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Energy prices

3 replies

KenAdams · 02/08/2017 16:45

To wonder WTF is going on with energy prices?

If wholesale prices are going down why have consumer energy prices gone up? British Gas are a good example of this.

OP posts:
SpartacusSaiman · 02/08/2017 16:49

Its been quite a while since british gas put their prices up. Its currently their electric that has gone up.

They are still cheaper than the majoroty of the market, for standard customers.

The impact of ofgem setting pay as you go prices has impacted profits. Running costs go up, not just the price of the product.

At the end of the day they are a company thats there to make money. I have never been 100% convinced that energy should have ever gone private.

CadnoDrwg · 02/08/2017 17:19

You need to read articles behind the popular press to see what's happening. There are industry news agencies and Reuters who cover the business side of things (rather than the consumer side which is often hysterical in tone).

For example this year Centrica announced it was closing Rough. This is a storage facility that supplied 10% of the gas used in Britain last winter.

Coal fired power stations are being decommissioned ahead of the deadline. Leaving us more dependent on gas fired stations and nuclear for electricity. Renewable still isn't big enough to make a sizeable impact on the calculations they make.

Both increase the risk for the coming winter. To offset this risk the big six will purchase massive amounts of externally sourced gas in advance to secure supply (e.g. a promise to buy XX billion cubic metres of gas for £XX billion over 6 months). They get abused for it. The smaller suppliers aren't obliged to do this as their customer base is too small to justify (which is also how their prices are kept low). It's a risky tactic though. Many small suppliers have been required to hand their operating assets over to one of the big six because they can't fulfil their licence obligations by Ofgem over the years.

Both are because of government. You can run coal fired power stations as a 'clean' business but the government aren't interested. The government also aren't interested in making it economically viable for companies to maintain and invest in offshore operations meaning the North Sea reserves will soon be priced out of production leaving us more vulnerable to foreign supply (the cynic in me sees this as part of a bigger picture where influential politicians benefit from kickbacks from Russian Oligarchs).

It all has an impact on prices. Don't get me wrong, all of the big six make massive profit but a substational amount of that is reinvested into the infrastructure for the country. Dividends are necessary because it supports pension schemes (most have energy in their portfolio) and attracts investment externally. The government can't afford to maintain the energy infrastructure so there has to be other ways of doing it.

It's not a perfect system but it is a system that doesn't result in rolling blackouts and there is choice out there for people as to who they give their cash to (British based vs foreign, ethical vs cheaper, onshore contact centres vs offshore contact centres etc).

Chattymummyhere · 02/08/2017 17:26

It's about time all houses where fitted with solar panels/solar tiles and a couple of those water heating ones maybe a mini wind turbine the ones that can be attached to the side of the house. But big business won't like that less money and what not.

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