MSE News: We'll freeze energy prices, Ed Miliband tells Labour conference

JezR

Cardew wrote: »

The tables show prices back to the period when gas and electricity was opened up to competition in the late 1990's. It is interesting to see how much prices dropped in the first years after privatisation. I wonder what would happen if the industry was re-nationalised

Incidentally electricity prices havn't even doubled(in cash terms let alone real terms) since 1997. Gas has!

Examination of price components show that the main reasons prices dropped from 1995-2002 related to fossil fuel prices, and the removal of the fossil fuel levy that supported the wholesale price of nuclear power in the early days of privatisation. Very little of this is clearly attributed to competition. Conversely rises since can largely be attributed to increase in fossil fuel prices and government adding back in levies to support particular generating technologies rather than abuse of market dominance.

People warned the government around 2000 of the consequences allowing vertical integration (even encouraging it through the new trading arrangements), but this fell on deaf ears. This was at least in part though because consolidation was happening Europe-wide and not a UK phenomena.

SuiDreams

In my opinion (maybe someone with time on there hands could research and check), but it "feels" like the highest jumps in energy prices have only been since we have started having these harsher winters. probably due to increased demand due to the colder weather. If this is true, what will happen with energy prices particularly gas, if winters returne to being milder and demand drops? Will we see a drop in prices or a slow down in the price increases?

samizdat

undaunted wrote: »

samizdat wrote: »

Two issues have been conflated in the article.

On the one hand, there is a need to encourage investment in new electricity generating capacity, especially low-carbon/renewable capacity. Much of this would not be undertaken in a free market, because the cost to produce electricity from renewable sources is higher than from sources such as coal and gas. In order to ensure this investment takes place, it is necessary for governments to subsidise it by for example promising an enhanced and/or stable price.

QUOTE]

Do you believe the average customer cares about the carbon / renewable issues more than the price they pay? Governments, Greenpeace & the like may have a bee in their bonnets about it but I don't believe most customers give it a thought really - they are more worried about their day to day lives & the cost of living versus their incomes I would suggest

I'm not sure. I think, as a society, we need to care about the environment, and it is in our best interests.

I am less convinced about the political response. There has been huge dithering over the question of nuclear power, a seemingly excessive zeal for wind power, and bewildering changes in subsidies for solar energy.

I do think we need to ensure a diversified supply, i.e. not one wholly reliant on imported gas. However, maybe fracking will provide us with UK gas in future.

DragonQ

Cardew wrote: »

Whilst I agree that we don't know what is going on, that statement about prices doubling in a few years could come straight out of the Daily mail.

Read this National statistics publication dated Sept 2013 for actual figures. Tables 2.2.1 onwards

https://www.gov.uk/government/publications/quarterly-energy-prices-september-2013

Domestic electricity prices rose approx 32%(18% in real terms) between 2007 and 2012

Gas over the same period 58%(40% in real terms)

The tables show prices back to the period when gas and electricity was opened up to competition in the late 1990's. It is interesting to see how much prices dropped in the first years after privatisation. I wonder what would happen if the industry was re-nationalised

Incidentally electricity prices havn't even doubled(in cash terms let alone real terms) since 1997. Gas has!

Electricity is easy to deal with in the long-term compared to gas though - just build more renewable and nuclear (fission now, later fusion) infrastructure. Gas is gas, once it's gone it's gone, unless there can be some kind of synthetic material that performs similarly. Same with oil but at least there are multiple fledgling technologies to replace petrol/diesel in cars - what will happen once the gas goes? AFAIK, gas central heating is the most cost-effective method right now and is the predominant heating method for homes.

samizdat

undaunted wrote: »

The banks shareholders should have bailed them out not the tax payer - that's how capitalism is supposed to work. Otherwise we may as well have nationalised the banks

Actually, it was the bondholders, not the shareholders, who should have bailed them out.

Admittedly, the shareholders were allowed to keep a small stake in many of the banks, whereas they should have been completely wiped out, but they did lose almost their entire investment.

The bondholders got away scot-free. The awkward fact was that many bank bonds were held by other banks, which would have resulted in the bankruptcy of the banking system across the entire World. This could have been tried - e.g. we could have just nationalised all the banks, but there is no doubt it would have been an enormous task to resolve all of the chaos that would have resulted from this.

