Centrica have rounded off the season for the Big six energy companies to increase prices with a substantial inflation busting rise of its own. This is bad news for consumers, and will sustain a higher inflation rate than is welcome for a bit longer following the impact of higher oil prices on our inflation earlier this year.
There is general agreement amongst political parties that these increases are undesirable. There is also some measure of agreement that the companies need to be made to try harder to keep the costs under control, with continuing discussion of regulatory action to sharpen competition or to broaden the scope of price controls or caps.
What is less discussed by the politicians is the impact of their own policies and actions on domestic energy bills. The main rises this year have come on the electricity part of dual fuel bills. According to Ofgem 14.9% of the typical electricity bill is now to pay for environmental and social costs imposed by the EU and UK government. There is the renewables obligation, the energy Green deal, EU targets, the carbon floor, the Warm homes scheme, feed in tariffs and smart meter promotion costs, adding up to a substantial sum. As more and more of our power is generated from renewables with the necessary back up we should also expect wholesale electricity prices to rise.
The government has passed the issue over to the Regulator, pointing out that they have powers to control prices or stimulate competition. The Regulator has rightly warned that introducing a general price cap might lead to a reduction in investment at a time when we need to expand our potential electricity capacity. Threats of price caps tend to encourage companies to raise their prices as much as possible in advance of the imposition of one, and have led to sharp increases in prices in some countries that have tried them when they have been removed.
The new team at the Energy and climate change department need to think through with the electricity industry our needs and the impact of both government and company policies on prices. As readers of this site will know I want to see more and cheaper energy, both for domestic consumers and for industry. The most important thing the government could do for an Industrial strategy would be to pursue a policy of cheaper energy that requires rethinking much of the present complex energy policy, which contains so many interventions, some now seeking to offset other interventions.
August 2, 2017
“The new team at the Department of Energy and Climate Change need to think through, with the electrical industry, our needs and the impact of both government and company policy on prices”.
No it doesn’t.
There shouldn’t be a government policy on the price of anything. There shouldn’t be a Department of Energy and Climate Change. There should be a free market.
August 2, 2017
@ James Doran
Absolutely correct anything other than a free market is a recipe for abuse and disaster
August 2, 2017
JR trying to blame energy companies instead of getting rid of the Climate Change Act. How much of our charges are for the Govt obligation to the environment? Wasteful wind farms etc. all ideas based in the EU!
Good grief, left wing May is even trying to copy Milibands prices caps! She assured him in parliament this year to build on his ideas! Come on JR, this is utter toss and you know it. At least write from a clean open hand position. Get your own party in order.
Reply Try reading the article again. I did not vote for the Climate Change Act and am arguing the case for cheaper energy”!
August 2, 2017
I did read the article. You are trying to shift blame from your party and govt. Your leader is building on what Miliband created. Cameron ridiculed him but implemented his socialist ideas. He even appointed EU fanatic Odonis to the tax wasting HS2 project. Milburn to social justice. Why is your party following left wing Labour? Why not create your own strategies and appoint Tories?
August 3, 2017
Cheaper Energy means widespread fracking for natural gas and clean coal-burning power stations. The crazy, self-harming Climate Change Act is an almost insuperable obstacle to making the UK an energy-rich country and should be repealed as a matter of urgency. Hope is absolutely correct in pointing out the beam in the Conservative Party’s eye while you, John, concern yourself with the motes in the energy company’s eyes.
August 2, 2017
What happened in the free market in the Dutch tulip trade in 1637 ?
Wasn’t there free trade in the financial markets in 2008?
August 2, 2017
Absolute tosh!
We need government controls on everything like they have in Ven…
Oh, wait…
August 2, 2017
I didn’t think DECC existed anymore, at least not in name, although the policies are still destroying our energy market.
http://www.bbc.co.uk/news/science-environment-36788162 July 2016
“The government has axed the Department of Energy and Climate Change (Decc) in a major departmental shake-up.
The brief will be folded into an expanded Department of Business, Energy and Industrial Strategy under Greg Clark.
Ed Miliband, the former energy and climate secretary under Labour, called the move “plain stupid”.
August 2, 2017
Indeed, get the government out of the way as far as is possible and let’s get some real competition in energy, banking, education and health care too. Stop MP’s being paid “consultants” and thus acting for vested interest groups like the hugely taxpayer subsidised “green” industries, rail industries or the state sector unions.
