than two shorter ones per year.

Re-Nationalise the electric, water and gas. this will reduce our bills more money for the goverment. in the short term it would be costly but in the long run everyone would benefit.

Harry Felgate says:
23 December 2012

Noooooooooooooooooooooooooooo. Availability at any price is better than that.

I suggest that you have a look at the performance of the nationalised companies, unless you mean that everyone would benefit from higher prices. 🙂

Dream on Andy. Have you looked at the Government’s records – past or present – in running or purchasing anything? Incompetence doesn’t begin to describe it.

pauline hill says:
24 December 2012

I switched as I objected to paying a daily standing charge. Chose a company who offered one competitive rate, no tie-ins or cancellation fees and no standing charges. Had never heard of company – not one of the “Big6”! ! – came as a recommendation. Tariff suits my lifestyle, bills have dropped dramatically – getting rid of the standing charge made the difference – my usage has been the same but I only pay for what I use.

To compare tariffs used on the “Big6” websites – was so irritated – invited to apply for a quote – took me a while to find “tariffs” – under Tariffs and T & C’s in very small print on right of page – when page opened the print again was very small – so someone who is not so computer literate would virtually find it impossible.

Good for you Pauline, but are you going to keep us all in the dark (excuse the pun) – which company is it ?

If they have no standing charge, they must be recouping their costs somehow – the alternative to a standing charge is usually higher priced initial units. If your bills are lower than with any of the main suppliers, how is this being done ?

Harry Felgate says:
24 December 2012

C’mon Pauline, which company have you discovered? Let’s have the word of mouth.

pauline hill says:
26 December 2012

company is EBICO – am a low user – as I explained the company suited my lifestyle. Obviously unit price of both gas and electricity costs more than if you have a daily standing charge, but that’s my point – if you don’t use it why pay. It’s no secret – in my opinion lifestyle and usage is the key to choosing your provider.

John Hadlow says:
24 December 2012

It’s all very well trying to get the major energy companies to give realistic tariffs but what about the 3.5 million people who have to rely on LPG or Fuel Oil as their energy fuel and providers. A good example we are on LPG, we have friends paying up to 79 pence per litre whereas we are paying 42 per litre. The which effort should try to cover all forms of energy and suppliers.

I think, John, that people forget just how fortunate most of us are in the UK to have piped gas for most of the population. It is very rare in most countries, where like a small proportion of the UK, people have to rely on other fuels such as gas oil, LPG (usually propane), electricity or solid fuel. The Which? campaign is focussed on the main energy suppliers of natural gas and electricity, simply because they supply the majority of homes and people are pointing the finger at this handful of companies for excessive profits. That’s not to say that oil suppliers and others are not doing the same, but with so many intermediaries selling alternative fuels, it would be difficult to apply the same methods to bring them to account. LPG will always be more expensive than gas oil, which for the forseeable future, will remain much more costly than natural gas. In many countries, where there is no natural gas, woodburners are popular (mainly in rural areas) because the running costs are comparable to using natural gas (they look nice too). The main downside is less control over the “system” and wood storage, ash removal / cleaning etc, which is why oil and LPG are often favoured. Although an electric heating system can be expensive to run (and difficult to control if using Economy 7 for storage heaters), heat pump systems bring operating costs down to affordable levels, but are expensive to install. It has been known, however, where some villages have no piped gas, for residents to apply group pressure on an energy supplier to provide a piped supply – it depends on how far away the mains supply might be.

Harry Felgate says:
25 December 2012

I lived in a small village from 86 to 2001 and used LPG for heating and gas hob. It was convenient but double the cost of natural gas at the time. I then moved to a new development on the edge of a large village which had an LPG system piped to each of the 25 new dwellings. It was a little cheaper, perhaps 10% but LPG kept going up faster than natural gas. LPG is refined from oil but gas is natural. The price of natural gas/kwh historically is roughly 1/6th the price of crude oil/kWh. So as the price of oil rises and all the associated products, petrol, LPG, paraffin, diesel, heating oil will increase too but natural gas will increase by around a 6th of the oil increase. We are using it all faster than we are finding new and harder to reach reserves so, the price will always be rising. I realise that not everyone who lives in the areas not served by natural gas may not be there by choice. If you are there by choice then you’ve chosen the lifestyle and have little choice but pay up I’m afraid.

