Energy news in general

Chrysalis

stripling said:

Have a little graphic [ Ofgem data based on 'average' annual bill of £1,719] :

How does a supplier who is effectively a reseller, have operating costs similar to the network.  Some pretty good accounting there.  £69.25 allowances ia a stealth profit.  So the suppliers profits are effectively 2.5x higher than the image suggests.
Some serious issues in the market.  Move policy costs to general taxation, where it should be, government buy back of private energy, and we get rid of policy costs, allowances, supplier profit, significantly reduce supplier operating costs.
Then build state owned energy infrastructure, and we also get rid of network profits.
Problem is it goes against the rights for rich investors to profit of everyone.
Keep VAT which is ring fenced to cover the costs of the infrastructure purchases, cannot be used for non energy purposes.
The margins are insane, 37% margin on network, thats really abusive levels of margin, close to 50% on wholesale as well.  Polices are not really a cost to a supplier, they basically just a stealth tax collector for that, VAT we set aside as well, so margins for suppliers are if we take their word operating costs are legit but assume allowances is all profit circa 7%.

Ildhund

Chrysalis said:
Some serious issues in the market.  

I wonder where the figures in the graphic came from. The serious issues may lie with whoever spun them out of Ofgem's published data.

Chrysalis said:
Move policy costs to general taxation, where it should be, ...

I've said this before, but I make no apologies for saying it again. As far as the domestic energy market is concerned, there are only minor differences between the cohort of those who pay standing charges for electricity and that of those who pay tax (one important one is that standing charges are levied per household, while income tax is per person). Piling 'policy' costs on to the standing charge is a simple way for government to increase revenue without increasing taxes.  

MattMattMattUK

Chrysalis said:

stripling said:

Have a little graphic [ Ofgem data based on 'average' annual bill of £1,719] :

How does a supplier who is effectively a reseller, have operating costs similar to the network.  Some pretty good accounting there.

The suppliers need customer service, accounting, debt recovery, they have to pay the DCC for smart metering data, they have to pay for meter installs, meter engineers when things go wrong, any social programs they operate etc. If you want the full breakdown it is available on the Ofgem website.

Chrysalis said:
£69.25 allowances ia a stealth profit.  So the suppliers profits are effectively 2.5x higher than the image suggests.

The allowances cannot be turned into profit, they are to cover specific outlays the supplier must make. Suppliers profit is 2.46% as a baseline, some make a slightly higher profit by saving on their operating costs, the highest last year according to Ofgem was 2.9%. Another point, the government makes 4.77% baseline "profit" on that average energy bill from the VAT, then makes 25% on the supplier, network operator and wholesale profits in the form of corporation tax, so the government's profit on your energy bill is 10.8% and even that is ignoring their profit from ee's and er's NI. Probably another 2-3%.

Chrysalis said:

Some serious issues in the market.  Move policy costs to general taxation, where it should be, government buy back of private energy, and we get rid of policy costs, allowances, supplier profit, significantly reduce supplier operating costs.

There are not really issues with the energy market as such, they are more structural than that, decades of underinvestment in the energy sector (as well as water, sewage, healthcare, schools, transport, policing etc.) leads us to the situation we are now in, needing to spend more to catch up, with governments willing to directly invest so doing it either through expensive private investment or stealth taxes. For the government to buy back the energy network, generation etc. (ignoring the suppliers, because it could just set up it's own and sell below market cost, driving them out of business) the cost would run into tens of billions, that would need to be funded one of three ways, borrowing (we have already borrowed far too much as a nation), increased taxes (people seem incredibly resistant to the idea, even though taxes for two thirds of the population are low by international standards) or printing money (which would be hugely inflationary). If we had several tens of billions to throw around there are far better ways to spend it as well, so it is in no way going to be a priority. Now personally I would like to see everyone's taxes go up (including my own), but the vast majority of people think that "someone else" should pay, they do not feel they should have to adequately contribute to the running of the nation.

Chrysalis said:

Then build state owned energy infrastructure, and we also get rid of network profits.

We could already build generation capacity if we wanted, the government could build a hundred nuclear reactors and produce our entire energy needs using that, combined with solar and wind and phase out gas, making us entirely energy secure and independent of the whims of foreign dictators, but again, tax rises. 

Chrysalis said:.

Problem is it goes against the rights for rich investors to profit of everyone.

Problem is economics, you need to fund it, again, taxes, borrowing, printing money, the first is sensible but unpopular, the last two are economically disastrous.

Chrysalis said:

The margins are insane, 37% margin on network, thats really abusive levels of margin,

Making up figures does not help anyone, the margin on the network is nowhere near that high.

Chrysalis said:
close to 50% on wholesale as well.

Again, making figures up helps no one. Some wholesale is bought at that level, the average margin is far far lower. 

Chrysalis said:
Polices are not really a cost to a supplier, they basically just a stealth tax collector for that, 

They are not a cost for the supplier that is correct, but they are also not a profit either, they collect them and either have to hand them over to other organisations or spend them on things dictated by Ofgem, they cannot profit from them.

Chrysalis said:
VAT we set aside as well,

We do not set VAT aside, suppliers hand it to the the government, the government takes it as "profit".

Chrysalis said:
so margins for suppliers are if we take their word operating costs are legit but assume allowances is all profit circa 7%.