£150 extra per household on energy bills due to all this fake greenery it seems, and this is not even saving any CO2 anyway. Even if you have been taken in by the state sector and the BBC’s endless climate alarmism agenda.
August 2, 2017
The State (government) embraces more competition in the private sector and appears to abhor private monopolies of any kind while precisely the opposite policy is applied to the State itself. How can this hypocrisy and double standard be justified?
The NHS and the utterly repugnant, poisonous BBC are two State organisations that are in dire need of total and absolute reform. Instead the government choose to target private companies who have to continually adapt their operations to survive. Why?
I have always believed that governments choose courses of action that protects itself. These tedious attacks on energy companies is another example of self-serving politicians with one eye on the ballot box and their popularity targeting a politically sensitive issue. If it wasn’t politically sensitive politicians wouldn’t care one way or the other
I have advice to Tory politicians. Stop pandering to all and sundry and set out your beliefs and principles. Defend them and never apologise.
PS – When are the Tories going to do something about the BBC? They’re becoming a law unto themselves
August 2, 2017
Duncan , very well said !
August 2, 2017
State virtual monopolies like the NHS and Education are appalling. Almost all competition is killed by these services being “free” at the point of use. Hard to compete with “free” especially if your customers have already been forced to pay for the free service (whether they use it or not under threat of imprisonment). Same in essence with the BBC.
August 2, 2017
LL,
The NHS is a long way from perfect, but seriously, do you want to see a US style health care system in the UK? They pay, on average, 3 times per capita what we pay, so be careful what you wish for.
August 2, 2017
No to US. Yes to French, Swiss or any that dont kill us.or cost more. Can we cut self awarded merit payments for life to consultants too please.
August 2, 2017
I wonder why you, like so many others, assume that the only alternative to the NHS is the American system?
Also, all relatively developed nations find it very difficult to devise and run a state health system in our modern world without getting into difficulties, both financial and administrative.
August 2, 2017
Why do people always assume that we want to replace the NHS with an American style health service?
August 2, 2017
Its always the binary choice of NHS or USA with those defending the UK system.
All it needs is ever more funds we are told, every year for decades.
There are dozens of different ways of providing State health care systems beyond the American system.
Many are better than ours.
Time we copied the world’s best systems.
August 2, 2017
Most are far better than the Nhs the US system is almost as bad as the Nhs.
August 2, 2017
You make it sound so easy to emulate another system, which do you suggest and why? I entirely accept any government payer ‘free’ system is open to abuse from the user and waste by the provider, but a commercial system costs so much more. Please recommend a better one!
August 2, 2017
Daniel Hannan thinks the USA system is much superior to the NHS – God knows why – can a constituent ask him?
August 3, 2017
It is certainly better, have you experienced the NHS recently? True it is expensive and they often over treat with no real benefit to the patient, but it is clearly better than the rationed and dysfunctional NHS. Free at the point of rationing and very long delays.
August 2, 2017
Indeed the whole renewable/green blob agenda is a total rent seeking nonsense. As of course everyone with any understanding of the physics, energy economics and energy engineering knows full well. What is the point of generating, far less valuable intermittent energy, at a cost that is way in excess of that of on demand energy from gasm hydro or coal? Then rigging the energy market to force people to buy it.
It is rather pathetic of MPs to complain when nearly all of them voted for the absurdly damaging, costly and pointless (even in C02 terms). Unfortunately parliament is full of people with zero understanding of physics, energy economics or energy engineering. It is full of people who deal in irrational emotion, wishful thinking and envy. Full of dopey PPE & Law graduates or worse still paid “consultants” to the rent seeking greencrap industry.
Three chears to the five who actually voted against the act:- Christopher Chope, Philip Davies, Peter Lilley, Andrew Tyrie, and Ann Widdecombe and the few others who at least abstained.
We are governed by scientific and economic ignoramuses or worse still people in league with (or acting as “consultants” to the green blob). Lefty remainers, T May, Rudd, G Clarke, C Perry, P Hammond and countless others are all greencrap enthusiasts. They seem to think the laws of physics with change if they pass daft laws.
Doubless they will complain about the energy companies large energy price increases – but they themselves are entirely to blame. They voted for it and they rigged the energy market for expensive electricity.
August 2, 2017
Good morning.
In other words, it has passed the buck.