Principled says:
25 December 2012

I’ve been reading the posts and feel it’s time to comment.
1) Foreign owned power companies bought in to the UK energy market for reasons of profit. They saw a market unhindered by the government controls that they suffered in their own countries plus the opportunity to enter one where price obfuscation had become the norm, (an additional bonus if you like). Some, like Centrica, control the whole energy chain from well head to retail and can use transfer charging within its structure to make its retail arm look non-profitable and so request price-hikes (Even though the company as a whole may have increasing profitability – http://www.independent.co.uk/news/business/news/british-gas-hikes-prices-as-centrica-profit-soars-8322860.html#tabs-1-3). Such price hikes are then followed by others because of the cartel nature of the market. The government appears either powerless or unwilling to address this issue. And it’s not as if these companies are going to up and leave such a valuable source of unfettered income, is it? So I am mystified by the inactivity of the government in this area.
2) It is not true to say that gas finds are not keeping up with usage. Natural gas reserves are currently between 60 and 90 years, not including fracking. New technologies will allow further extraction beyond this. However, if you were selling a product what would you prefer- to say it is in short supply and so drive prices up or say it’s plentiful and drive prices down? http://energytomorrow.org/blog/a-paucity-of-scarcity/#/type/all
3) Solar panels for the UK are a non-starter without massive subsidies. If in Spain, which has 50% more sunshine than the UK, the government found that solar power farms gobbled up 80% of the renewable energy subsidy for 2% of the country’s energy, then how can it possibly be economic in the UK? (Indeed, the subsidy was so good in Spain that their national grid noticed that some solar panel farms were generating electricity at night. On further investigation they found that some entrepreneurial solar farm owners had rigged up diesel generators to increase their output and that get maximum subsidy levels. This shows the perversity of subsidies!). As I walk round my village there are many large, expensive houses with their solar panels…but who pays their feed in premium? Those too poor to be able to afford such panels.( A perverse transfer of wealth from poor to rich via the hidden ROCS (FIT) subsidy that they pay hidden in their bills. As or saving the planet, perhaps they aren’t as clean as everyone makes out, and become even less so the lower the annual sunshine levels are. .(http://www.lowtechmagazine.com/2008/03/the-ugly-side-o.html ).
Am I a fossil fuel Luddite? No. Just trying to put in some common sense views. For example, if instead of subsidizing wind and solar we had used SOME of the subsidy to further research Thorium power, then we may have had a source of CO2 free, nuclear fissile material free, power using a something which is often a waste product from mining extraction.
4) Finally, the rubbish being spoken about private good, public bad. I worked for a large motor manufacturer in the 70s. There was a certain plant called Halewood. Strikes every five minutes. Halewood now produces LR best model with no strikes. A similar thing has happened in the public sector. I know because I transferred from the private sector to the public sector 30 years ago. There were dinosaurs for sure when I joined. For the most part these were weeded out and many public sectors now have to compete with the private sectors on contracts. My point? You can’t compare what happened in the nationalised/private industries 40 years ago with what would happen today.
merry Xmas

Harry Felgate says:
25 December 2012

Principled Anon.
1. Presumably the gov does nothing about regulating the energy suppliers for the same reasons they do nothing about Starbucks, Amazon, Google accounting practices. A mystery?
2. I think 60 to 90 years remaining gas supplies means it’s running out. 60 years ago when I was a lad they talked about cheap plentiful North sea gas. Where is that now….lol.
3. I agree about solar in the UK being very questionable but it does help a bit during some days. Wind is also hit and miss but a little better than solar. Tidal is of course reliable but as the tides shift off peak generation is unhelpful. These methods needed attractive incentives to kick start the business and FIT tariffs have now been pegged back to manageable levels.
4. We have no idea what would happen in a nationalised industry today and can only go by the total failures in the past and be very wary. Is their evidence things would be different today?

Running out, Harry? I’ve mentioned above about using the UK’s remaining coal reserves via underground gasification, which is about ready to go; first plant under the Firth of Forth by Powergen. These reserves (mostly too deep or too thin a seam to be economically mined any other way) are maybe four times what’s already been mined since Roman times.

Although the current system is to burn the gas (the old coal gas kind) in gas turbines to generate electricity, then pump the exhaust gases back underground, the gas could equally well be used for commercial heavy industry. Maybe not domestic, though, or we’d get the suicide-by-sticking-your-head-in-a-gas-oven back! Not popular!

Harry Felgate says:
25 December 2012

That all sounds great at first. Of course “too deep” means expensive, desulphurisation to prevent the acid rain means expensive, Gas turbine efficiency is poor and used for quick start peak generation also means expensive. pump the exhaust gasses back underground means more expense and probably public outcry, would you want it pumped under you? Presumably there would be some sort of heat recovery from the exhaust gasses. The core subject is reducing energy prices and nothing I’ve heard from anyone is going to bring that about.

