Big Six collapse? Ofgem puts advisers on standby

Liku

tghe-retford said:

Sky News broke an exclusive last night by obtaining a draft of the Heat and Building Strategy that I believe was talked about here elsewhere in the last few days, but for the laymen, the document obtained suggests that gas prices will be artificially aligned with that of electric, meaning if implemented today that 6p per kWh becomes 20p+ per kWh and for some on cheaper fixed deals, a 5x or more increase on the price of gas. 

I personally believe that could be a good thing if done right. But anyone vulnerable or low income must be given protection so that doesn't happen. A lot of us don't even get the choice of gas, it's heat pumps, storage heaters or oil/lpg. Heat pumps are more expensive to run than gas atm which just seems wrong. But we must not put vulnerable people at  risk through any green initiative.

oliverbrown

I wonder how electric-only households afford to heat their homes. If I converted my gas usage to electric my bills would be astronomical. 

Ultrasonic

tghe-retford said:

GingerTim said:

wild666 said:

I could see energy suppliers massively increase the cost of electric to subsidise the cost of gas. Most suppliers are now charging 20p plus per kWh for electric so putting 10p or more on a kWh of electric to cover the increase in the gas price would seriously hit user who are all electric but that is an option suppliers could consider as gas prices are in the region of 6p per kWh now and 1 unit of gas is around 11.4 kWh. I think the days of cheap energy are long gone and prices will only rise substantially in years to come.

Wouldn't it be more likely that they increase the price of gas instead, since gas is used to generate electricity?

(Agreed about medium to long term costs going up)

Sky News broke an exclusive last night by obtaining a draft of the Heat and Building Strategy that I believe was talked about here elsewhere in the last few days, but for the laymen, the document obtained suggests that gas prices will be artificially aligned with that of electric, meaning if implemented today that 6p per kWh becomes 20p+ per kWh and for some on cheaper fixed deals, a 5x or more increase on the price of gas. That would be Boris Johnson's "Poll Tax" moment and would potentially put him on a timeline of weeks to go in power as opposed to years to go should it go ahead.

But yes, I do agree that the era of cheap energy is over and we're all going to have to get used to paying a lot more for energy from a lot fewer suppliers, potentially to the point where switching only changes the name on the bill.

Much as I think that Boris Johnson has had a calamatous impact on the UK through his responsibility for brexit, I can't personally hold him responsible for global gas prices shooting up like they have.

We are in a somewhat weird situation due to the price cap, which is preventing the market responding to reflect true costs. If it did then we'd be in a more straightforward situation of the government being under pressure to support those least able to afford to pay for the increases. 

I wonder if a tiered energy pricing might be a good longer term solution, where some sort of agreed minimum energy amount was cheaper (intended to cover minimum heating, hot water, lighting etc) but then use above this was significantly more expensive (intended to what could be viewed as more discretionary use). I can see that any such system would be very complicated and controversial, and would need to in some way account for property size and number of occupants. Just musing...

QrizB

Dolor said:

Playing around with green taxes is going to fix nothing in the short-term - neither are grand plans for more renewables and nuclear.

Agreed. Gas is a commodity and will remain expensve for the rest of the winter, barring some sort of catastrophe that drastically reduces demand (see spring last year for an example of this happening).

My guess is the big energy companies are lining up finance to get them through this period, in the expectation that next April's price cap will be high enough that they can start paying down those loans.

There's a risk in this, of course; if energy is a lot cheaper in Spring 2022 there will be the opportunity for another round of Symbios and Avros to form, selling cheap energy and stealing the existing suppliers' market share so the big companies can't pay the loans back.

Where the Gov't could help, if they chose to, is by underwriting those loans at public interest rates. A sort of reverse-PFI finance deal in the strategic best interests of the nation. (I wouldn't expect a traditional Cons gov't to even consider this but the current Gov't doesn't appear to be one of those.)

