Ofgem announces new price cap, effective October 1st

zagfles

BarelySentientAI said:

zagfles said:

Qyburn said:

zagfles said:

The govt is the cause of higher standing charges, they're mainly a stealth tax to pay for "social" tariffs, environmental initiatives, and failed suppliers. 

Policy costs account for only about 3p per day, although I agree those should really come from general taxation. That's a non-party political matter, no government wants to increase taxes, whereas suppliers will get the blame for high standing charges.

Who do you think should pay SOLR costs? Should they be borne by the customers of the failed supplier, disconnect them until they cough up their share? After all they benefited from cheaper prices by signing up with Symbio, Neo etc.

I would support losing credit balances. Even though I would have lost out by around £140 when Iresa went bust, I must have saved much more than that by hopping from one cheapskate supplier to another.

I'm not sure who should pay, but that's not the issue, just the fact that any decision by the govt, or by govt quangos, that suppliers must act in a particular way at a cost to their customers, for instance social tariffs, equalising prepayment meter costs with DD costs even though the latter are more expensive for the suppliers, environmental stuff, and bailing out customers of failed suppliers etc should be recognised for what it is, ie a tax. 

I was half expecting that sort of strawman. I've said nothing about wanting it to be cheaper, or even that it we shouldn't be taxed via energy bills. Just that it should be recognised as a tax if the govt mandates that one group should subsidise another. 

Comparing with general H&S regulations is laughable. They aren't a subsidy from one group to another. I wouldn't call it a "tax" that part of the standing charge goes towards maintaining a safe supply infrastructure subject to all sorts of H&S rules. 

"any decision by the govt that suppliers must act in a particular way at a cost to their customers" becomes "if the govt mandates that one group should subsidise another"

Changing your story doesn't make my reply a strawman.  Just means you noticed that your original point wasn't a good argument.

Your reply "People love to throw the word "tax" around because nobody likes paying tax and it's a shorthand for "I want this to be cheaper" was a strawman.

That has nothing to do your extremely literal taking of the sentence above. I didn't know Mr Logic read MSE   I would have thought it's blatently obvious I didn't mean complying with stuff like H&S regulations, any more than complying with taxation regulations, accountancy regulations, employment law, and the criminal law. Stuff that all businesses have to comply with. 

It was obviously referring to the way energy companies are forced to act outside the usual parameters of business conduct and cross subsidise their customers. 

zagfles

Qyburn said:

zagfles said:

I'm not sure who should pay, but that's not the issue, 

You don't want to pay yourself, but don't have an alternative to suggest.

Another strawman. Perhaps you can quote where I've said that. 

Are there any social tariffs?

Warm Home Discount Scheme (£150 payment) | Age UK

prowla

Bungle73 said:

prowla said:

Isn't it great having a regulator working in our interests? (Said the energy companies.)

The cost of supplying has risen. Do you expect to be supplied with energy for less than it costs to supply it?

1. Why has the cost risen? 2. Erm, because of energy costs. 3. Goto 1

Scot_39

Qyburn said:

zagfles said:

The govt is the cause of higher standing charges, they're mainly a stealth tax to pay for "social" tariffs, environmental initiatives, and failed suppliers. 

Policy costs account for only about 3p per day, although I agree those should really come from general taxation.

3p per day is only £11 pa.  So what do you term as policy costs.

Because that's not what Ofgem declare as policy cost in their cap letter / cap summaries issued now every quarter.

How does the £188 ex vat in policy costs in Ofgem letter / summary price breakdowns for Apr equate.  Even the £30 ex vat increase in them from 158 to 188 in Apr - 19% - over twice the rate of inflation - is over 8p ex vat per day.

[Even on standing charges - how does the shift of £121 of network costs from unit costs to SC for electricity only - an Ofgem review  "policy" decision from 2019 TCR -  represent 3p a day for a low energy user say at half cap tdcv.  That's more than half the  average £220 SC - 33p per day..  But need to remembers that's a shift - not a cost saving or rise as that depends on use and where Ofgem balanced the shift in costs (270kWh, 3100 kWh, orc3900vs 4200 etc forcE7 etc). Afaik introduced to stop high vulnerable users unfairly in Ofgems view  paying more for fixed network costs.] 

And that main block of £188 excludes the debt special £28 (replaced the Covid hardship i.e. debt special at £11) and prepay levelisation at £10 for DD / credit.

Add those £30, £17 and £10 increases  - and the costs went up £57 in April - that's 15.6p increase per day.

Add those absolutes to the £188 - and that's £226 add vat £237 pa - total 65p per day.

Or if you prefer worse case in percent at July lows 237/1568 = 15.1% of bills at median UK dual fuel TDCV DD payment domestic cap

And that excludes other green costs imposed by net zero "policy" via renewables - wind contract CfD again adds to bills as gas remains well below its excessive Ukraine peaks - just as they did before the crisis.  Currently adding £37 ex vat to wholseale costs at 2700 kWh tdcv - 1.4p/kWh - or another 10p per day.

