Its claw back time - they are reneging on the deal!

Martyn1981

Sterlingtimes wrote: »

OFGEM's difficulty is that it cannot be seen to ignore the moral part of the equation, so it will be selective in defining policy such that it cherry picks the classes that will pay more. A universal increase in standing charge punishes the low energy user. Politically, it may be wiser to do nothing.

Average leccy demand will start to go back up due to heat pumps and EV's in the future, so I'm not sure what the point of this is OFGEM exercise is.

Plus (and as un-PC as this may sound) energy pricing shouldn't necessarily be 'fair', as it relates to a product that is causing problems and costs, when used to excess. So anything that reduces demand, or creates clean supply shouldn't be penalised.

Sterlingtimes

Martyn1981 wrote: »

Plus (and as un-PC as this may sound) energy pricing shouldn't necessarily be 'fair', as it relates to a product that is causing problems and costs, when used to excess. So anything that reduces demand, or creates clean supply shouldn't be penalised.

It's is difficult to be objective about "fairness". Does fairness mean that all pay in direct proportion to their use of the infrastructure and energy subsumed? Or is fairness more like the "socialist" interpretation where richer people pay proportionately more.

The second interpretation operates more like a tax that redistributes the burden from the rich to the poor.

OFGEM's remit will be tempered by political sway.

Note how OFCOM has reduced the price of telephone infrastructure for telephony only users and increased the price of telephone infrastructure for broadband users. It's the same infrastructure with the same capital and operating cost base. Regulatory interference in pricing may well have negative consequences on the use of fixed line communications.

zeupater

Sterlingtimes wrote: »

This is the crux of the issue. But, stripping all morals out of this, the apparent miscreants are all of those who use less electricity than they ought to all being equal.

So the old lady/gentleman who wears a couple of jumpers and an overcoat to keep her/his electricity bill down is also not contributing sufficient to the upkeep of the grid. The same would apply to second home users who use very little energy.

Solar exploiters are only one type of sinner.

Essentially, good compliant people use a lots of energy and over contribute and bad non-compliant people contrive to use less energy and under contribute.

This goes against everything that we are taught about being frugal.

Miscreant list of under contributors:
solar households;
second homes;
small businesses used for limited hours;
the frugal pensioners;
the frugal disabled;
the frugal poor;
those who contrive to use gas in preference to electricity, e.g. gas tumble dryer;
those with gas heated water rather electricity heated water.

All of these classes should pay a standing charge premium because their behaviour is now adjudged to be undesirable.

OFGEM's difficulty is that it cannot be seen to ignore the moral part of the equation, so it will be selective in defining policy such that it cherry picks the classes that will pay more. A universal increase in standing charge punishes the low energy user. Politically, it may be wiser to do nothing.

Hi

The issue here is that Ofgem don't seem to understand the market which they have remit to regulate ... even more than this they don't even seem to understand their own previous regulation decisions ....

Because there was little momentum in consumers changing suppliers, Ofgem decided that it must be due to a combination of tariff complexity. lack of transparency and the stupidity of customers, so the 'allowable' tariff system was 'simplified' ... of course, the solution was neither the most 'simple' or the most 'transparent' one either, also it could easily be described as one which suited the industry and their margins best in a position where increasing energy efficiencies would impact their margins .... 'Quelle surprise !', tiered tariffs & ones with no standing charge removed at a stroke & the industry allowed to claim that they were 'forced by regulation' to have a standing charge ....

So, apart from a few tens of thousands of customers, thanks to Ofgem almost every energy consumer in the country pays a standing charge ... a levy which is supposed by definition to cover supply sector fixed costs which are independent of supply volume .... Anyone else see the flaw in Ofgems logic here ?!

Whether any household uses absolutely no energy or something like 50MWh per year make no difference to the cost of connectivity due to previous Ofgem decisions, so they obviously haven't got a clue what they're doing, or they're preparing the playing field for removing supply standing charges, in which case why would they be looking to introduce generation standing charges !? ... they just look to be a regulator which is not only unfit for purpose, but also out of control or abusing the position of industry regulator to protect the interests of industry over consumer, in which case there really does need to be a complete third party departmental audit ....

