Energy news in general

Scot_39

Ildhund said:

The_Green_Hornet said:

Personally, I believe that ... social and environmental policy costs should be moved to the relevant government departments and paid through general taxation.

How do you think a Venn diagram of (general taxpayers) | (electricity consumers) looks? There is usually only one consumer per household, but often more than one taxpayer. There are doubtless many households with no taxpayer at all. What further cuts beyond WFP and PIP should DWP make to be able to afford to pay for the Warm Home Discount, for example?

Add in questions of business energy consumption and corporation tax and the whole thing becomes completely impenetrable. 

You do realise tax rates can be increased. Like have been on higher rate  in Scotland - or indirect have been in past.  Whilst Cons cut taxes in 80 and 90s from say 33% to 23% basic rate - on back of things like N Sea oil revenue - they increased vat from 15 to 17.5 to 20% to recover some of that.


And cuts are not inevitable.Or perhaps rather more realistically now - were not inevitable.

Like the generation now struggling to come to grips with tge end of emergency rates on their now stretched mortgages.  Our govts find themselves similarly stretched.

Many have become used to paying low direct wage deduction taxes. 
So at 24.5k ft min wage pay 20% + 8% on half - so sub 14%.
Even on median 35k - pat on 23rds so 18%

Whilst govt spends OVER £100bn on debt interest - £1 in every £10 spent.  Vying for third place with education - close to working age benefits - with only DWP  (working ag3 benefits and state pensions combined) and health standing clearly above it.

The price we all now pay for nearly quarter of a century - the whole of 21st century bar iirc first year - of consecutive deficits.

And their was iirc - and now still no plan under last or current govts to reduce that absolute debt - even the balanced day to day by end of term rhetoric now hides £10s bn of extra annual  capital expenditure spend and so new debt.

Falling as a share or % of GDP is not the same as falling.

MattMattMattUK

The_Green_Hornet said:

MattMattMattUK said:

Chrysalis said:

MattMatt you know I cant answer your questions, its a bit odd we have a thread allowing discussion of a political tool (Ofgem) but no politics discussion is allowed, perhaps moderators can chime in here to confirm if this thread is exempted from that rule or not?

It largely boils down to one very simple question which underpins nearly all of the issues. Do you think that you (and me) should pay for the energy and network you use, or you think that someone else should pay? 

Yes that is a very simple question - one which I see a lot on the energy forum - and most people would agree with your often repeated answer that people should pay for the energy and network they use. However, at the moment, that is not exactly true.

Another simple question is who should be paying for the social and environmental policy costs that have been loaded onto the standing charge over the years?

Personally, I believe that the standing charge should revert back to it's original purpose of covering the fixed costs of supplying energy to someone's property and that social and environmental policy costs should be moved to the relevant government departments and paid through general taxation.

I am fine with the environmental costs being on the energy bills as they relate to the network so they make sense. I do not think the social policy costs should be on the energy bills, but equally it is not something I can get worked up about, especially when 11-12% of out bills is made up of bad debt because the government refuses to let the suppliers properly recover unpaid bills. 

The_Green_Hornet said:

With Ofgem now consulting on whether wealthier households should pay a higher standing charge than poorer ones our energy bills are becoming more like an extension of the tax and benefits system.

That would be and is an awful idea but I think they have the issue that they are trying to deal with idiots having tantrums, so anything that might placate the screaming hordes will get consulted on.

MattMattMattUK

Scot_39 said:

Read any analysis into the failed suppliers to date and it will tell you what you need to know about whether Ofgem is a truly competent regulator or not.

The issue with a lot of this "analysis" is that it attempts to blame Ofgem for not doing things that it had no remit to regulate and no powers to take action about. The government, via ministerial direction, set the rules on what suppliers were allowed to enter the market, how their finances needed to be structured etc. and beyond that base level Ofgem had no ability to act. 

Scot_39 said:

The fact they have intervened at Tomato some might see as them improving.  