It is this more than anything that gets my ire. QUANGO’s, NGO’s and Supranational governments, all take over the jobs that our elected representatives should be doing. This has got to stop ! No more protecting useless Rent Seekers. We have seen all too often what happens when someone who has clearly broken the, Peter Principle can do.
Repeal or amend the Climate Change Act. Or at least stop blaming others for your mistakes – Our host excepted of course !!
August 2, 2017
@ Mark B
Repeal or amend the Climate Change Act.
Bin it, don’t give then the chance to fiddle with it, it will only come out as a bigger pigs ear.
August 2, 2017
It’s worse than that. By law – Ed Miliband’s 2010 Energy Act, OFGEM are required to put green interests ahead of consumer interests. So government has agreed once again to stuff consumers.
August 2, 2017
The best way to address this from here (other than cutting all the green crap of course) is to make the energy companies offer “directly comparable” contracts offering fixed and capped rates for certain fixed periods.
Then make switching between these fixed tariffs even simpler with a letter at the end of the fixed period encouraging them to look at switching again with the quotes and numbers/emails to call if they want to switch.
The biggest absurdity is that all these wind farms, biofuel subsidies, and the photo voltaic agenda have no significant effect even on world CO2 emmissions well all is considered. Even if you are still (wrongly in my view) concerned about imminent climate armagedon. It just exports jobs and overall world emissions actually increase.
August 2, 2017
No. The only thing that can help is a complete change in energy policy so that we stop closing down cheap power sources and investing in expensive ones, and remove the need for very expensive grid connections to transport power from remote wind farms to centres of demand. Anything else is simply shifting the deckchairs on the Titanic.
August 2, 2017
Last week the Government wanted us all to go the electric car route !
When the above happens, and we have little alternative left, does anyone think they will still be value for money.
How much to top up with a quick (30 min) charge to go 80-100 miles in 2040.
Has the government worked out how many more windmills, lagoons, solar panels and standby diesel engine generators are going to be needed yet ?
Does the Government actually have a long term plan for the necessary huge increase in power generation that will be needed.
Is fracking on or off the menu ?
August 2, 2017
At the moment HM Govt seem to be struggling to support UK Oil and Gas’s utterly conventional drilling in the Wealden basin in Sussex .
This is one of the most significant wells ever drilled onshore after the Sherwood Forest wells which kept Britain moving during WWII and Cuadrilla’s Bowland exploration wells which single handedly harpooned the British Establishments ideological fantasy energy policy .
As usual , once an official body finds they are wrong they go into denial as HM Govt did and tried to strangle UK shale gas at birth . Better to leave it to the market to find out who is right .
UKOG are waiting for approval to flow test the well now !
You couldn’t make it up .
August 2, 2017
You are optimistic if you think that a top-up charge for half an hour will take you 80-100 miles. Look up the report in Autocar on-line about the Mercedes all-electric car. It takes a minimum of three hours to charge from flat on a 3-phase supply (not domestically available) or nine hours from a domestic feed. It has a range of 125 miles. As to the generating capacity required, if we had the stated nine million electric cars, we would have to roughly double our generating capacity.
August 2, 2017
Long term plan…. yes they do – they also announced that they are going to uses diesel rather than electric in future railway engines.
See! there really is a joined-up energy policy after all!
August 2, 2017
Of those you list, only diesel generators offer the necessary reliability and continuity of power production. The reality is that we would need an enormous expansion in nuclear and gas generation to meet electric car demand. I calculated that peak supply from petrol stations when they are at their busiest is equivalent to over 100GW of electric vehicle recharging, or about twice current ability to supply. The additional investment required in the grid, local distribution and fast charging points is an eye watering sum.
August 2, 2017
Dear Alan–Another simple and super letter in the Torygraph today, the gist of which was that extremely important stuff the Government was clearly planning to bring in was not in the Manifesto, which instead was full of baloney to the extent that it is impossible to describe. Does Michael Foot still hold the record for the longest suicide note in history? It looks as if we are stuck with Mrs May but I hope that anybody else who had anything whatsoever to do with that travesty of a Manifesto has gone, and forever–never have people been so misguided and so just plain wrong.
August 2, 2017
Does the government have a long term energy plan for a population of 90-100 million people?
August 2, 2017
Not the news anyone wanted to hear, but is it any surprise ?
