MSE News: Guest Comment - Why are energy prices increasing?

edited 30 November -1 at 1:00AM in Energy
115 replies 7.8K views
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  • backfootbackfoot Forumite
    2.7K Posts
    Not sure why you think that.(the bold bit).

    I worked in the industry for many years throughout the various stages of privatisation and helped to concieve many of the additional processes the market participants now have to do which previously didn't exist. Hundreds of consultants worked for over a decade inventing and impementing these things.

    My opinion today is that bills today are much higher than they would be if the cegb still existed, and the ideals of competition ensuring a lean, mean and efficient electrical supply industry have failed spectacularly.

    Spot on Graham. Those Consultants have been the only winners.

    Indeed just a daily read here shows the basic inabilty of all of these companies to even get billing and customer service right. As far as the customer is concerned what should be simple has become a nightmare.
  • davidgmmafandavidgmmafan Forumite
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    "I think this is what happens when you run essential services like a market stall in a free market."

    I presume they inherited it, surely that's also a factor? I mean I hate water companies but I can see the argument that if they inherited shoddy infrastructure its going to take time to put right all the leaks and stuff.

    "I don't think all greens support energy generation on such a small and over subsidised scale. Certainly not one where you can have your cake and eat it."

    Glad to hear it, I wasn't sure because you never hear from them. I suppose that's the media though they'll tend to focus on the extremes on one side or another. Whilst we're on the subject I don't see how electric cars are the answer either, won't that mean we need more electricity???

    I understand the venom directed at companies, but I do feel the government has to take some responsibility (the previous one). There have been people saying for years right we'd better get on with this, what is the plan to keep the lights on and the only response has been silence. Maybe it would be better for the government to take over but I doubt they have the money.

    I also fail to see how this would protect us from changes in demand and the depletion of north sea supplies referred to already. So it looks like we're stuck with it and here is my humble suggestion. Change your mind on getting rid of consumer focus and give THEM the job of policing the market. They have already proven themselves far more adept than Ofgem.

    I don't see how capping the prices would work, what if that compels companies to sell at a loss?
    Mixed Martial Arts is the greatest sport known to mankind and anyone who says it is 'a bar room brawl' has never trained in it and has no idea what they are talking about.
  • Perry525Perry525 Forumite
    52 Posts
    The power companies and the National Grid have lost many customers.
    Large users, factories and shops have closed.
    Yet the power companies have increased their profits on a smaller base.
    They will not accept that their profits should go down.
    Every time you cut back, they put up their prices.
    You cannot win if you use any power at all.
  • ValhazValhaz Forumite
    12 Posts
    So energy prices have to rise, but why are their profits rising? I still feel ripped off.
  • I'm on a green tarif with British Gas. All of my electricity is supposed to be generated via renewables. I pay a premium for this.

    So when the recent increases due to rising cost of oil and gas were announced I was very surprised to see my renewable energy costs increase the same as everyone else's.

    I've asked British Gas to explain why my costs have increased as renewable energy is not dependant on oil and gas prices anywhere near as much as that from fossil fuel powered stations.

    So far I've had no response at all from them other than a confirmation that prices are increasing because of the cost of oil and gas.

    I can't think of any reason why renewable costs should increase with oil and gas, but am I missing something? Or, as many suspect, are energy companies just raising prices as much as they can because they can?
  • bengasmanbengasman Forumite
    601 Posts
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    kitbarker wrote: »
    I can't think of any reason why renewable costs should increase with oil and gas, but am I missing something?
    You are indeed missing something.
    The energy you use comes from the same source as the energy I use; it comes out of the same grid, and is therefore NOT 100% from sustainable sources.
    kitbarker wrote: »
    Or, as many suspect, are energy companies just raising prices as much as they can because they can?
    You didn't you really expect them to raise it only as little as necessary to compensate for the cost of raw material, did you?
    BG/Centrica in particular have been convicted many times for false advertising; you should take their sales spiel with more than one grain of salt.
  • bengasman wrote: »
    You are indeed missing something.
    The energy you use comes from the same source as the energy I use; it comes out of the same grid, and is therefore NOT 100% from sustainable sources.

    I realise that the grid cannot differentiate between energy sources and that, technically, I am using energy from a varied source. However, BG guarantee to source the amount of energy used from renewable sources.

    I'm assuming the price they pay to the wind farms isn't increasing but the price I pay is. So assuming that they were just covering their costs with the price increases(!), because they are not paying the increased costs for the energy I use, they are making a much larger profit from me which surely is not right.
  • bengasmanbengasman Forumite
    601 Posts
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    kitbarker wrote: »
    ...BG guarantee to source the amount of energy used from renewable sources.
    As that is technically impossible in this country, I suspect that BG have used their popular cop out "where practicable" somewhere in the contract. That in turn would mean that they can source pretty much the cheapest form, as long as they make a token effort to justify the extra high price they charge you.

    Like I said before: BG/Centrica have been convicted for misleading the public more than any other energy company in the country.
  • edited 19 July 2011 at 10:27AM
    zeupaterzeupater Forumite
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    edited 19 July 2011 at 10:27AM
    kitbarker wrote: »
    I realise that the grid cannot differentiate between energy sources and that, technically, I am using energy from a varied source. However, BG guarantee to source the amount of energy used from renewable sources.

    I'm assuming the price they pay to the wind farms isn't increasing but the price I pay is. So assuming that they were just covering their costs with the price increases(!), because they are not paying the increased costs for the energy I use, they are making a much larger profit from me which surely is not right.
    Hi

    Looks like a valid point to me .... perhaps this should be raised with OFGEM or the OFT ...... ;)

    The way I see it is that the supplier has entered a contract to supply energy to the grid for you to use which is sourced from renewable sources and for this undertaking you have agreed to pay a higher price per unit of energy, which would only be necessary to reflect the additional cost of purchasing from renewable sources, or to enhance the profitability of the organisation.

    Considering that the justification of this round of price increases is the market price of fossil fuel having an effect on cost of the overall energy supply mix, the fact that your renewables only contract is based on provision of 'non-fossil' sources how could the supplier justify any increase ..... perhaps this is something which would fail the OFGEM requirement for the market to 'Improve the transparency of their supply and generation activities.'

    Z
    "We are what we repeatedly do, excellence then is not an act, but a habit. " ...... Aristotle
    B)
  • ConsumeristConsumerist Forumite
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    kitbarker wrote: »
    I'm on a green tarif with British Gas. All of my electricity is supposed to be generated via renewables. I pay a premium for this.

    Hi kitbarker and welcome to the MSE forum.

    I agree with zeupater that you raise an interesting point of principle which you should take up with OFGEM after raising a formal (written) complaint with British Gas.

    Given the attitude of BG towards your enquiry, I would revert to a non-green tariff as soon as I could.

    Have you considered raising this issue with consumer programmes such as Watchdog or Paul Lewis's Radio 4 program Moneybox?
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
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