The fact thst they allowed Tomato to enter the market in the first place - others might argue suggests they have learned little from their past failures.

Others still might recognise that as long as a new supplier meets the criteria to enter the market, which is set by government, not Ofgem itself, then Ofgem must issue them a license and allow them to sell to consumers.

QrizB

MattMattMattUK said:

Scot_39 said:

The fact they have intervened at Tomato some might see as them improving.  

The fact thst they allowed Tomato to enter the market in the first place - others might argue suggests they have learned little from their past failures.

Others still might recognise that as long as a new supplier meets the criteria to enter the market, which is set by government, not Ofgem itself, then Ofgem must issue them a license and allow them to sell to consumers.

And not forgetting that Tomato is a rebranding of Logicor, who had been in the market for several years and had made it through the 2022/23 squeeze without going bust.

Chrysalis

MattMattMattUK said:

Chrysalis said:

MattMatt you know I cant answer your questions, its a bit odd we have a thread allowing discussion of a political tool (Ofgem) but no politics discussion is allowed, perhaps moderators can chime in here to confirm if this thread is exempted from that rule or not?

It largely boils down to one very simple question which underpins nearly all of the issues. Do you think that you (and me) should pay for the energy and network you use, or you think that someone else should pay? 

I think we are both very ideologically opposed.  I know when I post you will be quoting me quickly, and I dont think its healthy for the forum we go back and forwards.

I think in terms of national infrastructure government should own and build it funded by general taxation and taxes should be focused on those with the ability to pay (not a per household tax, that ignores number of adults and income of property).  I think costs of government policies should be covered by general taxation. 

National grid equity is eye watering, and dividend scheme as well. (assuming I am looking at the right document).

Costs to the supplier should be born by the bill payer, but if the costs remain abnormally high there should also be a social tariff funded by the taxpayer.

In terms of energy costs, there is clearly issues fundamental to the UK when you look at average energy costs worldwide, its a bit of a lazy cop out to just say "market conditions deal with it".

Of course we also both disagree on Ofgem's way to handle the market.  I think they have excessively dumbed it down to try and help people who dont understand billing and also people who cant budget, thats nothing to do with energy costs, just bad regulation.  It has ended up making things worse as we have people getting confused why their bill is higher than the cap, why their DD is going, questions about quotes based on an estimated annual consumption.  Just keep it simple daily charge and unit rate.  A dodgy payment system used by millions, unsecured credit balances, suppliers being allowed to set a repayment rate on prepay for debt without any kind of affordability check, you also seemed at odds of when I made the comment about being on the side of consumers, an example of them being very concerned for the suppliers  is ofgem allowing a part of the SC to cover energy debt (according to you 11% of bills), this is just really weird and regulators dont normally do this, instead its a case of tough luck, recover via the courts, thats what an open private market is.  If the suppliers were liable for unpaid bills, then they would of course not let debt balances get so high.  The portion of the SC used for debt is effectively a fixed direct debit tax, it has become easily the most expensive form of payment if it needs that kind of subsidy. A better choice would be to add 11% to bills only if paying by fixed DD, not there for pre pay or variable DD, this then is a strong encouragement for people to shift to other ways of paying.  Prepay is no debt at all, variable DD might be one or two months at worst assuming the supplier is on the ball.  I will stop it there.

We also have two governments who said they would work on it, so people are naturally going to want to hold them to account.
There is costs associated with policies and decisions that have been made. 

Also consideration some suppliers are owning infrastructure via sister/parent companies.

Finally I dont mind paying higher taxes for this stuff, except I have an issue with the idea of privatising profits and socialising losses for companies that have paid out billions to shareholders.  But ultimately I dont have an issue with higher taxation, and paying for my own energy.

Politics is the heart of it. 

