How much is green energy adding to your bills?

How about doing what I did a year or two ago, move to Co-operative Energy. Ethical, and no PLC shareholders except that YOU are then a shareholder! GO4IT.

Steve, they don’t seem cheap. What do you get rebated as a shareholder?

All the major energy suppliers promise to be the cheapest but they have to pay a slice to their PLC shareholders so their customers end up forking out for that. Co-operative Energy don’t make false promises and do look after their mutual customer-shareholders, as described on their website here:- http://www.cooperativeenergy.coop/why-us/

I’m looking for the best deal – annual bill. I don’t see why I should pay more to the Co-op just because they are a mutual, unless they return dividend that make it worthwhile. Although their website claims low carbon energy, as far as I know they don’t invest in energy production so must buy on the open market – if they buy from “sustainable” sources (maybe at extra cost) that reduces what sustainable sources can provide to other suppliers? I’d like to know more about the argument for buying from them.

I agree wholeheartedly with the sentiment that we need to see what renewable energy is being paid for. This country has a bizarre schizophrenia towards energy.The debate on fracking is a perfect illustration. We don’t want high prices and we don’t want new technology to provide cheaper energy! Doh!
The Severn barrage project is being treated like the Channel Tunnel. Must be private but why? We have a fantastic natural resource that is not being properly pursued

I’m not convinced about the ‘global warming effect’ either – we could be paying out all this extra money for nothing. A relative of mine who is a scientist is not convinced – I trust his judgement rather than the government!

I am a scientist, and not convinced about global warming either. What cannot be disputed is that we are depleting our reserves of fossil fuels or that coal and oil are important raw materials for plastics, pharmaceuticals and man other everyday products we tend to take for granted.

I do not trust politicians to plan for the future.

Brian R – you can find them here, but these are average prices, not by provider. Nevertheless they make interesting reading. We might moan about our prices but, as I have pointed out before, we are by no means paying the highest prices.
This was my comment on a previous conversation:

An interesting (?) comparison of European energy prices can be found at&filetimestamp=20130523135053
A quick look shows the UK in 2012 was 16th out of 27 for electricity price (91% of the average price) and 12th for gas (81% of the average price).
However, what is more striking is the increase between 2010 and 2012 – UK electricity increased by 23% (only Cyprus and Latvia having larger increases) and gas by 38% (Spain only higher at 68%).
Hope I’ve got the numbers right – I’m sure thousands will check this fascinating topic. However we have to ask why we suffer increases so out of proportion with the rest, whilst being somewhat glad we don’t buy electricity in Denmark or Cyprus (66% more than we pay) or our gas in Sweden (120% more).

Thanks Malcolm. This makes fascinating reading.

I had assumed that our dependence on importing energy would make the UK relatively expensive, but that’s obviously not the case. Considering the number of factors that affect the cost of generating and distributing electricity and gas, I am surprised that the price differences between countries is not greater.

I disagree, Vince. At present, the charges are greater for those who use more energy, which if fair. If they are moved into taxation, we are likely to land up with heavy users being subsidised by those who use less energy, which is anything but fair.

I totally agree about transparency.

Mmmm . . . Tricky one this. A lot of people are below the threshold for direct taxation; they might prefer relief from environmental charges on their energy bills. And many other people are having to use more energy because they are at home all day, or have to maintain higher levels of heat, or have alarge family with lots of baths and washing. I believe it is the inefficient [rather than greater] use of energy that should be targetted for a levy but, as I suggested above, that has its complications too. Thank goodness we have sensible politicians in place to make wise decisions for us!!!

Sensible politicians? That sounds like a new oxymoron. 🙂

wavechange, it has been said before – many who use more energy have no choice, for a variety of reasons. Why should you penalise them? I see no way to fund green energy intiatives that is fair to everyone – but general taxation would at least place the greater charge on those with more ability to pay, and it is an issue for the whole population, not just energy bill-payers. Nevertheless increasing taxes is not a task any government likes.

Malcolm

I am thinking of those people who have the smallest incomes and are literally having to choose between heating and eating. High consumers might have to save money by heating only part of their house, but that is not such a desperate situation. A standing charge has a much greater effect on those who are low consumers.

