Energy news in general

gt94sss2

Scot_39 said:

michaels said:

Scot_39 said:

nekr0mantik said:

if the electric prices are linked to gas then why is there a big difference in prices? 

The cost of power stations to burn it.

Just as likes of BG will charge £3000+ for even a small combi boiler every 10-20 years and £100s to service and maintain it annually - generators have costs (loans on buildings, maintenance, wages etc etc.)

Those differences may seem low at current high energy prices  - but when gas 4p a unit  - a massive overhead.

We pay one ourselves directly - or via rent as the landlords do if renting - and the other via our unit rates.

It makes the xxp vs yyp arguments difficult.

The real scandal is the grid pricing system - which CfD is trying to mitigate over time - that sees everyone on old contracts charge through at "highest" rate - old nuclear, old renewables etc - at that higher - gas rate (c45p wholesale last summer - now ?)

Recognising there is a windfall profit, a tax has been applied which goes to help pay for the EPG.  Hardly rocket science.

It's not retrospective, so the uk based producers only paid normal corporation tax all of last year, so keeping 81% of that periods record profit.

And the windfall tax is only 45% on that sold above a price (75/MWh ).  Even when add normal corp corporation tax - their still keeping 36% - over a third of that. 

Why 81%?

UK oil and gas producers pay a special higher rate of tax @40% - even without any windfall tax.

At the moment, they are paying 85% of profits in taxes

Scot_39

michaels said:

Won't a cap result in shortages?  Why would a marginal high cost supplier turn on their capacity if they could not charge enough per unit to cover the cots of generation?

Capped wholesale deals have been applied in Europe and elsewhere  - in some countries for several months.

No one is stopping producing and selling there.

The caps should be set relative to costs - not some nominal figure - and still allow for profit.

Although arguably France is a little different - but EDF is pretty highly nationalised anyway - 85% state - and the initial cap and the 8.4bn estimated cost to state - may shift that further.

Company loss or state debt - almost one and the same - when nationalised to that extent.

Just as the CfD deals in latest auctions allow for profit (companies wouldnt buy the licenses otherwise).  The price for a lot of the solar and wind in the 2022 auction - £37/MWh 2012 indexing-base - or around £44 at 2022 indexing.

The uk wind windfall tax - see e.g. Guardian report - uses a £75 threshold.  That's less than 2015 CfD pricing though (upto £120 ).

https://www.theguardian.com/business/2022/nov/17/chancellor-extends-energy-windfall-tax-low-carbon-generators

So exactly how the figure was derived ?

Scot_39

gt94sss2 said:

Scot_39 said:

michaels said:

Scot_39 said:

nekr0mantik said:

if the electric prices are linked to gas then why is there a big difference in prices? 

The cost of power stations to burn it.

Just as likes of BG will charge £3000+ for even a small combi boiler every 10-20 years and £100s to service and maintain it annually - generators have costs (loans on buildings, maintenance, wages etc etc.)

Those differences may seem low at current high energy prices  - but when gas 4p a unit  - a massive overhead.

We pay one ourselves directly - or via rent as the landlords do if renting - and the other via our unit rates.

It makes the xxp vs yyp arguments difficult.

The real scandal is the grid pricing system - which CfD is trying to mitigate over time - that sees everyone on old contracts charge through at "highest" rate - old nuclear, old renewables etc - at that higher - gas rate (c45p wholesale last summer - now ?)

Recognising there is a windfall profit, a tax has been applied which goes to help pay for the EPG.  Hardly rocket science.

It's not retrospective, so the uk based producers only paid normal corporation tax all of last year, so keeping 81% of that periods record profit.

And the windfall tax is only 45% on that sold above a price (75/MWh ).  Even when add normal corp corporation tax - their still keeping 36% - over a third of that. 

Why 81%?

UK oil and gas producers pay a special higher rate of tax @40% - even without any windfall tax.

At the moment, they are paying 85% of profits in taxes

1) The 45% is specifically on renewables.

Old renewables contracts sold pre CfD are basically- due to the way the NG electric pricing system works - have been earning more - as a result of gas prices used for over 50% of UK electricity - being passed onto their unit prices.