You got it out of me, but I think I really should stop here,  due to the notice at the top of the page.

debitcardmayhem

@Chrysalis

A better choice would be to add 11% to bills only if paying by fixed DD, not there for pre pay or variable DD, this then is a strong encouragement for people to shift to other ways of paying.  Prepay is no debt at all, variable DD might be one or two months at worst assuming the supplier is on the ball.  I will stop it there.

Then those who realise this will go for the “untaxed” method, Oh and variable DD still leaves the fact that if the consumer has no money in the bank there is a debt, which of course there always will be. The suppliers can’t recover the debts and can’t cut people off either so the debt grows. 

Similarly the  idealogies of

 National grid equity is eye watering, and dividend scheme as well. (assuming I am looking at the right document).

but those shareholders are happy for their money to be spent on grid updates to the tune of circa £65billion.

EDIT of by the by did you read or ignore the amount of dollars NG makes from USA etc

The government past and current cannot pay for what they are promising already and just keep growing the national debt, so you will soon pay more tax to service that debt without sorting the energy mess. Of course much of the cost of energy is down to the way the market works or not, traders get rich with no product. I remember when oil futures went negative, none of the oil companies paid the traders to take millions of bpd off their hands.

Sorry to say you need to come up with better ideas, not ideals.

Chrysalis

So they actually putting it back in, that makes it not so bad, I did say, if they willing to put it back in its ok. (or at least I meant to say that).
Regarding USA, the document I have is UK specific I think.

In this case the adjustment, is anything on top of that 65 billion is taxpayer funded. I am not totally against it being on bills though, but if it is, it shouldnt all be on SC.  As I think the investment is needed, we do need to do it rather than just ignoring the problem, and I am aware it has to be paid for somehow.

In regards to if the government can fund it or not, of course they can, its a political choice whether to raise new taxes, change borrowing rules etc. Reeve did exactly that so Labour could fund HS2 and their energy policy.  Think of all the money the government has thrown away e.g. in recent NI tax cuts.  All of this is relevant to the discussion hence my warning about politics.

One thing I do agree with matt on, most people want the solution where they pay the least possible.  For this reason, you will never get everyone agreeing, some prefer per household contributions outside of the tax system, some will prefer via the tax system.  Ultimately they both funded via the population, just different demographics take the hit (hence why the government borrowing argument is weak), its just whether to keep it as a stealth tax (which is what SC is for the most part now), or to increase taxes to make it funded via the tax and spend system.
Note to self, really stay out of this thread for a bit.

Just to clarify, are they putting it back in without expecting it back again via higher future bills?  I may not respond, but I will like, if you can answer it, thanks.

(The reason I ask is, if they expecting it back on top of normal revenue, its effectively a loan, will be ultimately funded by consumers, and of course restricts the method of payment to be via bills from a practical sense as well, but the proposed SC rebate for the vulnerable will help on this, if this is the way its going).

michaels

There is a limited pot of govt investment spending, hospitals and schools win more votes per pound than grid infrastructure so put it into the hands of the govt and the results are entirely predictable.

Plus although it is never mentioned, even govt investment eventually needs to lead to more tax revenue to pay the interest and repay the debt.

Interesting point re where the costs of non payment may come from and how they should be recovered. Can see an arguement for them to be built into the unit rate for those who might end up in arrears only but also the media response to doing so!

Social tariff not convinced, we have a tax and benefit system to redistribute income which should manage this problem.  Plus those who qualify for such benefits probably doesn't overlap very well with those who need energy bill support so you then need a whole new bureaucracy to determine eligibility.

Gerry1

Chrysalis said:

Think of all the money the government has thrown away e.g. in recent NI tax cuts.

Perhaps I've missed something, but wasn't there a big rumpus recently because the rate of employers’ NICs increased from 13.8% to 15%, from 6 April 2025, and the level at which employers start paying NICs (the secondary threshold) has also been reduced from £9,100 to £5,000 per year?

It's estimated that these changes will increase employers' payroll costs by about 2%.

