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  • Mrs Wossinge
    • #2
    • 30th Sep 08, 9:48 AM
    • #2
    • 30th Sep 08, 9:48 AM
    All useful info, but I've still not found a satisfactory answer to my green electricity questions. (Not a criticism of Martin - I can't find the answers anywhere, from any source.) My two questions are:

    Why has my electricity bill (on ScottishPower's H20 tariff) risen when it is matched by 100% hydro-electric generation? Unlike oil and gas, water doesn't suddenly cost more! I conclude that I must be subsidising the non-green methods of generation. Surely the answer to rising oil and gas prices is more renewables. Why is this not reflected in the price?

    Why are there no green capped tariffs around? (Very happy to be corrected, but I've not found one yet.) The Scottish Power H20 tariff (on Economy 7) always comes up as the cheapest 'green' tariff for us. Although other providers are arguably more green (ie the companies don't deal with non-renewables at all), these are considerably more expensive. I'd love to cap, but don't want to compromise on the source of our electricity. Am I stuck with an uncapped rate?

    Would Martin consider addressing these questions sometime, please? Meanwhile, can any other green moneysavers shed some (energy-efficient) light on my predicament?
    Last edited by Mrs Wossinge; 30-09-2008 at 9:52 AM.
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    • RayG
    • By RayG 1st Oct 08, 3:31 AM
    • 10 Posts
    • 1 Thanks
    RayG
    • #3
    • 1st Oct 08, 3:31 AM
    • #3
    • 1st Oct 08, 3:31 AM
    one of the biggest subsidised methods of generation are wind farms. There would not be one windmill, if it wasn't subsidised.
  • Never_Know_My_Balance
    • #4
    • 1st Oct 08, 9:14 AM
    • #4
    • 1st Oct 08, 9:14 AM
    I think actually the price of gas follows oil and the price of electricity follows gas.

    With regards to the post on why the hydro tariff has increased, this is simple; the cost of your hyrdo energy hasn't increased (excluding assumptions on non energy costs) however the wholesale price has. Therefore the company kept your price the same they would have the lost opportunity of selling your energy back to the market at higher wholesale prices.
  • caffeinehit
    • #5
    • 1st Oct 08, 12:57 PM
    • #5
    • 1st Oct 08, 12:57 PM
    Don't forget that the wholesale price of power is only a proportion of the total price of supplying electricity and gas - albeit a growing one. The cost of transporting the stuff has historically been around a third of the total cost with supply costs (billing, meter reading and so on) another quarter or so.

    While these costs do change (due to investment needed in new pipework for instance) they're much more stable than the wholesale price and aren't likely to change by more than a few percent over the next year. So the impact of changes in the wholesale price is on bills is, at a guess, only half of what you've predicted.

    I think there are some figures on the Ofgem website for the approximate percentage of your bill that's attributable to each part of the supply chain if you wanted to put together a more accurate model of potential price changes.
  • Andy_ArT_Trigg
    • #6
    • 1st Oct 08, 3:07 PM
    • #6
    • 1st Oct 08, 3:07 PM
    What's always puzzled me is if the energy companies know or suspect prices will rise substantially, why would they offer fixed rates that would clearly undermine their future price rises?
  • WelshGandalf
    • #7
    • 2nd Oct 08, 12:01 PM
    • #7
    • 2nd Oct 08, 12:01 PM
    - The wholesale cost of electricity is currently about 80-85% of the total cost. caffeinehit is right to say that historically it was a lot less than this, but the wholsesale cost of electricity is now 400% higher than it was 6 years ago. These other prices tend to increase at about 4 or 5% a year. The ofgem page you mention that breaks down the price is here - http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?file=energy%20prices%20jan08. pdf&refer=Media/FactSheets - however note that wholesale prices are now 50% higher than in January.

    - Mrs Wossinge - unfortunately your "green" tariff isn't that green - the Big Six suppliers advertise green tariffs, but they legally have to produce a certain amount of their electricity from green sources, so all they are doing is allocating green electricity that they have to produce anyway to you. If you really want to be green I suggest transferring to a company like Good Energy or Green Energy (though various criticisms can be levelled at these suppliers too)

    - Andy_ArT_Trigg - companies can buy power in advance. If they have 10,000 customers singing up for a 2 year fixed deal, then they can go and buy a reasonable amount of electricity going forwards for 2 years at today's prices.

    Current market prices are all over the place - it is hard to tell if they are going up or down in the medium-long term, however I would agree with Martin that the unprecedented price increases this year are not fully accounted for by recent price rises - so I would agree that there would be more price increases in January.
  • Andy_ArT_Trigg
    • #8
    • 2nd Oct 08, 1:13 PM
    • #8
    • 2nd Oct 08, 1:13 PM
    Thanks WelshGandolf. So would you change to a fixed rate even though my price comparison site recommendations for the cheapest fixed rate deal to 2009 is an Increase of £412.71?

