Gas charging

Sol00

I was always under the impression that the whole of the UK paid the same rate for gas, depending on what company you're with. For example, a Scottish Power customer in Glasgow would pay the same as one in London. However, when I was comparing tariffs with different energy companies, I noticed that Scottish Power charge according to area, the same as electricity. I know eDF and Ebico don't, so why don't they all?

Consumerist

Good question.

Historically, all utilities, as far as I am aware, have charged according to the area you live in. Assuming energy is purchased wholesale by the national companies, the variation from area to area presumably reflects different overheads, or management efficiency, from area to area. This is only a guess, of course.

macman

Gas is produced much more centrally, there are I think only 2 or 3 import points on the East Coast from the North Sea fields?
Electricity is generated in power stations located all over the UK.
Secondly, gas can be stored, where as electricity has to be produced at the precise time of demand.
So two very different things in terms of distribution and storage.

Premier_2

Sol00 wrote: »

I was always under the impression that the whole of the UK paid the same rate for gas, depending on what company you're with. For example, a Scottish Power customer in Glasgow would pay the same as one in London. However, when I was comparing tariffs with different energy companies, I noticed that Scottish Power charge according to area, the same as electricity. I know eDF and Ebico don't, so why don't they all?

From the ebico website:

Until recently, National Grid owned all the gas pipes in Great Britain. Even though the cost of looking after these pipes varied between different parts of Britain, National Grid were able to even out these differences across the whole of their network. As a result, the difference in price that a gas supply company was charged for transporting gas from the North Sea to a customer in, say, Wiltshire was little more than would be charged for transporting it to a customer in Scotland. Gas supply companies generally averaged out these relatively modest price differences so that customers don’t see them. However, recently National Grid sold some of the regional gas distribution systems to independent companies.

The result of this the ability of National Grid to do this evening-out has reduced and regional variations are increasing. It is likely that more supply companies will soon start charging different prices for gas in different parts of the country. This is not, currently, the case with EquiGas. National Grid also owns the high voltage supergrid that connects all the large power stations in England and Wales (Scottish Power and Scottish and Southern Energy own them in Scotland).

But it does not own the lower voltage wires that bring electricity from the supergrid to your door. Several different companies own these regional ‘distribution’ companies, and each of these regional companies face different costs. In Scotland, Wales and the Southwest, for example, the mainly rural environment means connecting many remote villages with long lengths of inefficient low voltage overhead wires. The distribution of these companies’ ‘assets’ (wires, poles, transformers, etc) across remote rural areas means that maintenance costs are higher.

Because the companies that own these regional distribution companies are independent, there can be no ‘smoothing’ of costs. As a result, a supply company bringing power to a customer’s door in Devon or Wales will be charged significantly more than for bringing power to a house in Birmingham – where the ‘assets’ are much closer together and cheaper to maintain.

Sol00

Thanks for your replies. So it looks as though there'll be more variation in gas, as there is with electricity currently. Scottish Power must be one of the companies that charge by location, which doesn't surprise me as their tariffs always seem to be more expensive.