Say before gas rises they were selling at 10p and gas 10p.
Gas - raised gas electric to say 30p - they both got the 30p
So rather than making say xp, they make 2xp per kWh.
(It used to be the gas generators benefitting from this, when renewables and nuclear more expensive, its not a new bid pricing model)

That is not retrospective - so only applies from Jan sales.
The only other tax last year on profits declared in uk - standard 19% corporation tax.  So they keep 81% of last summers bumper profits.

Ironically, it doesn't include nuclear, who's profits I suspect will also be well up in UK.  So UK state and taxpayers once again subsidising an EU nation - as EDF is a subsidiary - who's French parent - is owned c85% by French state. Who have imposed a price cap on it in domestic market - of 4%? rise. But then UK is almost 100% tied to EDF - China the only other party often interested at UK govt subsidy levels - Hitachi walked away from Welsh plant on cost - as EDF nearly did with Hinkley.


2) The mythical 75% - not 85% - of oil corporations £10s bns.

A lot of the 75% is on uk shelf oil and gas production only.

It does not apply to overseas production and profits reported and taxed elsewhere.

30% is the special rate of corporation tax - maybe production only?
10% is a special production levy - on production related profit only

So not on refining, not on petrol stations or shell energy - the domestic gas and electricity company etc etc

The once 25 now 35% (not 45%) windfall tax applies on top - but again only to UK shelf licensed production.

Bringing the total from a theoretical 65% to 75% ( not your 85%)

But then - as part of the 40% deal in good years - the producers are allowed much more generous allowances for field development, exploration, decommissioning etc.

So never really pay that 40%, or for that matter a lot of 25 or 35%  either.

In fact in quite a few recent years, they have declared no profit on uk operations - and had payments for these offsets from state, for uk operations.

Like during covid when petrol £1, oil was as low as c$30 a barrell, and costing more to produce in uk waters (one of the most expensive drilling locations in world) - the companies were receiving net taxpayer subsidy.

But kept producing, kept maintaining etc - rather than folding and hiding abroad - but we kept getting uk oil, and kept uk jobs and future tax revenues.

And as part of the oil and gas windfall tax - other reliefs were boosted to encourage new uk production - to replace imported oil and gas.

A deliberate and clever move by Sunak - given the fall that has occurred in previous high tax periods on big oil - c83% peak at one stage iirc. As we have have paid for in more imports for decades ever since and 10,000s of job losses.  In fact oil investment into UK never recovered.
And these very real losses - the reason many in the SNP didn't not only not support last Feb commons vote on windfall taxes - but spoke  against it in house at time and media afterwards.

Renewables operators have asked for and at least one threatened court action to get the same reliefs.

See eg
https://www.bbc.co.uk/news/business-60295177

70sbudgie

https://www.energylivenews.com/2023/03/10/ofgem-rejects-national-grid-esos-balancing-reserve-proposals/

markin

Octopus seems a little delusional on this.

https://www.energylivenews.com/2023/03/07/octopus-energy-calls-for-no-coal-as-back-up/

Maybe if we spent £750m on 10 for 2Gwh for 2hrs or double that up.
https://www.energylivenews.com/2023/03/03/europes-biggest-battery-in-east-yorkshire-opens/

Mstty

Heat capture and use. Brilliant

BBC News - Tiny data centre used to heat public swimming pool

https://www.bbc.co.uk/news/technology-64939558

GingerTim

Energy Price Guarantee extended to July.  Quelle surprise!

https://www.bbc.co.uk/news/live/uk-64831837

[Deleted User]

Mstty said:

Heat capture and use. Brilliant

BBC News - Tiny data centre used to heat public swimming pool

https://www.bbc.co.uk/news/technology-64939558

A local swimming pool recovers the heat generated by an adjacent crematorium. Not all the public were happy when this was first mooted.

RG2015

GingerTim said:

Energy Price Guarantee extended to July.  Quelle surprise!

https://www.bbc.co.uk/news/live/uk-64831837

I understand that the standing charge will still increase on 1st April 2023.

I only have electricity and can see that the electricity unit charge will remain at approx 34p but cannot find the standing charge details anywhere.

Can someone direct me to the relevant web page please.

[Deleted User]

It's disappointing if the Standing Charge is still going to increase.  Has it definitely been confirmed that only the unit cost is not increasing?  I have gas and electricity, thank you.

If anyone has a link to the new charges from 01 April now for Southern Scotland I'll really appreciate it.