Energy Price Guarantee (announced 8 Sep): initial reaction & questions

Hummingbird18

Well they haven't saved us money really because we will have to pay it back through taxes or other means over the coming decades! I'm relieved I won't have as big bills this winter but it's only pushing the problem further down the line. We are borrowing billions so I can't feel happy about that. 
And I hate the government because they could have said they would freeze the price cap months ago and saved people like me a lot of worry. Boris, rishi, Liz could all have got together and come up with a plan. They didn't need to wait until the new PM was decided. 

SnakePlissken

Hummingbird18 said:

Well they haven't saved us money really because we will have to pay it back through taxes or other means over the coming decades! I'm relieved I won't have as big bills this winter but it's only pushing the problem further down the line. We are borrowing billions so I can't feel happy about that. 
And I hate the government because they could have said they would freeze the price cap months ago and saved people like me a lot of worry. Boris, rishi, Liz could all have got together and come up with a plan. They didn't need to wait until the new PM was decided. 

Exacly, why wait until the winner was announced, bewteen them they could have made an announcement.

And why not use a windfall tax like Europe is doing.

It appears as always to be about benefiting the 1% of top incomes in the UK. And getting the majority to pay the debt over the coming decade(s ?) Rather than hitting those who have made obscene profits from this. And for whom were there not a war in ukraine wouod not have been able to sell energy at such a high cost.

And why is electricity not being decoupled from the gas price on the market?

[Deleted User]

SnakePlissken said:

Exacly, why wait until the winner was announced, bewteen them they could have made an announcement.

Depends if Rishi had different plans - unless they all wanted to do exactly the same thing they couldn't do anything specific.

SnakePlissken said:

And why not use a windfall tax like Europe is doing.

We already have one of those - it's what's paying your £400.

SnakePlissken said:

It appears as always to be about benefiting the 1% of top incomes in the UK. And getting the majority to pay the debt over the coming decade(s ?) Rather than hitting those who have made obscene profits from this. And for whom were there not a war in ukraine wouod not have been able to sell energy at such a high cost.

The big profits were not made by UK companies.  We can't go and tax overseas companies just because we don't like the price they sell things at.

SnakePlissken said:

And why is electricity not being decoupled from the gas price on the market?

They are trying to work out a good way do it, but if gas is use to make half of all electricity (v. rough numbers) then wouldn't you expect the price to be at least a little linked?

HeckingtonChris

I live in an old house with three young children our annual energy usage is approximately double the national average.  It is not a large rambling property but a 3 bedroom house.  I can understand that my gas usage will be higher due to the heating issue (heating & hot water are gas, everything else is electricity) but cannot understand how my electricity can be so much higher as I've installed low wattage devices everywhere that I can, turn items off when not in use etc.  Be that as it may, my current annual cost of energy is somewhat shy of £4,000 meaning that I budget by paying my supplier £325 per month to ensure that I am covered.  I'm not sure how the £400 discount is being distributed so it seems prudent to me to increase that by 26.84% (the increase without the discount) which takes my monthly DD to £410.  Whilst this is a bit of a hit, it is far more palatable than the almost £615 it was going to be, so I welcome this intervention.
Over the last 4 years, my electricity usage has averaged out at 7,400 kwH per annum.  I would be interested to find what others' are, i.e. what is a more realistic 'average', or am I being an electricity vampire?  Out of interest, my gas has averaged at 1,900 units (21,600 kwH).

[Deleted User]

@HeckingtonChris

https://forums.moneysavingexpert.com/discussion/6385817/what-is-a-typical-household

Take a look here - a recent and ongoing discussion of exactly this point.

SnakePlissken

[Deleted User] said:

SnakePlissken said:

Exacly, why wait until the winner was announced, bewteen them they could have made an announcement.

Depends if Rishi had different plans - unless they all wanted to do exactly the same thing they couldn't do anything specific.

SnakePlissken said:

And why not use a windfall tax like Europe is doing.

We already have one of those - it's what's paying your £400.

SnakePlissken said:

It appears as always to be about benefiting the 1% of top incomes in the UK. And getting the majority to pay the debt over the coming decade(s ?) Rather than hitting those who have made obscene profits from this. And for whom were there not a war in ukraine wouod not have been able to sell energy at such a high cost.

