Ofgem announces new price cap, effective October 1st

BarelySentientAI

xflare said:

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

Which recommendations are you hoping they account for?

The consultation is still open until 20 September, there haven't been any recommendations yet - just a list of options that are being considered.
https://consult.ofgem.gov.uk/energy-supply/standing-charges-domestic-retail-options/

One option I find quite amusing, at least in part because it would give some posters on here apoplexy, is the idea of fixed monthly prepayment.

Scot_39

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. 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 Ofgem data on this seems woefully out of date.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.

Gas is only part of tge energy mix - and no longer the most expensive - in the price mix.

Yes the bid pricing system was clearly a problem when gas rates peaked - and other countries don't use (so no others get the highest as a crass simplification) which helped lower their overall ave price rises.

And national grid operators and partners are investing billions - literally £10 billion plus per year - on new connections - for renewables and to transmit far more power as - if goes to plan - 10s of GW of gas domestic heating goes to electric

And whilst the renewables sold on CfD since 2015 were giving us a rebated on wholesale costs mid crisis - there now again adding -increasing to £37 to 2700kWh in headline July cap.

By my maths that's 1.45p / kWh.


And then there's the balancing costs and capacity costs and £10sbn on top of those new pylons and cables. Guess who pays long term for those. 

Another classic - as renewables are licensed for install before supporting infrastructure approved  - thermal constraint - forecast to peak c£3bn by 2030 ( over 10x ESO cost estimats 2 years ago ) nearly £100 per connection.

Right now renewables might be green - saving the planet - but to me they aren't saving money.

Middle classes and above like MPs or Ed Miliband on his ministerial salary or say the directors at Ifgem on (???)  might be able to afford it - the poor - well they just seem to be set to be forced to suffer.

This week's auction (round 6) - GW of FOS wind sold for over half above the July 22 round 4 rate.  Even stripping out inflation - easily still over a third more.

Not looking so good for continued savings.


E.g. Just this week  

He hailed Tuesday's auction as a "significant step forward" in the government's aim of achieving "energy independence and lower bills for good".

From 
https://www.bbc.co.uk/news/articles/c86ldzve4neo


We have been fed the future savings for years - well I want to see those dates and the savings.

This parliament - next - etc etc.

Produced independently from green lobby and likes of Miliband.

wrf12345

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

The only time a zero s/c and single unit rate tariff has really worked is with Ebico but as soon as Ofgem made offering the std tariff mandatory as the default tariff, their business model fell apart as they had to split customers between the std tariff and the zero s/c tariff but it does show that a zero s/c is viable. Ofgem have loaded up the s/c to give the energy companies easy money at the expense of consumers, it is a problem they created and are trying to make a big song and dance about consultation - hilarious if it was not such a rip-off.

BarelySentientAI

wrf12345 said:

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

The only time a zero s/c and single unit rate tariff has really worked is with Ebico but as soon as Ofgem made offering the std tariff mandatory as the default tariff, their business model fell apart as they had to split customers between the std tariff and the zero s/c tariff but it does show that a zero s/c is viable. Ofgem have loaded up the s/c to give the energy companies easy money at the expense of consumers, it is a problem they created and are trying to make a big song and dance about consultation - hilarious if it was not such a rip-off.

You were doing so well until the last sentence. 

The point about splitting customers between tariffs affecting a seemingly valid business model is actually logical and worth discussing.

MattMattMattUK

wrf12345 said:

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

The only time a zero s/c and single unit rate tariff has really worked is with Ebico but as soon as Ofgem made offering the std tariff mandatory as the default tariff, their business model fell apart as they had to split customers between the std tariff and the zero s/c tariff but it does show that a zero s/c is viable. Ofgem have loaded up the s/c to give the energy companies easy money at the expense of consumers, it is a problem they created and are trying to make a big song and dance about consultation - hilarious if it was not such a rip-off.

No they have not, and once again you demonstrate your complete lack of understanding. 

Qyburn

BarelySentientAI said: 

The point about splitting customers between tariffs affecting a seemingly valid business model is actually logical and worth discussing.

Back in the Extra/Iresa/Enstroga/Symbio days lots of suppliers offered a choice of tariffs with different weightings between S/C and unit rate. I'm not convinced that compelling a supplier to include SVT in their offering can have been that harmful. 

BarelySentientAI

Qyburn said:

BarelySentientAI said: 

The point about splitting customers between tariffs affecting a seemingly valid business model is actually logical and worth discussing.

Back in the Extra/Iresa/Enstroga/Symbio days lots of suppliers offered a choice of tariffs with different weightings between S/C and unit rate. I'm not convinced that compelling a supplier to include SVT in their offering can have been that harmful. 

OFGEM seem to think it was.

I minded to agree in part, but think it's a little more subtle and to do with how the weightings combine with the price cap.  I remember discussions a few years ago about how the cap applied, particularly whether it was "under the effective line described by these two points but for all consumptions" or "under this price at these two points" .



Once it was clarified to be the first version, then it meant a lot of tariffs became incompatible and, rather than modifying them or explaining why it was allowed to have these tariffs outside the cap (if they were a fix for example), suppliers seemed to quietly drop them to avoid the arguments.  You will recall all of the "why is my supplier charging more than the cap" threads that we still occasionally see even now.

Interestingly, the OFGEM data seems to indicate that only around 5% of customers ever chose a zero standing charge tariff, despite the loud voices claiming that this is what most customers want.  I've not done much digging into that data yet.

phillw

Scot_39 said:
We have been fed the future savings for years - well I want to see those dates and the savings.

This parliament - next - etc etc.

Produced independently from green lobby and likes of Miliband.

Good luck finding someone independent. Everyone seems so polarized these days.

I think it's unlikely for GB Energy to be fully up and running in this parliament and it could slip by a year or two. Nobody can give you a date

The estimate is £300 average saving, but remember that is saving based on the price it would be at that time if nothing was done. If we ditched renewable energy then the price of fossil fuels would surge considerably because of the greater demand.

wrf12345

"Interestingly, the OFGEM data seems to indicate that only around 5% of customers ever chose a zero standing charge tariff, despite the loud voices claiming that this is what most customers want. "

That may be correct but that was at a time when s/c's were less than half the current rip-off figure. Also people tended to stick to what they were used to back then, not so much today.

BarelySentientAI

wrf12345 said:

"Interestingly, the OFGEM data seems to indicate that only around 5% of customers ever chose a zero standing charge tariff, despite the loud voices claiming that this is what most customers want. "

That may be correct but that was at a time when s/c's were less than half the current rip-off figure. Also people tended to stick to what they were used to back then, not so much today.

There are approximately 1/3 the amount of supplier switches now than there were five years ago.  That doesn't match with people "no longer sticking with what they were used to".

Do you research any of your 'statistics'?  These numbers are freely available from public sources.