Again, it would be a good idea to stop making stuff up. We do not take their word for operating costs, allowable operating costs are set by Ofgem through a detailed process which you can read about if you wish. So no, as previously reported their allowable base profit is 2.46%, they can increase that through savings in operating costs, the highest a supplier achieved last financial year was 2.9%, upon which they then paid corporation tax at 25% (or higher for some sectors).

debitcardmayhem

Ofgem slated by UK energy https://uk.finance.yahoo.com/news/energy-bosses-attack-regulator-amid-094121599.html

michaels

Chrysalis said:

michaels said:

Scot_39 said:

Chrysalis said:

I see a news article on the BBC that energy debt without a repayment plan is still soaring.  Looks like a new stealth SC tax coming to write that debt off.  A tax to cover the perils of fixed DD?

Debt would be lower - if our energy bills did not include 

- the come Oct £215 in policy costs - up £58 /37% in 18 months 

- net zero costs - that just aded another £15 ex VAT on network costs in Oct on top of current costs.

 

Scrap policy costs - scrap VAT - even better scrap net zero - and bills would be £100s less.

And far less likely to have people in debt.

Govts - past and present - need to learn the lesson - fuel costs are far to high to keep the extra charges they deliberately chose to place onto them.

They should be trying to reduce them.

But rather than doing so - they have just lumped £10s more - ave cap up £35 - wholesale energy costs down -£15 ex VAT - the £51 diiference - largely govt policy.

And even those on WFD see these extras on their top line.  New recipents arent £150 better off - now only £99 if concume at median TDV.

The 3.4m on WHD before - share in the £51 extra - just as other bill payers do.

I would rather pay more for my energy and have a liveable planet for my kids, even if it means I can't afford ubereats, the apple tax, tattoos, Taylor Swift tickets or millions of other 'essentials'.

I am in a very small minority.

What about if it meant you cant afford to eat, pay your rent, and keep the lights on? Is that a more liveable planet and preferable?  I agree you in a small minority who thinks things like a 22billion carbon capture scheme is good value, and have enough comfort that the extra cost only affects luxuries.
I am a supporter of green energy but a cost/impact analysis should be done, and more targeted collection instead of equal per household, targeted on people like yourself with ability to pay.
Bear in mind where does this paying more stop? is there a limit, we already pay huge amounts even if you think its small.

We have a tax and benefits system to redistribute.  We should not distort energy prices if we think that current transfers are too low, we should increase transfers.  Does it really make sense that there is low vat on energy but there full rate on sweaters and electric blankets and double glazing and loft insulation, sending exactly the wrong signals?

michaels

Chrysalis said:

stripling said:

Have a little graphic [ Ofgem data based on 'average' annual bill of £1,719] :

How does a supplier who is effectively a reseller, have operating costs similar to the network.  Some pretty good accounting there.  £69.25 allowances ia a stealth profit.  So the suppliers profits are effectively 2.5x higher than the image suggests.
Some serious issues in the market.  Move policy costs to general taxation, where it should be, government buy back of private energy, and we get rid of policy costs, allowances, supplier profit, significantly reduce supplier operating costs.
Then build state owned energy infrastructure, and we also get rid of network profits.
Problem is it goes against the rights for rich investors to profit of everyone.
Keep VAT which is ring fenced to cover the costs of the infrastructure purchases, cannot be used for non energy purposes.
The margins are insane, 37% margin on network, thats really abusive levels of margin, close to 50% on wholesale as well.  Polices are not really a cost to a supplier, they basically just a stealth tax collector for that, VAT we set aside as well, so margins for suppliers are if we take their word operating costs are legit but assume allowances is all profit circa 7%.

Not sure if you were unable to read my post re return on capital at National Grid being 5.7%.  Do you really think anyone would invest if the return was lower than the return available on zero risk government bonds?  Would you, out of the goodness of your heart, invest your savings at your suggested return of 1-2% when you could get a safe 5%?!

The_Green_Hornet

Keir Starmer prepares to miss key green target in effort to keep energy bills down

Promise to remove almost all fossil fuels from UK’s electricity supply by 2030 may be quietly abandoned over cost

Keir Starmer prepares to miss key green target in effort to keep energy bills down | Politics | The Guardian

Scot_39

The_Green_Hornet said:

Keir Starmer prepares to miss key green target in effort to keep energy bills down

Promise to remove almost all fossil fuels from UK’s electricity supply by 2030 may be quietly abandoned over cost

Keir Starmer prepares to miss key green target in effort to keep energy bills down | Politics | The Guardian

More admission of the harm being done to UK electricity prices by the current renewables trajectory in the UK.

95% by 2030 = higher prices - not the £300 lower prices as most thought they were promised.

gt94sss2

Eon Next have announced they are going to start migrating their customers meters to start reporting usage every 30 minutes from this Autumn.

https://news.eonenergy.com/news/no-half-measures-e-on-next-customers-among-first-to-see-benefits-of-half-hourly-meter-readings

MattMattMattUK

The_Green_Hornet said:

Keir Starmer prepares to miss key green target in effort to keep energy bills down

Promise to remove almost all fossil fuels from UK’s electricity supply by 2030 may be quietly abandoned over cost

Keir Starmer prepares to miss key green target in effort to keep energy bills down | Politics | The Guardian

Typical of the last fifty plus years of governments, short term gain for long term pain, kick the can down the road and leave our children and grandchildren to deal with the consequences.