It’s all been thought through, Harry.

‘Too deep’ is too deep for open-passage coal mining, when the pressures can cause coal (which isn’t too strong) to spontaneously burst. In the East Midlands coalfield, for example. The deep, thick coal seams get too deep east of the Trent, roughly, but extend almost continuously across Lincolnshire and right across to France, Belgium and Germany. All this and almost the whole of SE England are underlain by coal which is extractable this way using well-tried oil well technology (which is already used in the shallow East Midlands oilfields).

Basically, a curving holes is drilled to meet the coal and pass through it. Very hot gas is pumped in and, without the presence of oxygen, the coal is converted to combustible gases and ash, which return via another pipe to the gas turbines (jet engines). Once it’s working continuously, it’s the hot exhaust gases from the turbines which promote the next gasification, continuously. It’s already working in South Africa (UK-led) and China (Chinese-led) on a smaller scale, but profitably. This article: http://en.wikipedia.org/wiki/Coal_gas tells you the chemistry.

There are two great advantages. First, it uses proven technology, but in a new scenario – nothing experimental. Second, there’s no pollution either by sulphur and chlorine, nor any carbon dioxide waste – all that goes back underground. And the subsidence you get with traditional deep mining is much less. And is it expensive? Well, no! The small-scale examples running now are still healthily profitable.

This is all arguably cleaner environmentally than any other fossil fuel use and once working, has zero carbon footprint. I can’t wait for the bureaucrats to give the go-ahead and see it in use! I reckon that they’re just nervous to try something that’s new for Scotland. Maybe it’s rather like the Severn Barrage that they’ve been dithering over for 20 years – even if it’s 95% advantageous in every way, someone will want to sue big-time over the 5% downside, like sea-bird environments becoming fresh water in the Bristol Channel, or changing waterways with subsidence under the Forth.

Just found a Wikipedia article on this: http://en.wikipedia.org/wiki/Underground_coal_gasification. It’s out of date, applies mainly to US structures and doesn’t include the return of gases underground, but you get the basics from it, at least. The diagram is naff and wildly inaccurate – the bores are sloping and twist to follow the coal. And yes, the bores can go several miles down and sideways if needed.

Principled says:
26 December 2012

Harry, for some mysterious reason NG prices appear to be fixed to that of oil in our part of the world. Why? Only the suppliers know that. In a true competitive market this is what happens (from the US:) “The natural gas market today is a completely different market from that of just three years ago. A shortage of supplies has turned into an overabundance, and production continues to outpace demand. In July 2008, the price of natural gas in Louisiana was close to $14 per MMBtu, and according to the Energy Information Administration (EIA),….Today, the price of natural gas in Louisiana is hovering around $4 per MMBtu,…”
Unfortunately, our technologically illiterate ministers seem to be swayed more by the green lobby than anyone else. Thus they introduce wind turbines as CO2 savers without telling Joe Public that the turbines must have a CO2 producing spinning reserve. They then prevaricate for decades over nuclear until the very last minute, losing UK expertise along the way (the experts having mostly retired or died!!!). The Severn tidal barrage was ready to roll by one big designer of power generators. It was a partial barrier with tandem dual direction turbines. Again the green lobby held sway. Then there was the ONE, state-of -the-art coal station that was defeated by supposed environmentalists, who at the same time seem very muted about the one coal-fired station being brought on line per WEEK in China.
Is it any wonder, therefore, that we have an ageing power infrastructure, a dwindling reserve capacity and high prices when politicians (and I suspect their civil servant advisers) lack technical expertise are only worried about winning their next election? Personally, I don’t see anything much happening anytime soon. So although we may campaign, in the end the status quo- with minor tweaks around the edges- will remain. IMHO.

Whilst we need have no fears of fossil fuels running out for many years yet, their increasing usage is only going to add to CO2 production with the subsequent effect on the ozone layer. If the western world has failed to get the USA on board with targets on reducing emissions, then we don’t stand a chance with China – the rise in emissions there outstrips anything we have ever known, with India set to follow suit. Already the USA and China together produce over half of the world’s CO2 emissions. The UK accounts for 2.5% with a government set long term target of reducing this by 20% – ie down to 2% of current emissions – an utter waste of effort. Without the big players on board, it is like re-arranging the deckchairs on the Titanic.
Incidentally, these days Ministers take very little advice from civil servants, scientific or otherwise (like they used to) – they are steered much more by their political advisers, which is why we have short term politics and decision making than long-term strategic thinking.