Gerry1

Ultrasonic said:

I wonder if a tiered energy pricing might be a good longer term solution, where some sort of agreed minimum energy amount was cheaper (intended to cover minimum heating, hot water, lighting etc) but then use above this was significantly more expensive (intended to what could be viewed as more discretionary use). I can see that any such system would be very complicated and controversial, and would need to in some way account for property size and number of occupants. Just musing...

That's one of the reasons why there's been such a push to install smart meters.

MWT

Gerry1 said:

Ultrasonic said:

I wonder if a tiered energy pricing might be a good longer term solution, where some sort of agreed minimum energy amount was cheaper (intended to cover minimum heating, hot water, lighting etc) but then use above this was significantly more expensive (intended to what could be viewed as more discretionary use). I can see that any such system would be very complicated and controversial, and would need to in some way account for property size and number of occupants. Just musing...

That's one of the reasons why there's been such a push to install smart meters.

If you really believe that Gerry then you must also realise that they would use the smart meter to enable the lower rate tiers, so no smart meter, no low rate, just the high rate only...

danielson81

Gerry1 said:

Ultrasonic said:

I wonder if a tiered energy pricing might be a good longer term solution, where some sort of agreed minimum energy amount was cheaper (intended to cover minimum heating, hot water, lighting etc) but then use above this was significantly more expensive (intended to what could be viewed as more discretionary use). I can see that any such system would be very complicated and controversial, and would need to in some way account for property size and number of occupants. Just musing...

That's one of the reasons why there's been such a push to install smart meters.

In Malta (of all places), they have a tiered billing system, ie the more you use the more the price goes up. What that sort of thing work here?

Residential Consumption Tariff rates

(inclusive of 5% VAT)

Band	Cumulative Consumption (kWh)	Rate (€)
1	0 – 2,000	0.1047
2	2,001 – 6,000	0.1298
3	6,001 – 10,000	0.1607
4	10,001 – 20,000	0.3420
5	20,001 & over	0.6076

Verdigris

Ultrasonic said:

I wonder if a tiered energy pricing might be a good longer term solution, where some sort of agreed minimum energy amount was cheaper (intended to cover minimum heating, hot water, lighting etc) but then use above this was significantly more expensive (intended to what could be viewed as more discretionary use). I can see that any such system would be very complicated and controversial, and would need to in some way account for property size and number of occupants. Just musing...

I've been banging on about pricing energy in this way for some time. It seems unfair that heavy users pay less per kWh, than somebody struggling on benefits, because the daily charge is effectively diluted. A certain amount of "social energy", that provides a basic level of comfort should be available to all, at a price that can be paid for at prevailing benefit rates. Anything above the should get increasingly more expensive per kWh, on a "polluter pays" basis.

As you say, it will be fiendishly complicated. People with he least money tend to be in rented accommodation, so I think a tightening of the EPC requirements for rentals should be implemented, perhaps in stages. I think a property has to have an EPC of E or above to be lettable at the moment. That needs to go up a letter every 5 years, say, with perhaps some incentive for landlords if the jump faster.

Here endeth the pipe dream.

grandadgolfer

oliverbrown said:

I wonder how electric-only households afford to heat their homes. If I converted my gas usage to electric my bills would be astronomical. 

But you'd be green.....Greta & friends would be happy never mind that your bill would have gone through the roof

Gerry1

MWT said:

Gerry1 said:

Ultrasonic said:

I wonder if a tiered energy pricing might be a good longer term solution, where some sort of agreed minimum energy amount was cheaper (intended to cover minimum heating, hot water, lighting etc) but then use above this was significantly more expensive (intended to what could be viewed as more discretionary use). I can see that any such system would be very complicated and controversial, and would need to in some way account for property size and number of occupants. Just musing...

That's one of the reasons why there's been such a push to install smart meters.

If you really believe that Gerry then you must also realise that they would use the smart meter to enable the lower rate tiers, so no smart meter, no low rate, just the high rate only...

That's exactly what many big companies are doing: no smart meter, no cheap tariff.

Seems that Parliament was seriously misled when several Secretaries of State said that no-one would be forced to have a smart meter.