Also, many people (and companies) had substantial portions of their wealth invested in, guaranteed by, or in the custody of banks. Many would have lost most of their assets, and many more would have lost access to them for a period of time, which would have delivered a huge economic shock to the global economy. Workers would not have been paid, etc.

A decision was made that it was better to prop things up, especially after the collapse of Lehman Brothers showed the authorities how difficult it could be to sort out just one insolvent global bank.

Cardew

DragonQ wrote: »

Electricity is easy to deal with in the long-term compared to gas though - just build more renewable and nuclear (fission now, later fusion) infrastructure. Gas is gas, once it's gone it's gone, unless there can be some kind of synthetic material that performs similarly. Same with oil but at least there are multiple fledgling technologies to replace petrol/diesel in cars - what will happen once the gas goes? AFAIK, gas central heating is the most cost-effective method right now and is the predominant heating method for homes.

It is estimated that there are huge untapped reserves in many places in the world - just very expensive to extract.

Look at North America where fracking has caused gas prices to plummet; they are capable of exporting gas in huge quantities. In the longer term the UK will also get gas from fracking and it will be 'too cheap to bother metering';) (with apologies to the early Nuclear power station enthusiasts)

DragonQ

Well hopefully we can see similar results here (assuming the energy companies actually pass on any savings in the first place...). Gas is already cheap compared to electricity but a whopping percentage of most households' energy usage is heating so it could save people a lot of money.

cepheus

KTF wrote: »

The word used was 'freeze':

http://www.bbc.co.uk/news/uk-politics-24213366

Both words have been used in various reports but this explains it

It will also be a price cap: if wholesale prices falls, consumer prices can too. Labour's new regulator will be able to force such moves, ending the "up like a rocket, down like a feather" approach to prices of the big six. If some black swan energy shock pushes wholesale prices up during the freeze, Miliband says the companies will be able to make their case.

Tom Burke, who as longtime former advisor to Conservative ministers, former head of Friends of the Earth and Rio Tinto employee, has a unique viewpoint is clear in his assessment: "The truth is that this will be good for the economy, good for consumers, good for most businesses - except the big six - and good for the environment as well." Co-operative energy has welcomed the price freeze.

verydeeppockets

posh*spice wrote: »

Now run along....I'm sure someone at Tory central office must have some tea for you to make lol!

Steady on, the tea is Cleggy's job.

How many power stations and how many MW of generation capacity are being shut down by the EU is here -
http://en.wikipedia.org/wiki/Large_Combustion_Plant_Directive

Comparable prices for elecky and gas across europe, showing we don't pay as much as some is here -
http://www.energy.eu/#Domestic-Gas

Ed the donkey/energy secretary actually said his green ideas would put prices up - 2009 article here -
http://www.telegraph.co.uk/earth/earthnews/5832429/Energy-bills-will-rise-in-low-carbon-economy-admits-Ed-Miliband.html

Fairly important bit in that last article is this -

' "I think it is the right thing to do. We have got to plan for it and make it as fair as we can." The Government's consultation on renewable energy last year (2008) estimated meeting targets to increase green power could lead to a rise in fuel bills of almost £230 a year by the end of the next decade. '

So, to recap, we have been signed up to closing our power stations down - making energy harder to produce, have agreed to levy the energy producers still further to finance the green moneygoround - a levy that has to either come from the investment budget or the customer's pocket, all with the knowledge we haven't invested anything in replacing the power stations for decades, and now finally 'Someone' just told the power industry that we want prices frozen for 20 months, prices frozen at an arbitary unknown price point that is months (and as of this week several huge price rises) away. Almost as smart as Gordie telling everyone when he was going to flog the gold off cheap. :rotfl:

Now I love shiny vote-winning ideas as much as the next man, but seriously.. :eek:

I wouldn't trust the man with a glass of water, never mind a hot kettle and a tea bag.

davidgmmafan

If worldwide demand is high it doesnt really matter what the lil old uk does now does it?

I am not convinced renewables are part of the solution since you need backup capacity which is less efficient because it isnt in use all the time.

Heres another item to ponder. The warm home discount runs for (i think) five years. It increases every year.

What do you think this will do to prices?

I think milliband could regret this position ifthere are debates given his position in government.

The best rebuff i can give to the investment argument is iur woeful gas storage capacity but i guess we have to ask why other countries hav much more than us.

I dont suppose companies will do anything about that unless there is money in it for them.