What should the unit prices be to cover wholesale prices?

QrizB

Sea_Shell said:

Just been reading on the BBC...

Keeping Bulb Energy running will potentially cost taxpayers billions of pounds more than has currently been set aside, government officials have said.

What does this mean for our standing charges (as part of the October cap) going forwards.   Will some of the governments costs be reclaimed this way?   So not just a "taxpayer" problem!!!

I don't recall whether the costs of running Bulb are reclaimable under the SoLR perocess.

Even if they are, SoLR costs are only reclaimable for the 6-month duration of the SoLR process. Bulb entered administration in mid-November so in mid-May it (and Bulb's customers) will leave any SoLR period and Bulb will have to go it alone.

I have no idea what the UK Govt's plan is for Bulb to leave administration. considering thast it's not tasking on new customers, but will be losing them via the normal processes, it will be a slowly shrinking business; however it could take decades for it to completely disappear.

I suspect they were hoping that the energy masrket would normalise and they would find a buyer but that's not looking likely to happen this year.

We might have a Gov't-run energy company for a while yet.

Sea_Shell

thanks for that....While your here @QrizB

Just been looking at Nordpool, and can you hazard a guess as to why it is that prices have a habit of peaking between the 14th - 18th of the month (eg Sept/Dec last year)

If you change the "table" to "chart" for the daily figures, you can see the two spikes.   Other rises are less noticeable, but they are there.  

QrizB

Sea_Shell said:

thanks for that....While your here @QrizB
Just been looking at Nordpool, and can you hazard a guess as to why it is that prices have a habit of peaking between the 14th - 18th of the month (eg Sept/Dec last year)
If you change the "table" to "chart" for the daily figures, you can see the two spikes.   Other rises are less noticeable, but they are there.  

I *think* it's just coincidence, but am open to other suggestions if anyone has any!

MattMattMattUK

QrizB said:

Sea_Shell said:

Just been reading on the BBC...

Keeping Bulb Energy running will potentially cost taxpayers billions of pounds more than has currently been set aside, government officials have said.

What does this mean for our standing charges (as part of the October cap) going forwards.   Will some of the governments costs be reclaimed this way?   So not just a "taxpayer" problem!!!

I don't recall whether the costs of running Bulb are reclaimable under the SoLR perocess.

Even if they are, SoLR costs are only reclaimable for the 6-month duration of the SoLR process. Bulb entered administration in mid-November so in mid-May it (and Bulb's customers) will leave any SoLR period and Bulb will have to go it alone.

I have no idea what the UK Govt's plan is for Bulb to leave administration. considering thast it's not tasking on new customers, but will be losing them via the normal processes, it will be a slowly shrinking business; however it could take decades for it to completely disappear.

I suspect they were hoping that the energy masrket would normalise and they would find a buyer but that's not looking likely to happen this year.

We might have a Gov't-run energy company for a while yet.

Interestingly I was at a meeting yesterday and the client has an energy market analysis sector, they are predicting that Bulb will be the SoLR for any future companies going under so it may well end up bigger than it started and there is also a suspicion that the government will amend the process to make some or all of the costs recoverable via standing charges in the future. 

meinnit

https://www.dailymail.co.uk/money/bills/article-10605651/Should-gamble-deal-fix-energy-bills-eye-watering-3-200.html

Cornwall predicts that the price cap will fall in April next year to £2,274. It could well be wrong, but if so, it makes the case for a current two-year fix a weak one. 

QrizB

Bumping this thread.

I'm still maintaining my spreadsheet and will have an update on Friday.

So far, this has been the most expensive month I've tracked, roughly 10% more expensive than December 2021 (last period's prices are here.)

Chrysalis

The fixed rate deals are not subject to the cap, so what those are been offered at might give a little insight to the answer.  Every fixed rate offered to me by octopus since October has been at least 40% higher than the cap on electric and currently about 70% higher on gas..

Sea_Shell

@QrizB

On The Ice website, they have the futures prices for various months/quarters/seasons.   

Currently hovering around the 300 mark (pence per therm?)

Does that mean they are the prices being paid for the pre-purchase of "hedged" gas for those periods?


No doubt you'll give us an update on average prices tomorrow (or when you have a moment - no pressure 😉)

QrizB

Sea_Shell said:

On The Ice website, they have the futures prices for various months/quarters/seasons.   
Currently hovering around the 300 mark (pence per therm?)
Does that mean they are the prices being paid for the pre-purchase of "hedged" gas for those periods?

Yes, sort of. Those are the futures price; the price commodity traders can pay today to take delivery of gas in future months. There are some other factors - big buyers may have struck purchase agreements months or years ago (it's not only consumers who do that), for example. But anyone buying today for delivery in April will be paying those prices or something like it.

300p per therm is just over 10p/kWh.

Sea_Shell said:

No doubt you'll give us an update on average prices tomorrow (or when you have a moment - no pressure 😉)

All being well I'll post something before noon tomorrow, but after breakfast!

QrizB

The end of one month, the beginning of another, and the first day of the April price cap. Time to take another look at current wholesale energy prices and what they might mean for us in October.

As before, the day-ahead electricity prices are from Nordpool, while my gas prices are from Guy Lipman. Last pricing period I came up with 6.5p/kWh for gas and 17.4p/kWh for electricity; Ofgem used 4.9p/kWh for gas and 16.6p/kWh for electricity when deriving the April cap.

How has March been? Turbulent, that's how. Russia's invasion of Ukraine has thrown the markets into uncharted territory, with gas prices at TheICE peaking over 500p/therm on the 7th of March and not falling below 200p/therm since. As a result both gas and electricity have been the highest yet.

• February - gas 6.33p/kWh, electricity 16.2p/kWh
• March - gas 10.34p/kWh, electricity 25.0p/kWh

This gives us an average wholesale price for the period to date of 8.44p/kWh for gas and 20.8p/kWh for electricity, and would suggest that the retail price of gas will increase by around 2p/kWh, to 9.4p/kWh, and electricity by around 3.5p/kWh, to 31.7p/kWh, leading to a headline Ofgem cap of around £2540, an increase of £570 or 29%.

That's a bit scary, although it's still lower than many of the fixed-rate tariffs currently being offered.

What if the recent unpleasantness continues through the summer? In that case we could see prices like March in April, May, June and July (the rest of the pricing period). This could see gas around 12p/kWh and electricity around 37p/kWh. But let's not get too carried away.

Happy April 1st, sadly this is no joke.