MSE News: David Cameron 'should fix broken energy market'

Former_MSE_Helen

"As millions face a bitter winter of higher energy bills, Which? has demanded the Prime Minister acts ..."

Read the full story:

David Cameron 'should fix broken energy market'

yangptangkipperbang

There is one quick, simple way to make the energy market truly competitive.
The power companies should be forced (by Law) to sell their products in the same way as every other commodity - by simple unit price. No standing charge - no dual rate - just x pence per kWh.

Petrol is sold by the litre - full stop ! If it was sold in the same manner as energy:
1. You might be charged two different prices, for one tankful of petrol. The first 20 litres at a higher price then the rest at a lower price.
2. OR - you might pay the same price per litre for the whole tankful, but the garage might charge you for "parking" whilst you fill up.
3. You won't actually be charged the true cost of your tankful (per litre) until after you have completed your journey.
What a farce !

Under the present system you only know what your energy bill is going to be (per kWh) after the event. Imagine going to Tesco and being told that they wouldn't tell you the price of your bag of spuds until you have eaten them.

Bark01

yangptangkipperbang wrote: »

There is one quick, simple way to make the energy market truly competitive.
The power companies should be forced (by Law) to sell their products in the same way as every other commodity - by simple unit price. No standing charge - no dual rate - just x pence per kWh.

Petrol is sold by the litre - full stop ! If it was sold in the same manner as energy:
1. You might be charged two different prices, for one tankful of petrol. The first 20 litres at a higher price then the rest at a lower price.
2. OR - you might pay the same price per litre for the whole tankful, but the garage might charge you for "parking" whilst you fill up.
3. You won't actually be charged the true cost of your tankful (per litre) until after you have completed your journey.
What a farce !

Under the present system you only know what your energy bill is going to be (per kWh) after the event. Imagine going to Tesco and being told that they wouldn't tell you the price of your bag of spuds until you have eaten them.

The cost models are not comparable, you need a standing charge to cover the fixed costs that are applicable to each customer regardless of consumption. There are already moves to standardise the standing charge. If you want to use Tesco as a comparison they make 7% margin the most profitable Energy suppliers make 3-4% margin from their residential supply business.

Energy Suppliers have to give customers 30 days notice of any changes that will negatively impact them and then they have the option of rejecting the increases for a number of weeks whilst they transfer to another supplier. So no they don't tell you about increases after you have used the product.

jobdone1

Government response
However, the Government is rejecting Which?'s call for a review of energy prices.

Is this for real" the above statement from the goverment. T

Which? points to an energy summit a year ago involving politicians, suppliers, the regulator and consumer groups including MoneySavingExpert.com. There, the Government said it was "making energy companies competitive".

I just give up the goverment are out of control out of touch can't organise a p*ss up in a brewery. So they have failed to produce anything out of lavish lunches over the year and hear we are as consumers once again being held to ransom with massive price increases. And look at the above qoute from the goverment we are making energy companies more competetitive :mad:. Do they think we are all thick. They should all be ashamed of themselves people are dying and having to make choices of heat or eat we are not a third world country for goodness sake but the way things are going well i will let you make your own assumptions on that.

WestonDave

This is low denominator populist nonsense from both Which and MSE. We cannot have gas or electricity prices which are totally isolated from global prices so if global market prices rise then our prices will rise. They will rise because as other countries develop and want technology like heating and electricity, demand rises and makes the comodity more expensive.

http://www.energy.eu/

This site is very illuminating (bear in mind the prices are in Euros) so the £ prices are about 80% of those.

A UK consumer is paying about 3.3p per Kwh for domestic gas (including tax) with the only places having better prices being Latvia and Romania (which isn't that much cheaper and probably comes from them not having any green commitments adding to prices).

Similarly on electricity - we are paying 11p per Kwh with only a few Eastern European countries and Greece having cheaper prices.

So what to people expect - taxpayer subsidy of energy? Its pretty clear that our energy prices are already competitive! We probably pay a bit less than many countries as we get some of our gas from the North Sea which cuts down transportation costs compared to those countries getting all their gas piped across from Russia. The price for electricity in Denmark is nearly double our price!