There is no such thing as free insulation programmes, free smart meters, money making feed in tariffs, and couple that with signing contracts for ever more expensive energy production simply because it has a name of sustainable, or so called lower emissions, and at the same time deliberately closing down older but still efficient power stations and you get, MORE EXPENSIVE ENERGY.
Cutting down forests to manufacture wood pellets shipped here from another continent another one of the latest fiasco’s.
August 2, 2017
Dear Alan–One imagines that the ships carting these pellets (the making of which itself uses power) across the Atlantic (hard to believe in itself) are diesel powered
August 2, 2017
Very good post John.
As more and more of our power is generated from renewables with the necessary back up we should also expect wholesale electricity prices to rise.
Why? The present state of our energy system and for that matter half of Europe is down to the total incompetence of politicians with little or no knowledge how a distribution network operates.
A knee jerk reaction to be seen to doing something to pacify the greens resulted in a suicidal rush to install wind turbines and solar panels with loads of subsidies bought in to support the new technology. New technology my backside. Windmills had been around for centuries. The Climate Change Act suddenly gave the government of the day with an easy option how to get the consumers to pay for the massive programme that was to be rolled out.
All the time little or no consideration was given to how would the network cope with getting the power from remote places to the end user and again no one stop to think that as you quite rightly have said wind turbines and solar require 24/7 back up to cover the changes in the weather which entails gas, nuclear and coal to be run but just ticking over ready to go back to full output.
Politicians gave little thought to how the old Constraint payments would work in this new generation of energy supply and the speculators soon cottoned on to the fact that their wind farms and even individual turbines make them more money for being turned off than actually operating. Still he mad rush was allowed to continue bought about in some areas of the UK by the fact that community payments to the villages and towns in rural areas would receive Community Benefits which in reality took pressure off of the local and central government to have to provide and more importantly pay for local amenities and improvements. In reality giving the people back some of their own money, but, not a lot.
We still have a totally hotch potch system for providing energy with billions being wasted on hair brained projects and all the time the snake oil salesmen ply their trade still selling the dream of 100% renewable energy. That is all it is a dream and it is totally unsustainable.
The new team you mention should have all their qualifications and CVs checked to ensure they have a complete understanding of energy, distribution, engineering and project management and if they cannot meet those basic requirements then they are in the wrong department.
The country is being ripped off because politicians with little or no understanding of the energy markets have allowed an engineering based discipline to be turned into something of a religion which now has credentials that means it can be taught in schools which through not understanding the process have presented all forms of energy other than renewable as bad and destroying the world.
August 2, 2017
You haven’t mentioned the lemming like £20 billion rush to Smart meters. HMG of the day refused to listen to the experts who said they were not fit for purpose so you had the situation of people with meters on the advice of the government switching suppliers on the advice of the government, only to find they went dead needing reversion to a manual system, often they are inaccurate, don’t link to a national network or work in dead spots, and by the way, even when working perfectly, according to BRitish Gas, saved £30 p.a. max. Wow.
Only a £20 billion waste this one Mr Redwood. I see HMG had to give back
£100 million plus in the last couple of weeks because of taxing second home people incorrectly plus refunding tribunal fees where you have denied people natural justice
But not hundreds of thousands in legal aid to allow people to contest immigration decisions. Just another ‘successful’ week in Westminster.
August 2, 2017
Well said. I just viewed again the late Prof David Mackay’s last interview (he was scientific advisor at DECC). He is quite explicit in blaming MPs for the UK’S wasted investment in solar, and explains why renewables can never be the solution for us. His online book “Without Hot Air” should be required reading for all MPs. The trouble is it appears that few of them have the basic numeracy and scientific understanding to understand it.
August 2, 2017
John, everything you have written here is totally irrelevant when we still insist on going down the route of renewables. You have stated yourself that the cost to the consumer for all the add ons puts pressure on companies to raise our bills. The following figures come from the Renewable Energy Foundation led by Dr John Constable.
The quickest way to reduce CO2 emissions is from switching from coal to gas. This was the case in 2016. Wind output was lower this year so output from wind farms was down while the use of gas was up and we saw a significant drop in CO2 levels. Hydro decreased also as when we have low wind speeds we often have less rainfall.
(Individual wind farm and company payments left out as I cant check these ed)
52 wind farms in the UK get constraint payments. 37 of these are onshore in Scotland which to date have received £274m. Scotland is building new wind farms at an alarming rate in areas where wind farms are regularly being switched off. This is a blatant attempt from the developers to earn more money as they know they will be asked more often to constrain and get more earnings this way. This is a disgusting situation which really should be addressed.