I am all for green energy, but not at any price and we do need to explore renewable resources that are more dependable than wind and solar point, as you have said.

wavechange, this problem should be dealt with, but separately, not at the expense of other energy users. Examples are elsewhere – all electric homes, small homes incapable of being insulated, larger families etc. etc.
I have not suggested anywhere that everyone should pay a standing charge. On the contrary I have always suggested a choice – unit charge only, or unit plus standing charge. You have the choice of the most advantageous tariff for your particular circumstances.
It is simply not possible for one charging method to be fair and the other not. So we should not impose an artificial situation. We should address issues that will help all consumers.

Well, as I have said before, I am fully supportive of the Which? campaign for simple energy prices that can be compared as easily as the price of petrol.

I guess we have to agree to differ.

Charlie, not everyone agrees with Which’s stance on just unit pricing, as you will be aware from other conversations. There is not one pricing system that is fair to all consumers. I want to see simplified tariifs that give us a choice – then I can decide which supplier and tariff suits me best – i.e. cheapest over the year.
Ofgem have consulted again – The Retail Market Review – Final domestic proposals – in March and they have included Unit and Standing Charge in their proposed tariffs, but no two-tier tariffs. The standing charge can be zero, hence Unit charge-only options.
Tinkering with which group of consumers might or might not benefit is not the real issue. What is needed is genuine competition, and speed of switching suppliers when a tariff may change so you are not financially penalised.

Dear Charlie,

Thanks for your reply and a separate earlier email telling me about legal advice available, forwarned is forarmed as they say. In the meantime I am waiting to see if BG get back to me with anything meaningful.

Regards, Ray

Rocky, the figues bandied about for profits are 3-5% retail, and 20% wholesale. It must be remembered that profits at the generation end are partly used to fund new plant.
It would not be right to ask every business to disclose all their operating costs and margins, for commercial and competition reasons. However, since the energy sector is partly subsidised and needs to meet UK and EU objectives, it should be regarded more as a joint venture, and required to justify its prices – even if confidential to the regulator.

Josh, you are on tricky ground in trying to get commercial organisations to disclose real profit levels. I am not sure whether it is even feasible without knowing their business obligations. Since 5 of the 6 are foreign, we could run into the same problem as Starbucks, Google etc – revenue can be transferred to reduce profits in one country. This, I would think, is an EU issue, not only UK.
However, as the energy generators are inextricably involved with government – renewable targets, CO2 emissions, subsidies, funding future plant and infrastructure – there needs to be a means of monitoring performance and profit even if it is confidential; between government, the companies and the regulator, to ensure there are no cartels operating and that it is free market.
Government is responsible for a significant part of the price rises – persuading supply companies to invest has required generation price guarantees. Presumably this was felt more appropriate than using government borrowing and adding to our deficit. Probably a lot better than PFIs though.
It is not straightforward.

Doug, it seems unlikely your energy usage or your tariff has increased by 80%? It may be you have been underpaying and this is recovering the underpayment. If that is the case you should be able to pay off the amount owed separately and reduce your direct debit. Alternatively, wait till your higher repayments have made up the shortfall and then ask for them to be reduced to match your consumption.

We have had a similar DD increase for the reasons that Malcolm and Charlie have given. We became new E.ON customers in December 2012 because we bought a new house that was already running on E.ON, with an E.ON smart meter, and we had no idea what future consumption would be as the property was significantly different to our previous home. As it happens, I think E.ON have been alright; I would not have chosen them, and with all the other things we have had to deal with after moving into a new house, changing suppliers has not been very high up the ‘to do’ list. I have been wondering whether energy companies have a tendency with new customers to give lower forecasts of energy bills in order to appear more competitive. Diffficult to prove … just a suspicion.

I was very satisfied with Cooperative Energy at our previous house, not just on pricing but their overall responsible approach, and we might switch back to them once the first twelve months are up. Substantiating Charlie’s point about last year’s bad summer and cold winter, I had to pay a large amount to Cooperative Energy when closing the previous account as the DD payments were seriously out of line with actual requirements.

