Energy bill price cap predicted to go to £3850 - 3 x what it was a year ago

[cakeorwine]

There is an AIBU here - but really it's posting for traffic

Russia is having 'maintainance issues' so has reduced the gas flow to Europe to a low level.

Gas prices have soared again.

Price cap prediction - £3850 - about 3 x what it was a year ago.

This is going to affect all of us

www.theguardian.com/money/2022/jul/27/uk-energy-bills-forecast-to-hit-3850-pounds-russia-cuts-gas-supply-further-europe-pipeline

I suppose you can lay the blame at the conservatives for selling everything off in the 80s, people were warned it would lead to this , but nobody listened and even years of a Labour government didn't do anything
either. They all hope it'll be alright I suppose.
They all just wait till it's at crisis point which will be the end of the year I suppose or they just hope the prices will come down naturally and the money credits they give us will be enough

I’m not against it in principle as you say Macron is centre right and managed to do it

I’d be interested in cost though as it would be tax payer money too

The other thing is oil and gas are taxed at higher corporation rates, double, so at least we benefit in that way

It must be hard if you’re a country not getting tax from higher profits but having to import

Remember also, oil companies can offset tax bill inc CT against decommissioning old rigs.

Some companies are paying no tax at all, despite large profits such are their decommission costs.

www.theguardian.com/business/2021/oct/30/shell-and-bp-paid-zero-tax-on-north-sea-gas-and-oil-for-three-years

So its all a bit of win win for the 'industry!

Yes, I read my meter on the 1st every month

I'm on a fixed rate until the end of April next year so have time to try and build up a bit of a surplus. However I just went on my energy company's website and it states that because they are a totally sustainable green electricity provider the price cap does not apply to them.

Does that mean that they could put bills up even more?

The other thing with stopping the sale of gas from NS on the global market is that we don't know how long these price increases will last.

Putin can prosecute the war in Ukraine and/or stop flows of gas for many more years.

We can also do a Norway and use the profits from Gas to have our own wealth fund.

@AndreaC74 possibly better that leaving the costs of decommissioning unfunded and liquidate the subsidiary when the revenues stop flowing and have the costs of decommissioning fall to the Exchequer. The taxation of extractive industries is complex but generally taxes and profits are paid after costs are taken into account. I don't want to defend big energy and expect that costs and overheads and tax is more of a fiction than for most industries but I think I read at least one of the bigger firms gave no dividends to shareholders for the previous three years when energy prices collapsed. Now some industries like big tech can get away with paying no dividends with shareholders happy at the prospect of share price growth but in general for mature industries, shareholders including pension funds expect a dividend and pensioners expect pensions to be paid.

@Zilla1 I was replying to Marsha who talked about NS companies paying 40% CT, which many don't at all.

Decommissioning is as you say a complex area but rigs last a long time and oil extraction has proven to be a highly profitable industry, i'm not entirely sure why the tax payer picks up the bill?

How much are individual pension funds exposed to the oil and gas sector? as far as i could tell, its around 4% of total fund values, which makes sense as pensions are supposed to be very widely spread funds and risk averse.

I don't understand why people run these huge credit balances. No wonder the energy companies are rolling in it 😂

No way I'd let them keep a grand of my money.

You know who would never let this happen?

Jeremy Corbyn.

I am getting annoyed with the £500 a month figure being quoted. Yes - in January when people are using a lot of heating, that could be the cost

But that's January. It is not £6000 a year.

But £3800 is an about £320 per month on average

Can I ask everyone what your price per kw is for electric and gas please?

Mine is 28.45 pkwh for Electric and 7.48 pkwh for Gas

Similar - that's basically about the price cap

I don't get this either! They owed me £400 at the end of March and I made them credit me before we restarted at the higher price.

26.11p per kWh electricity
5.44p per kWh gas

have legislation on profit margins for essential services. How is it fair that rich investors carry on profiteering whilst the consumers are crippled????