The government’s Renewable Energy Planning Database (REPD) is the principal source for estimates of progress and probable future cost, but is inconsistent with five other data sources published by government, and also with estimates made by National Grid. What cannot be measured accurately cannot be managed adequately. Government needs to get a grip.
We note that the proliferation of Scottish onshore wind farms has caused and exacerbated export constraints and thus it seems unreasonable that they should be rewarded with additional profit, made at the consumers’ expense and above that already inherent in the renewable subsidies, as a result of the necessity to curtail output. This should be seen as part of the risk of building non-dispatchable generation in an area of limited infrastructure, rather than incentivising building in such areas as the current system of rewards does.
Could this be why our energy bills keep rising and can only rise higher each and every year that more wind farms are built? Once we have electric heating, cooking and cars the grid will need more supply of energy and our bills will rocket. All utter madness and something that will come home to bite us in the rear end.
August 2, 2017
Smart meter promotion costs.
If you have a lot of appliances on you will use more electricity or gas. Why do we need Smart meters, which can not be switched between suppliers?
Just change the charging formula so that it is simple and users can multiply the numbers on the meter by their agreed rate. No need for smart meters.
I can work out my daily and hourly charge using the formulae used by the supplier but do understand that others can not or will not.
August 2, 2017
The new team must be the old team of Deccheads, moved to Business añd energy, judging by the decisions,.
Can someone ask ministers why we will be paying much more for our North Sea wind than the Dutch, Danes and Germans.
I am in Denmark, home of DONG. They are smrt negotiators.
August 2, 2017
Smart meters are indeed largely a complete waste of money driven, by the let have more expensive intermittent “renewables” agenda and charge differently at different times.
August 2, 2017
Switching is easy.
Market forces in action. If everyone moved to the cheapest supplier competition would ensure prices reached their floor unless a cartel is operating. In a cartel situation the government actually has a use.
August 2, 2017
Once you have changed the first time, there is very little to save after that. I change my electricity supplier every year or so when my fixed term finishes but actually the savings are not much more than £50 or so. I do so more to make what I know is an ineffectual point as they try to bump me onto dearer tariffs. There is an unofficial cartel – everyone can see everyone’s prices, so they all end up charging more or less the same. I have been tempted to change to the brand new suppliers but a bit of research online usually produces tales of how bad the experience is, so I don’t go that route (I will when they get a bit more experience maybe). There are no market forces anymore except the endless price rises whether justified or not. Cost plus profit does not exist much now, just what they think they can get away with. True competition only exists between small businesses – the large corporations all end up moving to the same centre of gravity whatever the product. Petrol, supermarkets, anywhere a big firm is involved they price match which results in higher prices over time, not lower. Wait and see the result of British Gas price rise. I bet they will all follow before winter.
August 2, 2017
The trouble is that retailers are not permitted to switch to the cheapest supplier. They are all required to purchase or generate themselves a large quota of expensive green power, and the grid is required to compensate wind farms if their power output is curtailed, so you pay for it again in grid charges.
August 2, 2017
Mark You are quite right in what you say and I have sent in a post today highlighting how much subsidies are which so far John has declined to print even though the figures come from a very reliable source.
August 2, 2017
The political class is in denial about the impact its ill thought out green energy policies is having on energy costs. It was pointed out by many when they were implemented but we/they were ridiculed for doing so. Cameron’s Carbon Plan signed by him, Clegg and Huhne is an egregious example of the nonsense that is inflicted on consumers and businesses alike. The current government is no better.
August 2, 2017
‘
Unfortunately, the concept that we are all responsible for alleged man-made climate change, and need to be punished for it, is rife This government like the one before has simply fallen in line – the lemming approach to good governance – with other nations that use the scam to increase taxes and control people better.
It is high time te government looked outside the box ………
Companies however wll take advantage of any additional tax that gets added to services – for example Insurance – costs rose well above the 2% additional taxation, but companies blamed the government entirely.
August 2, 2017
A scam to increase taxes and control people better – indeed that is why the state likes it, another excuse to tax and interfere.
The main thing driving up insurance taxes are: Hammonds huge increase in IP Tax to 12% and the various rackets that go in with false no win no fee insurance claims, whiplash and the rest. The vested interests of the lawyers and the need to keep them in the style to which they have become accustomed.