As an aside, I am wondering what happens with company-specific smart meters when you change supplier and whether there are any refit costs; I expect we shall find out in a few months time!

e.on never directly admitted to having a policy of keeping customers in credit and ensuring that they did not get into debt over the winter quarter. In contrast, when I switched to Scottish Power, they were quite open about getting customers to build up a credit before winter. I welcome honesty, even though I would far prefer to pay for what I use. 🙂

My experience with e.on (and their predecessors, Powergen) was that it it was easy to get them to revise direct debits or issue refunds on request. e.on regularly increased direct debits when I was obviously well in credit. I don’t think their computer could cope with the fact that I use less energy than many people.

Hi Charlie,

I’m not at all happy with their forecasting model which seems to seek out a massive balance rather than a zero balance – I remember the days when I paid nothing until the end of a quarter, and then paid for actual usage.

I have already used a system similar to that you suggested, but the payments went over-high (£146/mo), then following my challenge, super-low (to £102). If we hadn’t had such a cold year where I left the heating on the entire year it would probably have been OK with just a few pounds extra.

The problem was that charges ballooned and the annual review was inadequate to keep pace with the changes. I can look back to 2008 and my quarterly bill varied within the year between £216 and £488, but then from January 2013 the bills were £525, £606 and £616. Any way you look at it, it’s a terrible blow for any OAP – and it’s not going to go down.

My average twelve-month balance used to be over £200 CR. now it has dropped to £160 CR, but this quarter’s bill is £793.30. I think I’ll move to the Med.

Thank you very much for that response, Charlie. I think a ‘dumb’ meter is just right for me – I didn’t even know it was a smart meter until speaking to an E.ON customer services adviser about the rejection of my on-line meter readings!

Paul, if you look at what all European countries are paying for energy, where in 2012 UK was below average, there are a lot of other countries being ripped off too? Link above.

Thank you, Malcolm. I agree. The rip-offs that are being perpetrated in other EU member-states are even more reprehensible. It’s just that Great Britain is in catch-up mode in the rip-off stakes. The Labour governments from 1997 focused on keeping prices low to reduce fuel poverty. To an extent, the energy companies, gradually merging and morphing in to the Big 6, went along with this, but they hollowed out and leveraged their balance sheets to discourage a repeat of Gordon Brown’s ‘windfall’ raid in 1997. The result was insufficient investment in generation capacity, so we’re looking at a rapidly declining reserve margin and the possibility of black-outs in the near term. And gas prices began to increase from the mid 2000s and have oscillated around these higher levels since then.

As I mentioned, this is not just a British problem; it is a European problem. And the most effective solution may be found at that level. Although DG COMP is finally tackling Gazprom’s abuse of market power I remain convinced that it needs to conduct a new energy sector inquiry. Its previous one which led to the Third Energy Package in 2009 has been totally overtaken by events. Many of the behemoths in the EU’s ‘Big 7’ are struggling financially and are angling to position themselves as being ‘too big to fail’ (TBTF). They need to be broken up – similarly to their banking brethern with similar TBTF pretensions. Only DG COMP can force this. And the EU market needs to be more fully integrated to put pressure on the external suppliers.

All this will drive down the price of gas – and could be aided further by doing a free trade deal with the US so that LNG exports from there would be expedited and applying a sensible gas transmission contractual and pricing mechanism for internal market trade. Fixing the EU ETS, with higher, and increasing, prices for CO2 emission allowances, and lower gas prices would allow gas gas to bear these higher emission allowances and drive dirty coal out of electricity generation. Electricity prices might not be lower, and could even be higher, but the requirement to directly subsidise renewable and low carbon energy would be reduced, the markets would function efficiently and clear incentives would exist to invest in a sensible mix of CO2 reducing energies.

Most consumers have little interest in, or understanding of, the policy, regulatory and commercial complexity in the energy sector to which, implicitly, they have given their democratic consent. Many commentators convey an understanding that is only marginally greater; and their limited understanding is often a dangerous thing. Which?, with its excellent reports on the retail and wholesale markets in Britain, is the exception. But it needs to leverage these much more effectively on both the national and the EU stage. Idle chatter here isn’t going to advance things very much.