We all need to stand together on this... Government are not here for the people, despite what they claim. We need to REFUSE to pay en masse.

Was out in the car just now and a lady on lbc radio was urging people not to cancel their direct debits for the fuel.
It will cause all kinds of grief and will only make matters worse and not for the energy companies.

Electric only here. 27.90p and standing charge is 49.79p

@AndreaC74 sorry, I know the replies make posts and replies about points a bit more complicated,

Regarding the % of oil and gas in pension funds, I couldn't see a definitive answer. I suppose it might depend on the agenda of the person answering though someone in the pension industry could presumably give you a simpler, definitive answer. Different funds have different investment strategies but I've seen 0.4% quoted on the context of a body advocating a windfall tax and trying to counter a 'this will hit pensions argument'.

I've seen absolute figures of $1.4tn of traded company (non state firms) oil and gas assets held by financial institutions and at one time this equated to the total UK pension fund assets though there will be lots of non-pension funds that hold these assets and pension funds hold other shares as well as bonds and alternative assets. This was by someone discussing stranded assets if the economy goes green and half? this $1.4tn becomes worthless. Some were giving these figures to encourage divestment by pension-contributors and some were saying be careful of going green and sabotaging pensions. It seems contested.

I recall hearing that pension funds prioritised dividend-paying stocks which included extractive mature industries pre-COVID though i understand the investment strategies are incredibly more complex than that.

Regarding the subsidy or not, this might depend on perspective. Some will see a clear subsidy, some will see a cost that needs to be considered before profits and tax can result. I think the decommissioning costs for nuclear are so high that these have been taken by the state even for commercial providers though could be wrong.

I suppose the advantage of France retaining state control of EdF is that they can impose a hard cap with a 4% increase then make the numbers work behind the scenes. I have a little sympathy for the smaller UK firms that had to buy in the market rather than having an extractive arm as the price cap led them to having to buy energy in the market at a higher price than the government let them sell it leading to liquidation. I think there was little appetite to take on the loss-making customers of one of the larger failed firms and the government had to run it itself. I know with hindsight they should have hedged the liabilities but it seems unsatisfactory in a commercial market for the government to impose the hit on a small firm doomed to crash.

As PPs have said, Norway created a state fund worth £tns whereas the UK used the revenues for tax cuts and subsidies. Hindsight can be easy.

Standing charge is 48.53p elec and rate 27.36p electric and gas standing charge is 27.22p and 7.28p unit rate. That’s with bulb on their variable

Regarding gas storage and gasometers, I don't know the aggregate capacity but got the impression these were more for local load balancing. On a network scale, the big storage facility called Rough was closed when the government said the £2-3bn refurbishment cost wasn't value for money as we'd always be able to buy from the market. I think in aggregate it only stored 6 days worth of demand so could impact at the margins but doesn't have the scale that Poland has. I understand there's an emergency investment case for Rough being looked at but expect there will be a limit how much capacity can be commissioned for the Winter and regarding consumer prices, the current high prices seem baked in. I think Germany is renting 2-3 LNG terminals to increase its ability to import LNG from Qatar and USA but will struggle to connect this into their network. Generally, such investments in infrastructure take years to decades to be effective. Lots more solar and wood burners being bought in Germany though Solas in the Northern Hemisphere in Winter has issues.

I requested my credit Octopus suggested I reduce my DD so I've done that as well.

Nobody is sitting around in shorts an t-shirt at 20 degrees. That isn't hot, it's normal room temperature. My thermostat is set at 21 degrees in winter and that's with a jumper on and a layer underneath.

If I were you, I would be finding out.

@lightand not necessary at the moment as my energy prices fixed until the end of April 2023. It's definitely not cheaper than my current fix.

I've just been playing around with a spreadsheet.
I have monthly figures for usage and have estimated the costs per KWH based on the predictions in the news.

I have also done some forecasts based on what would happen if our electricity / gas usage went down by say 20%.

It's interesting - now I just need to get DS on board.