MSE News: Energy prices could jump by 60% by 2016

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This is the discussion thread for the following MSE News Story:

"The cost of our energy bills could soar to £2,000 a year for a typical family because of the volatility of the energy market and the huge investment required ...."

Read the full story:

Energy prices could jump by 60%

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  • moonrakerz
    moonrakerz Posts: 8,650 Forumite
    First Anniversary Combo Breaker First Post
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    Premier - the post above is Spam !

    Actually, a 60% increase over the next 7 years would do me just fine, looking back at the last 4 years !
  • Gazpablo
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    Yes you might accept a 60% increase in energy costs over the next 7 years but what about pensioners, people on low incomes and others who need protection from exploitation and rescuing from politicians of all persuasions, who have sold us down the river with their woeful lack of planning for future energy supplies?
  • Ken68
    Ken68 Posts: 6,825 Forumite
    First Anniversary First Post Energy Saving Champion Home Insurance Hacker!
    edited 19 October 2009 at 9:10AM
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    It needs a multi pronged effort.
    Super dooper insulation inside and out, and mandatory for new builds, air locks for doors, and things such as heat exchangers and GSHP and ASHP. Plus heated clothing.
    The government want to keep the taxes flowing in, and the energy providers want the profit, so no incentive to go all out.
  • moonrakerz
    moonrakerz Posts: 8,650 Forumite
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    Gazpablo wrote: »
    Yes you might accept a 60% increase in energy costs over the next 7 years but what about pensioners, people on low incomes and others who need protection from exploitation and rescuing from politicians of all persuasions, who have sold us down the river with their woeful lack of planning for future energy supplies?

    Joke! Geddit ?
  • Snakeeyes21
    Snakeeyes21 Posts: 2,527 Forumite
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    and how is this news? do you think prices are going to stay static for the next 7 years? 60% over 7 years isnt exacally shocking.
  • dopester
    dopester Posts: 4,890 Forumite
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    Electricity and gas prices will crash 60% in my opinion.
  • Cardew
    Cardew Posts: 29,036 Forumite
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    dopester wrote: »
    Electricity and gas prices will crash 60% in my opinion.

    If the information BG publish is correct:

    For electricity the price of fuel accounts for 53% of our total bill.(24% delivery to your home, 13% operating costs, 5% VAT, 3% Government obligation for the environment, 2% profit)

    For gas the price of fuel accounts for 44% of our total bill.(20% tax for gas production, 19% delivery to your home, 8% operating costs, 5% VAT, 2% to Government obligation for the environment environment, 2% profit)

    No doubt all the 'BIG 6' will have statistics in the same ball park.

    So where will the 60% reduction come?
  • dopester
    dopester Posts: 4,890 Forumite
    edited 19 October 2009 at 9:49AM
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    Cardew wrote: »
    So where will the 60% reduction come?

    Where do you think individuals and families are going to find the money for 60% rise leading into 2016?

    Increasing numbers of people can't afford the current prices. They are financially stretched and tapped out already.

    How much had electricity and gas demand fallen from residential homes and industry and closing businesses since 2007, and projected to fall further still?

    It isn't like significant payrises are on the 7 year horizon for the majority. It is mostly all increasing numbers of pay-freezes, pay-cuts, or job losses. 60% increase and very few people would be able to afford it, on top of all their other bills.

    I'll be using my kelly-kettle to boil water and my stone hot-water bottle for warmth in bed and around the house which gives off great heat for 12 hours.

    Putting the squeeze on with rises too much also hurts their profits. More so than balancing what can be generally afforded.

    Yes. Reductions in wholesale prices of the fuel, but the remainder of the costs involved are not "permanently fixed". They can be reduced. They can be slashed by pay-cuts and other efficiency measures. The government's tax-take falls on lower wholesale prices and residential pricing. The cost of a 20% tax towards gas production falls inline with prices charged.
  • dopester
    dopester Posts: 4,890 Forumite
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    To give an alternative view to 60% price rises, here is a London Evening Standard news article from just a few days ago... which I don't think is bearish enough by a long way.

    2016 and prices will be 60% higher? It would be an amazing market manipulating feat to keep prices at today's prices levels!
    Gas prices ‘face collapse’

    15.10.09


    UK wholesale energy and gas prices are on the verge of collapse, with major negative ramifications for Britain's leading supply companies.

    Those are the headlines of explosive research by investment bank Morgan Stanley, which turns on its head claims by the energy industry that household bills will stay at near all-time highs.

    In a research note, Morgan Stanley's Bobby Chada says: “Lower demand with little sign of any recovery means UK gas and power markets are heavily oversupplied.”

    Chada says “the change in supply-demand balance is stark”, as National Grid has revised down its peak power demand forecasts by 10% and claims peak demand in 2015/16 will be about 7% below the 2007/8 out-turn level.

    Morgan Stanley predicts the energy market is on the verge of “contango collapse”. Contango is futures market trading jargon for an upward-sloping forward curve where prices for future delivery are higher than for immediate delivery and those in succeeding months are progressively dearer.

    “Given the deterioration in the supply-demand balance over the next 12 to 24 months, the current forward curves — which are universally in steep contango — appear optimistic. The risk is of contango collapse.”

    That, says Chada, will pile the “political and regulatory pressure” on Britain's big six supply companies to cut prices not only during the peak demand months of the winter but also in the run up to the General Election.

    Suppliers have been arguing they can't cut prices because they bought their current supplies last year when the wholesale price was high.
    http://www.thisislondon.co.uk/standard-business/article-23756777-gas-prices-face-collapse.do
  • Spearmint
    Spearmint Posts: 22,969 Forumite
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    MSE_Guy wrote: »
    "The cost of our energy bills could soar to £2,000 a year for a typical family because of the volatility of the energy market and the huge investment required ...."

    we pay nearly this now for a years worth of energy bills so dread to think what they will be then
    "I am an insomniac, so I was really excited when I was able to get a full night's sleep. I said to a friend, 'Just keep your fingers crossed that I get lucky again tonight!' Realizing what I said, I tried to correct it and said, 'No, I mean, I just hope that I get some tonight!' After that, I decided to shut up."
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