Principled says:
26 December 2012

Two good posts by David and AQ. Thanks for the link David.
I am currently in Canada where the government got itself out of the Kyoto “club”. Freed from that noose they’re finding new gas and oil reserves continuously, and there is no recession. Not only that, but it’s minus 22 outside and I’m snug and warm inside. No TV progs about pensioners having to choose between heating homes or eating. Here, they’d be dead in minutes if they turned off the boiler. I suppose the UK government is “lucky” that the UK has the Gulf Stream to provide a little heat so our pensioners and the sick don’t die through sudden hypothermia (Imagine a headline “Frozen bodies found in house” ) However, the old and frail DO die from the cumulative effects of hypothermic stress.
“180 pensioners died every day as a result of cold conditions during the 2010-11 winter months in England and Wales. The annual ‘Excess winter mortality’ report found that an estimated 21,800 people over the age of 65 died as a result of adverse conditions, on top of the average mortality rate for the same period of time.”
And all this for what? To save -as AQ so rightly says- a maximum of 0.5% of the World’s CO2 production. The Green movement has – and I don’t know how- successfully placed in our psyche that we- the UK- are major CO2 “polluter” and must lead the way in its reduction regardless of the cost.
The result is a cobbled-together “sustainable energy” policy that is costing a fortune (ie high energy costs), but without any demonstrable saving of the very thing that it was introduced to reduce – CO2.. A real life lose-lose situation IMHO.

BTW, the so-called green jobs bonanza promised by successive govs. is also doubtful. You may not have heard of a comprehensive study carried out by a prestigious Spanish University on the new “Green Jobs” promised by their government when they introduced their solar and wind energy policy. The study found that each green job created cost the equivalent 450 000 pounds in subsidies and caused the LOSS of 2.2 “other” jobs. ( I can give the link if anyone is interested, but it’s in Spanish!).

Still, by applying the mushroom theory to the electorate, successive govs have managed to do very little about the energy sector. Which is just what both sides want, it would seem.

Principled, the UK tries to lead the way on things other than green issues – try defence, foreign aid, for example. We seem quite prepared to spend money helping others, and neglecting our own. To save fuel we could encourage better insulation of existing homes, and improving insulation and heat gain standards on new houses. We should also be putting more money into sensible energy sources, including tidal. Unfortunately, political expediency and short-term strategies get in the way..

Malcolm, can I take issue on help for insulation? Aren’t the government doing just that? And don’t I remember getting grants for it nearly 40 years ago? I agree that the present government is quoting ‘recession’ to throttle back on funding for this, but I still keep getting leaflets and nuisance phone calls offering to fit insulation at heavily-subsidized prices.

And current Building Regulations are heavy on insulation and draught-proofing. And what about the requirement to have a house you want to sell assessed on environmental impact (my take on this)?

What is missing is help for insulating solid-walled houses like my Georgian town house (ie, terrace). The technology is there – high-efficiency wallboards fastened to the inside of external walls – but it’s invasive, needing redecoration and possibly refitting of skirtings and architraves, so I wouldn’t find it cost-effective without a grant.

They tell us that street lighting must be switched off during night time to save energy. What happens to the energy generated by wind power (if any) during night times ?, if it is available and not used then it is wasted. If it is not available then `back up` generation must be supplied.

Ron, street light is not turned off to save energy, but to save money. This is where the street lighting is no longer necessary. We do use electricity at night for other things – including industry and commerce, so night-time generation is required. Having installed expensive wind farms they might as well be used.

Not only is electricity consumed at night, the energy companies actually encourage night consumption with tafiffs like Economy7 for storage heaters and cheaper domestic hot water (where there’s no gas for example). The main reason for offering these tariffs is to help balance demand a little. As power stations cannot be “turned off” so to speak, the excess production at night would otherwise be “wasted”, whilst during the daytime demand is much higher, probably peaking at about 6-7pm as everybody gets home, switch on kettles and start cooking the dinner.

Street lighting consumes a fair amount of electricity, although the more recent ones are more energy efficient than some older ones. The efficiency savings are partly offset by the growing number of street lights as more and more residential estates are built. Unfortunately, this does result in a significant amount of “light pollution”, with urban areas shedding so much light, that you almost need black-out curtains to shut it out. In many other countries the residential / urban street lighting is switched off around midnight to overcome this and to reduce energy wastage.