MSE News: Independent report finds we're paying too much for energy

edited 26 October 2017 at 4:35PM in Energy
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MSE_LukeMSE_Luke MSE Staff
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edited 26 October 2017 at 4:35PM in Energy
An independent review into the cost of energy has found we're paying too much for our gas and electric – and says that prices should be falling....
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'Independent report finds we're paying too much for energy'
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  • robin58robin58 Forumite
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    No s*it Sherlock.

    But then again can you see Ofgem standing up to the energy companies. :rotfl::rotfl::rotfl::rotfl::rotfl::rotfl:
    The more I live, the more I learn.
    The more I learn, the more I grow.
    The more I grow, the more I see.
    The more I see, the more I know.
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    How little I know.!! ;)
  • One-EyeOne-Eye Forumite
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    MSE's headline must have been cut short.

    Independent report finds we're paying too much for energy, mainly due to government policies.

    Professor Dieter Helm's report actually puts the blame mainly on the Government’s own misguided policies, “spectacularly bad” decisions, and excessive levies and taxes.

    It has an interesting section discussing the fact that energy switching will die off if fixed costs due to government contracts and levies become such a high proportion of our bills that energy companies will become just revenue collectors, and will have no room to compete on price - something that a Standard Variable price cap will exacerbate.
  • lstar337lstar337 Forumite
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    One-Eye wrote: »
    MSE's headline must have been cut short.

    Independent report finds we're paying too much for energy, mainly due to government policies.

    Professor Dieter Helm's report actually puts the blame mainly on the Government’s own misguided policies, “spectacularly bad” decisions, and excessive levies and taxes.

    It has an interesting section discussing the fact that energy switching will die off if fixed costs due to government contracts and levies become such a high proportion of our bills that energy companies will become just revenue collectors, and will have no room to compete on price - something that a Standard Variable price cap will exacerbate.
    Thanks for highlighting this point. The governments campaign to point the finger solely at energy companies in order to hide their own stealth tax collection is both strong and effective. Of course it should be considering the number of press outlets they have in their back pocket!
  • edited 27 October 2017 at 2:19PM
    SystemSystem Forumite, Community Admin
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    edited 27 October 2017 at 2:19PM
    I don't think that the Government will take much notice of this report given that it looks for long-term solutions to overturn short-term expediency. Political parties do not engage in long-term thinking as they may not be in power to reap the benefits. Questions are also being asked about the very limited time taken to produce this report, and the level of panel scrutiny. It would seem from reports in some papers that the latter were not paid for their time.
  • Sun-Is-FunSun-Is-Fun Forumite
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    Something definitely needs to be done about utility / telecommunications companies. Constantly upping their prices over the rate of inflation.
  • SystemSystem Forumite, Community Admin
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    mjfp509 wrote: »
    Something definitely needs to be done about utility / telecommunications companies. Constantly upping their prices over the rate of inflation.

    Most of the recent increases have little to do with wholesale prices or inflation. They are down to social and economic costs imposed by Goverment. For example, warm home discount; climate change levies; feed in tariffs; the cost of smart metering etc; the Ofgem consumer levy etc etc. The wholesale cost of energy only accounts for about 40p in every £ that we all spend on energy. What the report is advocating, in part, is that some of these costs should be removed from energy and charged in a different way.

    To put this into context, if the wholesale price of gas increased by 100% (doubled) overnight it would only equate to a 20% increase in our bills.

    http://www.energy-uk.org.uk/customers/about-your-energy-bill/the-breakdown-of-an-energy-bill.html
  • SystemSystem Forumite, Community Admin
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    For those who haven’t read the Report, here is a key extract from the Executive Summary. This is not a quick fix.......

    Quote:. 1. The cost of energy is too high, and higher than necessary to meet the Climate Change Act (CCA) target and the carbon budgets. Households and businesses have not fully benefited from the falling costs of gas and coal, the rapidly falling costs of renewables, or from the efficiency gains to network and supply costs which come from smart technologies. Prices should be falling, and they should go on falling into the medium and longer terms.

    2. Households and businesses have not benefited as much as they should because of legacy costs, policies and regulation, and the continued exercise of market power.

    3. The scale of the multiple interventions in the electricity market is now so great that few if any could even list them all, and their interactions are poorly understood. Complexity is itself a major cause of rising costs, and tinkering with policies and regulations is unlikely to reduce costs. Indeed, each successive intervention layers on new costs and unintended consequences. It should be a central aim of government to radically simplify the interventions, and to get government back out of many of its current detailed roles. This review explains how to do this.

    4. The legacy costs from the Renewables Obligation Certificates (ROCs), the feed-in tariffs (FiTs) and low-carbon contracts for difference (CfDs) are a major contributor to rising final prices, and should be separated out, ring-fenced, and placed in a ‘legacy bank’. They should be charged separately and explicitly on customer bills. Industrial customers should be exempt. Once taken out of the market, the underlying prices should then be falling.

    5. The most efficient way to meet the CCA target and the carbon budget is to set a universal carbon price on a common basis across the whole economy, harmonising the multiple carbon taxes and prices currently in place. This price should vary so as to meet the carbon targets. It would be significantly lower than the cost of the current multiple interventions. Unquote

    Para 5 implies that we will still have to pay a CCA levy but not via energy bills.
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