Energy and competition

Hoopie1

pqrdef wrote: »

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.

This isn't the only problem, there are lots of problems.
1) A lack of clear policy in this country, which has stopped significant new build of capacity for 15-20 years.
2) An industry structure that was based on having various project financed plants and new suppliers, which has simply moved back to an oligopoly after Enron/TXU Europe/the entire generation sector's collapse when wholesale prices bottomed out a decade ago.
3) The lack of liquidity in the UK electricity wholesale market and the ability of the dominant players to maintain this at a price that suits their needs.
4) There is a political element to energy - it may in some sense be good to have very high prices to limit demand at certain times, but those times are likely to be when it is very cold and people can get ill/die as a result - no government wants that on their record. It is different from holidays, as these are an entirely discretionary area of spending, and it is different from a vegetable out of season, because you can substitute it for one that is in season. There aren't lots of obvious substitutes for energy and it is partly an area where spending isn't discretionary.

michaels

Plus the environment deal - Greens are very worried that Shale Gas will stop prices rising to levels where renewables make economic sense, Personally I think underpricing energy (such as the reduced rate of VAT) actually discourages energy efficiency measures. Energy should be correctly priced and more generous benefits provided if required.

Hoopie1

michaels wrote: »

Plus the environment deal - Greens are very worried that Shale Gas will stop prices rising to levels where renewables make economic sense, Personally I think underpricing energy (such as the reduced rate of VAT) actually discourages energy efficiency measures. Energy should be correctly priced and more generous benefits provided if required.

Indeed, and a lot of this comes back to policy. Greens will argue that there simply hasn't been the research done (due to lack of funds) to get green energy to a point where it is better and a real alternative. I don't know if they are right or not, but as things stand green energy simply isn't a real alternative, and from a carbon dioxide perspective (behind nuclear) shale gas is the best option.

DervProf

shortchanged wrote: »

The other problem is that the energy suppliers (quite likely deliberately) make changing companies quite difficult.

This keeps a fear factor in the market which is particularly strong for the elderly. My father being a prime example. The number of times I have told him to change supplier only to get the same response 'It's all too much hassle.'

Hassle ?

I'm currently changing supplier for the second time in 2 years. The last change was a doddle. Seems like the current switch is going to be just as easy. It's obviously easier with an internet at your disposal.

pqrdef

Hoopie1 wrote: »

There aren't lots of obvious substitutes for energy and it is partly an area where spending isn't discretionary.

There are ways to use less energy, or cheaper energy, given enough economic incentive. If we can charge electric cars overnight, we can meet a chunk of our daytime energy needs from off-peak electricity. But without the pricing structure, there's no point.

But if we think it's right that some people should live on the edge of poverty, we can't complain if they try to economise. They probably won't eat healthily either. We may have to pay their bills with Heating Benefit the same as we pay their rent with Housing Benefit.

shortchanged_2

DervProf wrote: »

Hassle ?

I'm currently changing supplier for the second time in 2 years. The last change was a doddle. Seems like the current switch is going to be just as easy. It's obviously easier with an internet at your disposal.

I know dervprof, I have changed several times myself. The point I was making is that the fear factor is prevalent for the elderly who are often afraid of change.

pqrdef

Hoopie1 wrote: »

Indeed, and a lot of this comes back to policy. Greens will argue that there simply hasn't been the research done (due to lack of funds) to get green energy to a point where it is better and a real alternative. I don't know if they are right or not, but as things stand green energy simply isn't a real alternative, and from a carbon dioxide perspective (behind nuclear) shale gas is the best option.

By some miracle, Whitehall seems to have got the message that it has a responsibility for energy security. And nothing is less secure than the price of oil. In spite of coal and North Sea oil, we import too much energy already. Wind may be crap, but it may turn out one day to have been amazingly far-sighted.

pqrdef

DervProf wrote: »

Hassle ?

I'm currently changing supplier for the second time in 2 years. The last change was a doddle. Seems like the current switch is going to be just as easy. It's obviously easier with an internet at your disposal.

This could become just another introductory niceness game, where it hardly matters who you switch to, so long as you keep switching. And the cheapest rates go with the longest lock-ins, so basically we're all just guessing.

I figure I've got about 15 things already that I ought to be switching at least once a year. And Vickers wants us all switching our current accounts continually as well. Maybe we'll have to sign up to switching services to do all the switching for us, so we won't know who we're buying anything from.

Then we'll only have to compare the switching services.

sheffield_lad

£125 profit per customer per year so 34p per day, do posters feel this is high? I bet if you poled customers/posters before this morning most would think that profit on an average £1350 per year bill would be higher than what amounts to less than 10% ask Tesco's how much they make on sausage's lol.

This actually makes me realise that the days of cheap energy are over it has NOTHING to do with the Dmail headlines of rip off britain, and fat cats it's the cost of fuel and sharing it with other emerging markets.

Come on be honest how many thought that energy companies made far more than that?

pqrdef

Not sure turnover is the right thing to measure profit against, but Tesco makes £3.5bn on £60bn, so nowhere near 10%.

Their markups on wholesale are scary, but they've got huge overheads. Considering the price of their finest chorizo and Dijon mustard sausages, it costs them (or rather you) a lot of money to create that fleeting moment where you unaccountably pick the things up and put them in your trolley.