Energy and competition

michaels

Its all about transfer pricing - imagine BP pump up the oil in Norway, refine it in Holland and sell it on the forecourt in the UK.

There is plenty of opportunity for the extraction, refining or retailing bit to make a profit depending on where incurs the lowest tax.

In the power generation and supply market it is easy for the suppliers to claim that they make paper thin margins because they pay their generation arms so much for the power the supply arm sells. If the two are decoupled however so the generation arm sells all its output to the highest bidder and the supply arm buys all its output from the cheapest supplier then excess profits in supply can not be hidden in generation. Thus it is not really in SSEs interest to do this but the generation/supply companies know that they will be regulated to do this in the near future anyway so they are trying to sound like good corporate citizens by jumping the gun.

TruckerT

michaels wrote: »

Thus it is not really in SSEs interest to do this but the generation/supply companies know that they will be regulated to do this in the near future anyway so they are trying to sound like good corporate citizens by jumping the gun.

As I suspected, the announcement was political rather than commercial, but why didn't the media ask the question (and demand an answer)?

And, I repeat, who owns the power stations? If Scottish and Southern has power to sell across the UK, then where (precisely) does it come from?

TruckerT

vivatifosi

TruckerT wrote: »

And, I repeat, who owns the power stations? If Scottish and Southern has power to sell across the UK, then where (precisely) does it come from?

There are six big companies selling electricity to the public in the UK, Scottish and Southern; E.On; EDF; Scottish Power; British Gas and NPower. Some of these also own the means of production for what they sell (eg British Gas and Centrica) and very often at least part. British Energy, which was a producer in its own right, became part of EDF in 2009. National Grid runs the UK electricity system (as well as part of the US) and distributes gas to about 1/4 of the country. Then you've got a very long tail of small companies including, for example, wind farms that aren't owned by a major; companies offering business tarifs, etc.

TruckerT

vivatifosi wrote: »

There are six big companies selling electricity to the public in the UK, Scottish and Southern; E.On; EDF; Scottish Power; British Gas and NPower. Some of these also own the means of production for what they sell (eg British Gas and Centrica) and very often at least part. British Energy, which was a producer in its own right, became part of EDF in 2009. National Grid runs the UK electricity system (as well as part of the US) and distributes gas to about 1/4 of the country. Then you've got a very long tail of small companies including, for example, wind farms that aren't owned by a major; companies offering business tarifs, etc.

Many thanks for the info. But I still don't understand what the BBC meant when it reported that Scottish and Southern intend to auction all their power on the open market, rather than offer it to it's retail cusomers - how do they 'own' this power? Where is it generated?

TruckerT

CLAPTON

TruckerT wrote: »

Many thanks for the info. But I still don't understand what the BBC meant when it reported that Scottish and Southern intend to auction all their power on the open market, rather than offer it to it's retail cusomers - how do they 'own' this power? Where is it generated?

TruckerT

tescos, sainsburys, morrison, aldi etc produce no food, so how do they sell the stuff?


power companies may or may not actually produce energy even if they sell it to you (centrica produce very little electricity but they sell a lot)

so there can be companies that produce power but have no actually users (i.e retail customers)

and there can be companies who produce no power but have lots and lots of retail customers

vivatifosi

TruckerT wrote: »

Many thanks for the info. But I still don't understand what the BBC meant when it reported that Scottish and Southern intend to auction all their power on the open market, rather than offer it to it's retail cusomers - how do they 'own' this power? Where is it generated?

TruckerT

Have a read of this article, it answers a lot of your questions better than I can:

http://www.independent.co.uk/news/business/news/energy-giant-sses-price-ploy-just-smoke-and-mirrors-2369595.html

Hoopie1

CLAPTON wrote: »

rephrasing that in English means

when it very very cold, the smart meter will cut you off to 'regulate' supply except for the richest customers of course

Two reasons:
1) The meter is a measuring device, nothing more.
2) More importantly, where demand doesn't meet supply then the grid calls more power stations on, it doesn't switch consumers off. The only time this would not happen is if there was no available supply of any kind.

Why do you think that people will get cut off?

daveyjp

"I thought the Which piece was a bit disingenuous - a phone enquiry was made which of course means some online tariffs are not available "

Stop apologising for the liars. If an online tarriff is cheapest then the caller should be advised that this is the case.

pqrdef

Hoopie1 wrote: »

2) More importantly, where demand doesn't meet supply then the grid calls more power stations on, it doesn't switch consumers off.

But this is the problem. Standby capacity is expensive - same overheads, less volume. Worse, it uses fossil fuels.

We really need to stop thinking that the supply system's job is to meet all the demand we throw at it and not dare to think of making any attempt to limit peak demand by price.

We understand that vegetables are dearer out of season and holiday accommodation is cheaper off-peak. We understand Economy 7. That's the right idea, but with primitive technology. We have smarter technology now.

The supply companies have to buy the energy their customers use at highly variable rates, but then they sell it on at flat rates. This probably isn't sustainable.

michaels

Funny - if I go into an Orange Mobile shop and ask about tariffs I wouldn't expect them to also mention their online tariffs or in Tesco I wouldn't expect the shelf edge price label to mention that there was an internet only special on a particular product and yet energy suppliers should be different?

daveyjp wrote: »

"I thought the Which piece was a bit disingenuous - a phone enquiry was made which of course means some online tariffs are not available "

Stop apologising for the liars. If an online tarriff is cheapest then the caller should be advised that this is the case.