MSE News: Guest Comment - Why are energy prices increasing?

edited 30 November -1 at 1:00AM in Energy
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  • bengasmanbengasman Forumite
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    zeupater wrote: »
    ..The way I see it is that the supplier has entered a contract to supply energy to the grid for you to use which is sourced from renewable sources
    That's the way they INTEND you to see it, which does not necessarily mean it is accurate.
    Careful analysis of the small print in the contract can correct any misunderstandings on your part.
  • ConsumeristConsumerist Forumite
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    bengasman wrote: »
    As that is technically impossible in this country, I suspect that BG have used their popular cop out "where practicable" somewhere in the contract. That in turn would mean that they can source pretty much the cheapest form, as long as they make a token effort to justify the extra high price they charge you.
    If there is no distinction between the sources of energy used then why should there be a distinct tariff for consumers of green energy? This seems to me to be obtaining money by deception - i.e. fraud.
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
  • edited 19 July 2011 at 10:59AM
    grahamc2003grahamc2003 Forumite
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    edited 19 July 2011 at 10:59AM
    kitbarker wrote: »
    I'm on a green tarif with British Gas. All of my electricity is supposed to be generated via renewables. I pay a premium for this.

    So when the recent increases due to rising cost of oil and gas were announced I was very surprised to see my renewable energy costs increase the same as everyone else's.

    I've asked British Gas to explain why my costs have increased as renewable energy is not dependant on oil and gas prices anywhere near as much as that from fossil fuel powered stations.

    So far I've had no response at all from them other than a confirmation that prices are increasing because of the cost of oil and gas.

    I can't think of any reason why renewable costs should increase with oil and gas, but am I missing something? Or, as many suspect, are energy companies just raising prices as much as they can because they can?

    I think it's a very good point. We are often told by those promoting wind and waves that the power is somehow 'free'. Of course, the reality is different.

    Although renewable power probably hasn't increased much in price (and certainly less than gas), the price of renewables is something like 20 to 30 times the cost of fossil fuels. So if you were to pay the full cost of the fuel and you wanted your fuel to be 100% renewable, then your bills should be 20 or 30 times those who don't mind fossil fueled electricity.

    If you want a concrete example - the suppliers pay around 96p/kwh for home generated solar power (they have an obligation to do so).
    The fit and import is about 47p/kwh generated, and the supplier gets an estimated 50% of that).

    They pay something like an average of 2 or 3p for power in the marketplace from conventional generators.

    These 'green' tariffs are pretty much a con if you ask me, and allow suppliers to increase profits by marketting tariffs which make no practical difference either to the supply or delivery of the electricity. The industry already has an obligation to source a certain percentage of it's power from renewables (at an extremely high cost as it happens), and even if no one signed on to a 'green' tariff, then they would still take exactly the same percentage of renewables, and you would still get the same electricity down your wires.
  • bengasmanbengasman Forumite
    601 Posts
    If there is no distinction between the sources of energy used
    There is a distinction. What is not really there, is a GUARANTEE, but in stead it is often an INTENTION to reach a certain goal.

    Contracts written up by big companies like BG are invariably legally correct, and the chances of ever getting them in court for fraud, let alone win the case, are virtually nil.

    I've heard many similar misconceptions from people that had "annual service" contracts or central heating breakdown cover, and were under the mistaken impression that BG guaranteed to solve the problem within 24 hours come hell or high water.
    All that is needed to cover themselves, is put little items like "when possible" or "where practicable" or insert the word "endeavor" before the promise, somewhere in the pages full of legalese.
    As we all know, most people don't read the contract they sign, and most of those that do read it, don't really understand it.
  • ConsumeristConsumerist Forumite
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    bengasman wrote: »
    Contracts written up by big companies like BG are invariably legally correct, and the chances of ever getting them in court for fraud, let alone win the case, are virtually nil.

    I agree that, from a legal standpoint, BG is going to be bullet-proof but the issue here is: why are those customers who are charged a premium for their (green) energy being treated exactly the same as those who are not?
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
  • bengasmanbengasman Forumite
    601 Posts
    ..why are those customers who are charged a premium for their (green) energy being treated exactly the same as those who are not?
    Because those that still believe in the anthropogenic climate change malarkey are even more gullible than the average BG punter, and therefore willing victims for profiteering.
  • ConsumeristConsumerist Forumite
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    bengasman wrote: »
    Because those that still believe in the anthropogenic climate change malarkey are even more gullible than the average BG punter, and therefore willing victims for profiteering.
    Given BG's attitude to kitbarker, I'm inclined to agree.
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
  • SterlingSterling Forumite
    177 Posts
    Stop me if I’m wrong, but aren’t the wholesale prices of oil and gas quoted in US dollars? So when the UK pound falls against the US dollar, the same amount costs us more, even if the dollar price remains the same.

    Since the banking crisis, and subsequent “quantitative easing” by the Bank of England, the pound has dropped by around a quarter of its value against the US dollar. That would result in a one-third increase in the wholesale prices as measured in UK pounds. It’s just a thought.
  • zeupaterzeupater Forumite
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    bengasman wrote: »
    That's the way they INTEND you to see it, which does not necessarily mean it is accurate.
    Careful analysis of the small print in the contract can correct any misunderstandings on your part.
    Hi

    I agree with your sentiment, however, I've just been through the BG T&Cs for their EnergyShare offering and can see no clause which specifically reinforces the point you raise. As there is no specific clause the actual terms regarding a counter position on supply source has not been made fully clear to the consumer which leaves the offer open to interpretation from the information provided in the offer, which is that an impression has been given that supply under this scheme will result in the supplier matching "every unit of electricity a tariff member uses by supplying the national grid with the same amount of electricity from 100% British renewable sources"

    Of course, the supplier would mount a defence based on semantics, however, that's exactly where OFGEM, the OFT, the ASA, Consumer Direct, Trading Standards, your MP, Old Uncle Tom Cobley and all derive their Raison d'être from ........

    I'm quite sure that the recent obligations imposed by OFGEM on energy suppliers through modification of their supply licenses to include improvements to "the conduct of their sales and marketing activities", to provide consumers with "better information regarding the terms and conditions of their contracts" and to "Improve the transparency of their supply and generation activities" would either have a bearing on how the position regarding this issue should be judged, or how the continued existance of OFGEM themselves, in their present form, should be judged ....

    HTH
    Z
    "We are what we repeatedly do, excellence then is not an act, but a habit. " ...... Aristotle
    B)
  • bengasmanbengasman Forumite
    601 Posts
    zeupater wrote: »
    Hi

    I agree with your sentiment, however, I've just been through the BG T&Cs for their EnergyShare offering and can see no clause which specifically reinforces the point you raise. ...
    Of course there isn't such a clause; the whole point is to emphasize the "promise" of sustainable energy, and repeat it as often as is possible without looking like brainwashing. To make it LEGAL, they only need to include ONE tiny little bit of small print ANYWHERE in the document, and they can make it as unobtrusive as the law permits.

    If you fancy digging deep, you need to spell out the entire contract, including revisions, additions, and referrals, and look for 2 simple words: " if possible" or "where practicable"
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