Also with the dire NHS £56 billion just for legal costs it seems. A broken legal system and a dire NHS.
http://www.express.co.uk/news/uk/744940/NHS-budget-legal-costs-compensation-negligence-cases-national-health-service.
Rather more lucrative to sue doctors than to become one! Yet which one does good and which net harm?
August 3, 2017
We could usefully adopt the type of system they have in New Zealand for medical compensation. A report from 2006 says:
http://www.commonwealthfund.org/publications/in-the-literature/2006/feb/no-fault-compensation-in-new-zealand–harmonizing-injury-compensation–provider-accountability–and
August 2, 2017
@Bryan Harris
It is high time te government looked outside the box ………
Would be a great idea Bryan, but to do that they have to be inside the box to start with.
August 2, 2017
Time to broom all this green crap. It’s all a fraud anyway.
August 2, 2017
Indeed get Owen Patterson and Peter Lilley back to sort it out. But May is a Geography graduate, has religion and is clearly daft enough to fall for it all.
August 2, 2017
I am most shocked by the speed at which Gove capitulated to the Green blob.
August 3, 2017
Gove has gone potty, first he stabs Boris in the back and lumbers us with May, then he wants VAT on private school fees (which would cost money not raise any net) and now he is becoming another green loon!
These English graduates – no grasp of science, logic, engineering, economics or even basic sums!
August 2, 2017
There is a Faith system in play here, that expensive intermittent “Green Energy” has a virtue all of its own and must be supported at any cost, following the general premise of Socialism that someone else will pay.
Let us itemise electricity bills to fully expose the cost of green levies on household bills. Then make the levies an opt in so that true believers can support them.
Supporters could virtue signal their good deed with window stickers saying “I’m into Green and higher cost energy”.
Alternately we could have a referendum on decarbonisation to instruct the govt to stop doing it and taxing us to fund it. Fracking could be proceeding independently.
August 2, 2017
President Trump has the right approach. If we want t cheaper energy, we have to stop thinking renewables are our saviour, they’re clearly not.
August 2, 2017
Technology is amazing. We don’t need an unimaginative and lazy Luddite, like Trump (when it comes to politics and energy).
With a bit more work, time, imagination and patience, we can have our cake and eat it—enough energy (and not forgetting Nuclear) without damaging the environment, by supporting our scientists in every way possible.
August 2, 2017
I suggest you read Prof Mackay’s “Without Hot Air” before assuming that technology will magically have all the answers. There are real barriers to what can be achieved that are dictated by physics.
August 2, 2017
Indeed but T May even tells him off for withdrawing from the totally absurd Paris Accord.
August 2, 2017
Only British Gas, part of Centrica and SSE (Southern Electric and Scottish Hydro Electric ) are UK owned.
Scottish Power = Iberdrola, Spain
N’Power = RWE, Germany.
E’ON = Germany.
EDF = France.
What sort of a government would allow something as strategically critical as electricity supply to fall into foreign hand. Only a UK one. etc ed
Electricity controls heating, lighting, machinery operation and industry in general. Government now proposes to hand UK transport to said same electricity companies. very sharp minds in government or is something else pulling their strings. It is hardly surprising that such a free market of uncontrollable suppliers finds prices, as ever, soaring. Another aspect you may wish to consider is that these EU companies are all under the influence of EU policy on green energy. I assume that there is a lot of lobbying against fracking and cheaper energy sources from these companies. It will take more than gentle stroking from a government regulator to sort out the energy mess you have led us into.
August 2, 2017
The cleanest and relatively cheapest way to generate reliable electricity is CCGT gas fired stations.
Would you invest your money building a station with a 40 year life when government policy is to close them down within 13 years.
Also they will be forced to operate at less than optimum output to provide backup for unreliable wind turbines.
John, why are politicians so stupid and blind when it comes to power generation. Announcing change to all electric cars by 2040 when there is absolutely no strategy for providing the extra 40 gigawatt required.
Spending billions on windmills which will not generate anything on a cold December day when high pressure settles over Britain.
August 2, 2017
Ian, Agreed that an extra 40GW demand is a reasonable figure, though it does depend on when we all plug in our electric cars. However since the road transport energy consumption is over 450,000 GWh (assume petrol at 30mpg) in a year, we are looking in the region of doubling (depending on efficiencies and trade-offs) our electrical energy consumption over a year.