The big profits were not made by UK companies.  We can't go and tax overseas companies just because we don't like the price they sell things at.

SnakePlissken said:

And why is electricity not being decoupled from the gas price on the market?

They are trying to work out a good way do it, but if gas is use to make half of all electricity (v. rough numbers) then wouldn't you expect the price to be at least a little linked?

I disagree on why they couldnt make an announcement that a freeze on cap could not be allowed.

If you think we should not tax obscene profits, then do as norway did and raise tax on oil and gas pextracted  here to 90%.

I dont think half of electricity is from gas.

For example in Scotland majority is from renewables or nuclear, with gas capacity being 1400 MW max. Which is dwarfed by the GW of wind capacity along with hydro, solar wind, tidal and nuclear.


SSE has  proposed that energy from renewables and nuclear should be sold well below market rate, but UK gov has not acted on this.

DjangoJan

Surely this is "Emperors New Clothes" at it's finest . Of all the journalists , commentators and critics why is no one reasoning that without a Kwh rate and standing charge figure there is no price guarantee. The only time I see this point brought up is on this thread but why is it acceptable for the government and all media to talk about household bill caps in money terms when they don't exist.

I've talked to several people yesterday asking what will happen after they go past their guaranteed £2500 worth of lower energy . They really struggled to grasp that the £2500 was completely meaningless.

 Nearly 24 hrs and no mention of what unit rates are going to be , even a rough guide . Why do I have the feeling that the figure to be frozen will be 52p per kWh for electric and all the talk of reductions on household bills is spin taking into account cash handouts , reduction of green levy and maybe a cut from the originally announced gas price.

[Deleted User]

SnakePlissken said:

Deleted_User said:

SnakePlissken said:

Exacly, why wait until the winner was announced, bewteen them they could have made an announcement.

Depends if Rishi had different plans - unless they all wanted to do exactly the same thing they couldn't do anything specific.

SnakePlissken said:

And why not use a windfall tax like Europe is doing.

We already have one of those - it's what's paying your £400.

SnakePlissken said:

It appears as always to be about benefiting the 1% of top incomes in the UK. And getting the majority to pay the debt over the coming decade(s ?) Rather than hitting those who have made obscene profits from this. And for whom were there not a war in ukraine wouod not have been able to sell energy at such a high cost.

The big profits were not made by UK companies.  We can't go and tax overseas companies just because we don't like the price they sell things at.

SnakePlissken said:

And why is electricity not being decoupled from the gas price on the market?

They are trying to work out a good way do it, but if gas is use to make half of all electricity (v. rough numbers) then wouldn't you expect the price to be at least a little linked?

I disagree on why they couldnt make an announcement that a freeze on cap could not be allowed.

If you think we should not tax obscene profits, then do as norway did and raise tax on oil and gas pextracted  here to 90%.

I dont think half of electricity is from gas.

For example in Scotland majority is from renewables or nuclear, with gas capacity being 1400 MW max. Which is dwarfed by the GW of wind capacity along with hydro, solar wind, tidal and nuclear.


SSE has  proposed that energy from renewables and nuclear should be sold well below market rate, but UK gov has not acted on this.

I don't really care where you think electricity comes from - I know, and there are plenty of data sources to show it.  Here's one:



That's yesterday's actual generation for the UK. Gas is the brown/orange bit at the bottom and makes up about 16000MW of the roughly 30000MW required.

SSE have proposed a CfD arrangement, which already exists for the new nuclear stations and for some newer windfarms.  I'm ok with it as a concept, some of the generators I designed use it, but you do realise that a CfD contract agrees to pay these generators more than market rate if the price drops?

Yes, ok, raise tax on North Sea oil and gas.  That will make it more expensive than oil and gas from anywhere else in the world, so they'll stop producing it and that tax income will plummet as it's just bought in from the global market.

SnakePlissken

[Deleted User] said:

SnakePlissken said:

Deleted_User said:

SnakePlissken said:

Exacly, why wait until the winner was announced, bewteen them they could have made an announcement.

Depends if Rishi had different plans - unless they all wanted to do exactly the same thing they couldn't do anything specific.

SnakePlissken said:

And why not use a windfall tax like Europe is doing.

We already have one of those - it's what's paying your £400.