I really would love to have a direct meeting with senior officials at Ofgem and have them provide explanations to this complete farcical situation which they're creating themselves for no apparent reason other than to befriend the energy sector ...

HTH
Z

Sterlingtimes

zeupater wrote: »

So, apart from a few tens of thousands of customers, thanks to Ofgem almost every energy consumer in the country pays a standing charge ... a levy which is supposed by definition to cover supply sector fixed costs which are independent of supply volume .... Anyone else see the flaw in Ofgems logic ...

Thank you for an excellent posting with which I agree. Following OFGEM logic there would be a cumulative standing charge for each leg in the supply chain and transmission chain. As the fixed charges get greater the variable price of supply for electricity gets cheaper and the consumer is incentivised to use more cheap electricity.

This is ridiculous when the regulator should rationally should be using mechanisms to reduce demand (particularly at peak times).

michaels

It is sad because in theory the market can get it mostly right. If consumption produces externalities surely this can be added to the unit cost, ideally in proportion to the harm done, which is what a carbon tax acheives. There is then no need for an additional monkeying with consumption tariffs to skew the billing from low usefs to high users.

Usage is only a very weak proxy for ability to pay, thus if you want to redistribute to some vulnerable users it makes sense to do so via the benefits system no via the blunt instrument of energy tariffs. However thenformer looks like tax and spend whereas the latter is an entirely hidden redistribution. Shame really as the former is both efficient and fair whereas the latter is far from it.

As usual the economics is fairly simple but the politics is a minefield.

michaels

Martyn1981 wrote: »

For CCGT it can be as high as 60%, but the heat output is usually wasted.

50% efficiency for a domestic generator is incredible, and that's before adding in the heating benefit.

Think of it this way, burn 2kWhs of gas in a boiler and perhaps get 1.6kWh of heat.

Put 2kWh's through the fuel cell, get 0.5kWh of heat plus 1kWh of leccy. So a comparable worse case scenario of 1.5kWh of heat.

But put that kWh of leccy through an ASHP with an annual average COP of 2.9, and you have 2.9kWhs of heat + 0.5kWh = 3.4kWh's v's 1.6kWh.

Or you have 1kWh of leccy for approx 5p of gas.

I think it is probably double counting to claim the heat pump saving on top as you could have that from grid leccy as well. However the economics would seem odd if it were cheaper to get leccy via your own gas turbine than from a grid scale gas power plant.

The sterling boilers generate leccy in the traditional way but any waste heat that is used for dhw and soace heating is not waste heat at all. Problem is that for most users the heat demand is too variable to make up for the extra cost of the boiler/generator - hence my suggestion that with an infoor pool with a year round heating demand the economics work much better - with a decent fit and own use from the mvac the pool heating might be free......

Jackthedog

Domestic solar systems use on average 40% of power generated so the grid gets 60% BUT we are only paid for 50%... So the energy company get 10 % of domestic solar generated energy for free already!!!!!

Martyn1981

michaels wrote: »

I think it is probably double counting to claim the heat pump saving on top as you could have that from grid leccy as well. However the economics would seem odd if it were cheaper to get leccy via your own gas turbine than from a grid scale gas power plant.

Hiya, not double counting as the unit of leccy costs 2 gas units, so around 5/6p instead of 12p+. Plus the heat from the fuel cell boiler would not be enough at approx 25% efficiency.

Also the ASHP would supply heat when PV generation is high enough, so saves the fuel-cell being used in those marginal months.

So overall I was comparing a package of: fuel cell + ASHP + batts + PV against a more normal gas and leccy supply plus gas boiler.

And within the context of this discussion, it might alos be possible to disconnect from the leccy grid, thus saving those standing charges.

Cardew

Jackthedog wrote: »

Domestic solar systems use on average 40% of power generated so the grid gets 60% BUT we are only paid for 50%... So the energy company get 10 % of domestic solar generated energy for free already!!!!!

I really hope that post is 'tongue in cheek'. Although such is the sense of entitlement on this forum

---

The owners of PV systems are paid for 100% of the energy they generate; that subsidy is paid by other consumers.

ard123en

So moving forward will water companies start a surcharge for having a water butt in your backyard.

Can't have you using free water there that's not fair on others