MattMattMattUK

Chrysalis said:

MattMattMattUK said:

Chrysalis said:

MattMatt you know I cant answer your questions, its a bit odd we have a thread allowing discussion of a political tool (Ofgem) but no politics discussion is allowed, perhaps moderators can chime in here to confirm if this thread is exempted from that rule or not?

It largely boils down to one very simple question which underpins nearly all of the issues. Do you think that you (and me) should pay for the energy and network you use, or you think that someone else should pay? 

I think we are both very ideologically opposed.

Possibly yes, I see that we have a welfare system to support those in need and I take the view that that is the system that should be used to fund and provide for those in need. You take the view that there should be multiple different subsidies, social tariffs, hypothecated payments etc. which all add unnecessary complexity and cost, whilst also creating other issues such as cliff edges for those on the edge of social tariffs (imagine doing a few hours overtime and suddenly seeing your electricity, gas, water, broadband etc. all go up because you no longer qualify for social tariffs). 

Chrysalis said:
I know when I post you will be quoting me quickly, and I dont think its healthy for the forum we go back and forwards.

I am not sure why you have an issue with being quoted, it is the easiest way to address specific points. 

Chrysalis said:

I think in terms of national infrastructure government should own and build it funded by general taxation and taxes should be focused on those with the ability to pay (not a per household tax, that ignores number of adults and income of property). 

Unfortunately after privatisation that would be a difficult thing to do now, National Grid could be nationalised relatively easily, but generation capacity would cost far too much to be able to buy it up, it would make more sense to just build over time (and build lots of nuclear, which is somewhere between difficult and impossible for private enterprise to do and still requires state guarantees).

Chrysalis said:
I think costs of government policies should be covered by general taxation. 

I agree, but with energy there seems to be disagreement on what is policy and what is the cost of supply. Some people think network upgrades are policy for example, where as in reality they are essential to keep the lights on, others argue about green subsidy, but that either encourages generation to be built or reduces usage so itis more nuanced.

Chrysalis said:

National grid equity is eye watering, and dividend scheme as well. (assuming I am looking at the right document).

Dividends are slightly difficult to directly quantify as they can contain profit from previous years as well. but on average National Grid has made around £1.8 billion profit per year from it's UK operations, with around 45% of that coming from domestic supply (the rest being business/commercial), so their average profit per year, per household is around £28. Whilst people might want cheaper energy privatising National Grid is likely to have little impact, especially when one accounts for the finance cost to the government of buying the assets. If one wanted to bring energy costs down then nationalising National Grid PLC would be one of the worst ways to spend taxpayer funds.

Chrysalis said:

Costs to the supplier should be born by the bill payer, but if the costs remain abnormally high there should also be a social tariff funded by the taxpayer.

Social tariffs are always a bad idea, they never work well for anyone involve. Energy costs are not going to remain abnormally high, this is normal now, the cost to build a secure supply, upgrade the network and make that network fit for the modern era, especially off the back of decades of failing to invest, are going to mean that bills will not be able to fall substantially. If people are in need of state assistance to live then the only rational solution would be to use the benefits system.

Chrysalis said:

In terms of energy costs, there is clearly issues fundamental to the UK when you look at average energy costs worldwide, its a bit of a lazy cop out to just say "market conditions deal with it".

There are issues with the UK, largely several decades of little to no investment, this was done to keep bills down in the short and medium term, but everyone knew that at some point that would no longer be sustainable and would need additional investment to catch up, we are now at that point. We are also overly reliant on imported gas, largely again that stems from failure to invest in generation capacity, France spend hundreds of billions on building nuclear generation capacity and has some of the cheapest electricity in Europe. Norway is still developing it's own gas fields, something which the UK could and should be doing, there is no environmental benefit of burning imported gas vs domestically extracted gas. Yes, we should be looking to decarbonise, but there is no benefit to using imported gas. Other countries with cheaper supplies have benefit of geography, higher solar capacity due to being closer to the equator, hydropower, large fossil fuel reserves and especially the use of polluting coal.