And network costs up nearly £100 in five years  - no doubt in part renewables connections - again "policy" choice - with grid upgrades running into  £10bn plus per year over next decade - we will pay heavily financialky including through energy bills - for years to come for green "policy".

And don't forget the over 10 fold increase predicted in thermal constraint costs to a peak of £3bn in 2030 by ESO forecasts - thats up 12x in less than a decade - 2022 estimates vary  c£220-250m region. That £3bn alone approx £100 per consumer - inc small / medium business and c27m domestic - if shared equally.

And all the greens and specifically our energy minister Miliband appear to offer the millions more predicted in fuel poverty this winter in his cap rise response interviews yesterday was more woolly  "jam tomorrow" - on some unspecified timescale - green driven price savings - but are those actual price drops or just relative savings ?

Qyburn

Scot_39 said:

Policy costs account for only about 3p per day, although I agree those should really come from general taxation.

3p per day is only £11 pa.  So what do you term as policy costs.

From the Ofgem Options Paper. They define them as "Policy costs (the cost of government schemes such as WHD)".

Scot_39

Thanks.

So guess that forms part of the now £188 total I guess from those letters.

But you can also see there the £121 network component - not a new cost in total cap but afaik a cost shift by an Ofgem "policy" decision.

I need to reread the latest document and it's comment on the TCR in 2019 it refers to re the electric SC  - and possibly try to look at that again.

But the version I found was more of an options review - and  over 180 pages and even skimming the section  summaries was doing my head in early this morning so gave up. 

I just wanted a simple £ amount on SC - date on our bills and corresponding change on unit rates.

Emma6

Bungle73 said:

prowla said:

Isn't it great having a regulator working in our interests? (Said the energy companies.)

The cost of supplying has risen. Do you expect to be supplied with energy for less than it costs to supply it?

I'm trying to not be political. It's just that UK electricity prices are not making joined up sense to me. I cannot find a reasoned justification for increasing Autumn prices. Ofgem data on this seems woefully out of date. It could do with a refresh. Where else to look?

With renewables now making up 43% of the generated energy mix including gas, I find it hard to justify the electricity price rise based on a gas price benchmark. I note too that renewable generators are often asked to not supply, which increases the apparent cost of renewable electricity. So 43% could become more if National Grid plc chose.  That would reduce demand for gas electricity generation so reduce gas prices a bit.

Are unit pricing calculations now out of step, on the higher side, with present day energy market?

If so, where does the surplus revenue from the electricity price rise go given the cost of renewables is static more or less?

It's just not adding up.  Given the mix, I would expect electricity prices to be going down (or staying static over Autumn and Winter). I would expect gas prices to be going up.

MattMattMattUK

Emma6 said:

Bungle73 said:

prowla said:

Isn't it great having a regulator working in our interests? (Said the energy companies.)

The cost of supplying has risen. Do you expect to be supplied with energy for less than it costs to supply it?

I'm trying to not be political. It's just that UK energy prices are not making joined up sense to me. I cannot find a reasoned justification for increasing Autumn prices. Ofgem data on this seems woefully out of date. It could do with a refresh. Where to look?

With renewables now making up 43% of the generated energy mix, I find it hard to justify the price rise based on a gas price benchmark. I note too that renewable generators are often asked to not supply. So 43% could be higher if National Grid wanted it to be.

Are unit pricing calculations now out of step, on the higher side, with present day energy market?

If so, where does the surplus revenue from the price rise go given the cost of renewables is static more or less?

It's just not adding up.  Given the mix, I would expect prices to be going down (or staying static over Autumn and Winter).

Gas costs more in autumn than summer and more in winter than autumn. Solar generates less in autumn than summer and less in winter than autumn. Wind generation can be higher, but not always and demand is higher overall and can be much much higher. Renewable make up 45% over the year, but with significant seasonal and time of day fluctuations.

With regard to renewables being asked not to supply, all electricity is bought at the same prices if it is bought as needed otherwise every supplier would hold out for the higher prices. Now the market does need some reforms, but it also makes sense so that generators do not hold back capacity to force prices up.

There is no surprise revenue.

BarelySentientAI

Emma6 said:

Bungle73 said:

prowla said:

Isn't it great having a regulator working in our interests? (Said the energy companies.)

The cost of supplying has risen. Do you expect to be supplied with energy for less than it costs to supply it?

I'm trying to not be political. It's just that UK electricity prices are not making joined up sense to me. 

Are unit pricing calculations now out of step, on the higher side, with present day energy market?

Unit pricing calculations are out of step on the low side with the present day energy market, at least in terms of wholesale price.

I'm not surprised that things don't make sense to you, they wouldn't be immediately obvious to anyone without some underlying knowledge of the energy market.

xflare

Do you think we will ever see suppliers offer tariffs that take into account OFGEMS recommendations from the public consultation into standing charges?