    I currently spend around £700 per year on dual fuel

    There is a fixed 'till 2010 deal with my current supplier also which shows as £435 more than current
  • WelshGandalf
    • #9
    • 2nd Oct 08, 11:49 PM
    • #9
    • 2nd Oct 08, 11:49 PM
    Andy - I'd really have to refer you to Martin's article here, especially this bit....

    the key question is 'how much surety do I want?' If peace of mind is important, as you're on a very tight budget, then a price cap would enable you to at least have surety of knowing the payments won’t rise. Better to end up having paid a wee bit more than be pushed over the brink.
    I'm not on a capped price as I can afford not to be if prices increase. Both ways are a gamble - you could end up paying more or less on a fixed or non-fixed. So I would refer to the above advice from Martin first & foremost

    I really don't want to try to predict the future electricity prices - they are far less predictable than, say, house prices. A fair bit of it is due to speculators and rumours and such. For example compared to 6 weeks ago, if you want to buy electricity for delivery at almost any point in the next 3 years it's actually a bit less, unless you want that electricity this winter, in which case it's about 20% more. This is due to mainly unfounded fears of brownouts/blackouts this winter (see here - http://news.bbc.co.uk/1/hi/sci/tech/7638564.stm) . That fear should subside as winter goes on so you would think that would reduce prices... but another fear may come along after that, so you really can't tell.
  • Andy_ArT_Trigg
    Thanks WelshGandolf. I am also in a position where it wouldn't cause serious problems if prices rose and so I'd instinctively prefer to take a chance rather than have a self-imposed £435 price rise now.

    I see the advice from martin and it is similar to the advice I give my web site users regarding breakdown insurance in that the only reason I believe it's worth taking out is if peace of mind is worth a lot of money to you, or if a big breakdown bill could cripple you because you never have savings and have little spare cash.

    having said all that I'm not sure how long ago Martin wrote that quote. I'm sure it's highly relevant in normal times though these are anything but normal times.
  • andrewsmoneysaving
    I've found most interesting, information which shows which sources that the Power companies get there energy from.

    So for instance, since Scottish Power seems to source most energy from coal power stations, buying green energy from them probably isn't the cheapest option.

    Personally, I have gone for Scottish Power Online Fixed 2009 which is a small premium which fixes prices until the end of October 2009.

    For me this was the best compromise deal on the market - I was very suspicious of British Gas' Energy Click 5 because it was too low to be true, and sure enough it's now rocketed in price and ISN'T fixed in any way!
  • andrewsmoneysaving
    Best compromise
    I've found most interesting, information which shows which sources that the Power companies get there energy from.

    So for instance, since Scottish Power seems to source most energy from coal power stations, buying green energy from them probably isn't the cheapest option.

    Personally, I have gone for Scottish Power Online Fixed 2009 which is a small premium which fixes prices until the end of October 2009.

    For me this was the best compromise deal on the market - I was very suspicious of British Gas' Energy Click 5 because it was too low to be true, and sure enough it's now rocketed in price and ISN'T fixed in any way!
  • StuartGMC
    I chose for the first time to fix on a 3yr deal with BG after the rise on 1 Sept from Scottish Power (usual 25% we have all seen for their online tariff). We can and always have afforded variable pricing. The reason was that then the BG offer only carried a premium of 13.8% over the new best prices online, which looked good against historic situation for fixing over that time, which I have seen to be some 20-25% premium.

    Transfer takes place on 9 Oct, but, it is interesting to see BG has now dropped the fix to Sept 2011, and replaced with fixed to Jan2012 but with a further 7.8% increase (in my region). This puts the margin to fix back to some 22%.

    So, will I lose out? Provided that prices rise by an average of 14% over the 3 year duration, then no. If they drop, and the oil price and gas futures look like there may be some expectation if recession results in significant reduction in industrial and commercial consumption, then I would lose out. Exit fees of £70 on gas and £30 on electricity would be the penalties.

    I maintain a thread on the Mortgage Free Wannabie board so that's where I'll post further comment in future regarding whether this first time to fix was worth it.
  • WelshGandalf
    I'm sure it's highly relevant in normal times though these are anything but normal times.
    I don't see why these aren't "normal" times in the gas & electricity markets. They have been quite volatile for the last 3 years (up AND down).

    Andrewsmoneysaving - yes every supplier by law has to reveal where their energy comes from - just search for "fuel mix" on their website. I doubt that the cost to the supplier of green power changes much between different suppliers though. (See my earlier comment about obligatory renewable power)

    Good luck with BG Stuart - they have by far and away the worst customer service record in the country Personally I wouldn't touch them with a barge pole - indeed I think last time I switched, BG were the cheapest, but I went for the 2nd cheapest instead and haven't regretted it.

    The firm's share of the electricity and gas market is 30%, but it gained more than 70% of the industry's complaints.
    by http://news.bbc.co.uk/1/hi/business/6573929.stm
    • Chrysalis
    • By Chrysalis 10th Oct 08, 2:34 PM
    • 2,298 Posts
    • 1,095 Thanks
    Chrysalis
    basically I am staying away from capped deals, they tie you in and like the other poster said there is suspicoun why they would offer caps when they know prices are going to be much higher. The price comparison sites continue to be horridly inaccurate for me as well, they still get my current tariff wrong (massively overpricing it making comparisons look better than they are).
  • StuartGMC
    Good luck with BG Stuart - they have by far and away the worst customer service record in the country Personally I wouldn't touch them with a barge pole - indeed I think last time I switched, BG were the cheapest, but I went for the 2nd cheapest instead and haven't regretted it.
    Originally posted by WelshGandalf
    I was aware of the ratings before deciding to change.