SnakePlissken said:

It appears as always to be about benefiting the 1% of top incomes in the UK. And getting the majority to pay the debt over the coming decade(s ?) Rather than hitting those who have made obscene profits from this. And for whom were there not a war in ukraine wouod not have been able to sell energy at such a high cost.

The big profits were not made by UK companies.  We can't go and tax overseas companies just because we don't like the price they sell things at.

SnakePlissken said:

And why is electricity not being decoupled from the gas price on the market?

They are trying to work out a good way do it, but if gas is use to make half of all electricity (v. rough numbers) then wouldn't you expect the price to be at least a little linked?

I disagree on why they couldnt make an announcement that a freeze on cap could not be allowed.

If you think we should not tax obscene profits, then do as norway did and raise tax on oil and gas pextracted  here to 90%.

I dont think half of electricity is from gas.

For example in Scotland majority is from renewables or nuclear, with gas capacity being 1400 MW max. Which is dwarfed by the GW of wind capacity along with hydro, solar wind, tidal and nuclear.


SSE has  proposed that energy from renewables and nuclear should be sold well below market rate, but UK gov has not acted on this.

I don't really care where you think electricity comes from - I know, and there are plenty of data sources to show it.  Here's one:



That's yesterday's actual generation for the UK. Gas is the brown/orange bit at the bottom and makes up about 16000MW of the roughly 30000MW required.

SSE have proposed a CfD arrangement, which already exists for the new nuclear stations and for some newer windfarms.  I'm ok with it as a concept, some of the generators I designed use it, but you do realise that a CfD contract agrees to pay these generators more than market rate if the price drops?

Yes, ok, raise tax on North Sea oil and gas.  That will make it more expensive than oil and gas from anywhere else in the world, so they'll stop producing it and that tax income will plummet as it's just bought in from the global market.

We will agree to disagree.

Goodbye

CKhalvashi

SnakePlissken said:

Deleted_User said:

SnakePlissken said:

Exacly, why wait until the winner was announced, bewteen them they could have made an announcement.

Depends if Rishi had different plans - unless they all wanted to do exactly the same thing they couldn't do anything specific.

SnakePlissken said:

And why not use a windfall tax like Europe is doing.

We already have one of those - it's what's paying your £400.

SnakePlissken said:

It appears as always to be about benefiting the 1% of top incomes in the UK. And getting the majority to pay the debt over the coming decade(s ?) Rather than hitting those who have made obscene profits from this. And for whom were there not a war in ukraine wouod not have been able to sell energy at such a high cost.

The big profits were not made by UK companies.  We can't go and tax overseas companies just because we don't like the price they sell things at.

SnakePlissken said:

And why is electricity not being decoupled from the gas price on the market?

They are trying to work out a good way do it, but if gas is use to make half of all electricity (v. rough numbers) then wouldn't you expect the price to be at least a little linked?

I disagree on why they couldnt make an announcement that a freeze on cap could not be allowed.

If you think we should not tax obscene profits, then do as norway did and raise tax on oil and gas pextracted  here to 90%.

I dont think half of electricity is from gas.

For example in Scotland majority is from renewables or nuclear, with gas capacity being 1400 MW max. Which is dwarfed by the GW of wind capacity along with hydro, solar wind, tidal and nuclear.


SSE has  proposed that energy from renewables and nuclear should be sold well below market rate, but UK gov has not acted on this.

The 'problem' here is with our style of government (and to be clear, that is not meant as a party political statement).

Most countries have negotiated on energy rights from the 0% mark and worked up.
Norway has viewed the same rights as owned by the people, therefore has started at the 100% mark and worked down.

Unfortunately, I don't see a change to this negotiation strategy coming anywhere soon.

As far as what I'd have done would have led to, I'd have looked at the international pricing (which I get is elastic) and worked out a reasonable 5% profit margin for producers based on that with a reasonable level of costs and investment.

On the retail end, I'd have looked at a 4% profit margin for suppliers and again based reasonable figures on that with a reasonable level of costs and investment.

100% of profit would remain taxed at 19%, with a 95% tax (post-CT) on any profits in excess of the above funneled directly into solar/wind/heat pumps/EVs, likely with the generation side on a matched grant, ensuring we can reduce the environmental impact of the UK and reduce long term dependency on imported gas.

Sadly with a government who can't see beyond the next election, this is not going to happen. Protecting energy companies is not the option, we need to go further and ensure this situation cannot happen again.