There is a lot of populist noise being made about energy prices but when our prices are already near the lowest in Europe its hard to see what can be done to make them lower. If there is an issue about affordability then its probably the income end of the equation that is the issue not the energy price. We also need to get used to the fact that as global demand for energy continues to grow, energy will become more and more expensive so we need to find ways to use less of it. How many people complaining about high fuel bills are living in homes with little or no insulation?

grahamc2003

The government force suppliers to act at tax collectors for many indirect taxes the government lumps onto our bills. Mainly 'green' costs, subsidies for very expensive wind generation for example, including tens of billions for grid infrastructure upgrades for off-shore windfarms. The actual energy cost now in our electricity bills goes lower each year. The margins are therefore higher than 3 or 4%, which is on turnover (comprising indirect taxation plus energy costs) - they are higher on just the energy turnover aspects.

Paul_Herring

Oh great - more demands for government intervention.

Perhaps if we had less government intervention the prices would be cheaper. I'm mainly thinking of all the green taxes that are currently rolled up into the bills at the moment.

jobdone1

gread creates a vicious circle.

higher energy --- shops need electric higher costs past on to goods and services to us

farmers need energy --- again higher costs past on

So the billion in profits made by the greed of the rich causess suffering to millions

rogerblack

A poster above raised the issue of single price per kWh, to have someone raise the 'but we need a standing charge for fixed costs'.
Do we?


There is clearly a rationale for not making low users pay proportionately more for their energy.
This is slightly unfair to high users.
But it's not like Ocado deliveries.
People won't get more deliveries because the cost of the delivery is rolled into the price.

MillicentBystander

WestonDave wrote: »

This is low denominator populist nonsense from both Which and MSE. We cannot have gas or electricity prices which are totally isolated from global prices so if global market prices rise then our prices will rise. They will rise because as other countries develop and want technology like heating and electricity, demand rises and makes the comodity more expensive.

http://www.energy.eu/

This site is very illuminating (bear in mind the prices are in Euros) so the £ prices are about 80% of those.

A UK consumer is paying about 3.3p per Kwh for domestic gas (including tax) with the only places having better prices being Latvia and Romania (which isn't that much cheaper and probably comes from them not having any green commitments adding to prices).

Similarly on electricity - we are paying 11p per Kwh with only a few Eastern European countries and Greece having cheaper prices.

So what to people expect - taxpayer subsidy of energy? Its pretty clear that our energy prices are already competitive! We probably pay a bit less than many countries as we get some of our gas from the North Sea which cuts down transportation costs compared to those countries getting all their gas piped across from Russia. The price for electricity in Denmark is nearly double our price!

There is a lot of populist noise being made about energy prices but when our prices are already near the lowest in Europe its hard to see what can be done to make them lower. If there is an issue about affordability then its probably the income end of the equation that is the issue not the energy price. We also need to get used to the fact that as global demand for energy continues to grow, energy will become more and more expensive so we need to find ways to use less of it. How many people complaining about high fuel bills are living in homes with little or no insulation?

Just can't be bothered to debunk this total nonsense argument again so here's the link to the thread

https://forums.moneysavingexpert.com/discussion/4235837

rogerblack

On another topic - feed in tarrifs - scrap them.

Were they important in setting up a solar installer market in the UK - yes.
Are they relevant to today - not so much.

The price of electricity today is comparable with the Price paid by the feed in tariff.
FITs also have perverse incentives, that are getting worse over time.
The FIT scheme was designed to pay subsidies to reduce carbon generation.
It was not designed to subsidise people who are able to install panels, though this is a sode-effect.

It is in the householders interest to (for example) run their electric water heater off solar-pv, as it's cheaper for them, they still get paid the FIT for units generates and used internally, even if those units displace gas.
There is some small energy saving locally by doing so, and hence carbon saving.
But by not exporting to the grid, as the FIT system was designed around, the cost per kilo of co2 saved is comparatively small, and the effective cost of the FIT scheme more than doubles.
This will get worse over time, as installers see fitting devices to aid this as easy additional profit, and the devices become more available.

I would argue for either: adjust the scheme so locally used units get only a small subsidy, reflecting the relative carbon saving (so perhaps 1.5p/kWh), with the remaining at the normal rate.

Or more simply, eliminate FIT entirely, and allow net metering, where your electricity meter simply runs backwards.

This would have the advantage of simplifying the install tarrif, and allow installations where they are now prohibited by FIT.