    We were with them in the past before ScottishPower and never had any problems. Called Centrica (BG) to discuss the direct debits proposed as I felt both were too low with respect to energy consumption, gave them the kWh annual consumption and they agreed; and proposed monthly payment was what I had calculated it should be to "just" match the consumption for 14229kWh pa gas and 5128kWh pa electricity.

    Call answered after short delay but nothing excessive, and so far customer service has been fine for us. I'll wait to see how things progress, but to be honest, with submission of monthly online readings (I may look to do so bi-weekly for a while if possible) has meant I've rarely had any need to call an energy supplier from one year to the next.

    I've had a similar conversation with Anglian Water as they decreased monthly direct debit too much based again on metered consumption; quick call later, confirmation on consumption and thus cost and all sorted.

    Perhaps that's where my luck runs out, or it was just because I was increasing the monthly payments?
  • StuartGMC
    basically I am staying away from capped deals, they tie you in and like the other poster said there is suspicoun why they would offer caps when they know prices are going to be much higher. The price comparison sites continue to be horridly inaccurate for me as well, they still get my current tariff wrong (massively overpricing it making comparisons look better than they are).
    Originally posted by Chrysalis
    As noted I only went for the cap BECAUSE the uplift was only 13.8% cf usual differential of 22-25% based on my observations when doing checks every 6 months on comparisons (after price changes stabilize of course). I wouldn't pay that premium to cap! I fully agree that companies will have their gas future contracts in place (you can get this data easily online through to 2015) and of course UK suffers due to lack of bulkstorage unlike continental Europe, which can impact the price suppliers can get for "winter" gas. LNG deliveries and major pipeline developments will assist supply, but we're now a net importer of gas having burnt the N Sea reserves (yes I deal with the oil & gas sector in my job!) but as I said; an average increase in domestic energy prices of 14% over 3 years would seem realistic. Even if market costs reduce the £:$ is weakening so that will influence prices too.

    Predicting the future - It's fun isn't it!

    Have found that U-Switch was always very accurate for the price we paid based on kWh consumption annual data and it allowed specific entry for night/economy 7 data too (we have gas CH but a dual electricity meter). Others were only able to ask for % split day & night consumption. So if the data is not accurate then you are right to question output from comparison but using kWh should get the correct values?
    • MSE Martin
    • By MSE Martin 14th Oct 08, 8:54 PM
    • 8,115 Posts
    • 42,285 Thanks
    MSE Martin
    Hi

    As you'll this in this weeks email

    Wholesale energy prices have now dropped - so the january price rise now looks less likely

    Martin
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.

    Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
  • WelshGandalf
    Wholesale prices have been up and down quite a bit the last few months, been very volatile.

    Personally Martin I would not go around saying "price rise less likely!" just yet... give it another week or two to see if this current dip is going to be a permanent one, or if it'll be like the other dip (or were there 2? I can't remember offhand) we had during the summer/autumn so far - which were quickly reversed. The continuing drop in oil prices however makes me hopeful that this drop in prices will continue.

    The facts are that electricity futures for over a year away are at their lowest levels since May, but shorter term prices are only at their lowest since August. If the short-term prices get below May's levels and stay there... then I think we will avoid price rises. We may even see some companies raise their prices and others not.

    Yes I look at the wholesale electricity prices every day as part of my job in case you hadn't figured that out yet
    • MSE Martin
    • By MSE Martin 16th Oct 08, 12:43 AM
    • 8,115 Posts
    • 42,285 Thanks
    MSE Martin
    Hi WG...

    Thanks for the note. Less likely is only a comparative phrase of course, it doesn't mean won't happen. I was only really shortcutting what i wrote in my email...

    Gas & Electricity price rise now LESS likely in January. Is capping worth it?
    Recession fears have driven down winter's wholesale gas & elec prices by 15-20% in the last few weeks. If this holds, next Jan's predicted 20% energy price hikes are more likely to be 0-10%. Should I cap? As the cheapest caps cost 15%ish more than the cheapest non-capped tariffs, savings are less likely. Yet if you’re near the financial brink, capping gives the security of a fixed price. Did you cap before? If you capped when I yelled “cap cap cap”, your rate's cheaper and you're likely to be saving money already, so even if prices don’t rise, you’re quids in. Much more, and how to compare and check in the Updated Guide: Gas & Electricity Related Articles: Home Phones, Grant Grabbing, Cheapest Boiler Cover

    I still think we will see price rises in January but I think they will be smaller than predicted - around the 10% mark, yet of course anything can happen between now and then in such an unstable world

    If i aske dyou to put your money on it where would you go

    Martin
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.

    Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
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