Electric cars will need charging more frequently in winter for example, just when the demand is highest anyway. Generation produces its own losses and inefficiencies in the chain from power station fuel to roadwheel which offsets much of the higher efficiency of electric motors vs internal combustion engines.
We will be forced to build more (a lot more) CCGT because Wind is not reliable, and we cannot build new Nuclear fast enough. At the moment as you intimate we are not building enough to even fulfill our current needs because of government green policies. The imposition of the diesel/petrol ban is Gove’s folly.
August 2, 2017
You ask:- John, why are politicians so stupid and blind when it comes to power generation?
Well not just power generation. They are driven by a green religion, most do not even have a physics A level let alone any understanding of power generation or the economics of it. They get their information from the absurdly biased BBC I suspect or Greenpeace. They think there are votes in this daft religion.
August 2, 2017
I believe historians will look back at the shattered remains of Western civilisation and be bewildered by the extent of stupidity that brought it to such a state. The progressives will rightly be blamed for bringing the West to it’s knees with their machinations. That are concentrated on promoting mediocrity and insistence on all rigidly conforming to their socialist and eccentric dogmas. Energy policies will just be one of a myriad of reasons blamed for its’s demise. Social, economic and political policies coupled with paucity of intellectual abilities of our leaders and politicians will play a bigger role.
Energy policy is a prime example of how progressives are leading us into making absurd, ill thought out and counterproductive decisions. As they consider sentiment and emotion are better measurements than conclusive evidence on which to formulate their policies. As for consequences that does not remotely interest them as they rely on the intention ensuring they will not be harmfull. Inevitably they are. Climate change alarmists are like Columbus. They do not know where they are going, have no idea if their method of travel is appropriate and when they eventually get there they will not know where they are. In fact everything they cause us to implement is not motivated by logical reasoning or objective observation only on unsubstantiated faith like beliefs.
August 2, 2017
Too true. The legacy of a lack of thinking in the upper parts of the Civil-Service…
August 2, 2017
Daily Telegraph is reporting £149 of average electricity bill is green taxes. The Climate Change Act needs repealing, another blindingly obvious mess, it should never have been passed. One positive from the election: Clegg out, but negated by Cable and Davey back.
August 2, 2017
Probably more important is that grid costs have more than doubled in a decade in order to handle the wind farms etc., So it now counts for almost as much as wholesale power prices. This is always the factor that is hidden away in discussions of green policy.
August 2, 2017
The energy price cap was a nonsense policy worthy of Ed Milliband as pointed out in the election. If the govt doesn’t like high energy prices then it needs to get rid of the green crap policies and return to a free market such as we more or less had post privatisation in the 90s. If they really think the green crap policies are necessary to save mankind from global warming then stop complaining about the costs of them.
In the meantime get moving with shale gas. All the environmentalist scares over this have been shown to be bunkum.
August 2, 2017
There you have hit upon the reality of the political class. They moan and groan about each other’s policies when in opposition, but when they come to power how often do you hear that the policies they complain of are reversed? They keep the Ed Milliband nonsense going for instance so they can say it was all Labour’s fault or vice versa and never seek to correct what they see as being wrong in opposition. Too many new ministers with hare brained schemes trying to make a name for themselves and weak Prime Ministers who do not shut them down. Politics is the best paid job in the world for unqualified amateurs and we all suffer.
August 2, 2017
@ Richard1
In the meantime get moving with shale gas.
The present parliament just hasn’t got the bottle to do it, they are afraid of the greens and as usual are trying to be everything to everybody.
August 2, 2017
The BBC spends £2,500 a week buying copies of left-leaning newspaper The Guardian.
Presumably, in the interests of balance they spend the same amount buying the Telegraph and the Daily Mail.
http://www.dailymail.co.uk/news/article-3097877/BBC-spends-130-000-year-buying-copies-Guardian-s-equivalent-900-licence-fees.html
August 2, 2017
No the Guardian is top of the list of papers they buy, even though the on-line version is free ! There is also all the BBC and public sector job advertising that goes exclusively in the Guardian. It is the closest thing to a state-owned newspaper we have.
August 2, 2017
Also, smart grid with fancy switchgear for swapping around between suppliers,smart meters thst dont work 4bn, carbon capture and tidal that dont work unless 100 year write off. As Prof MacKay said before he died, Why dont we just build nukes and run them all the
August 2, 2017
Smart phone too smart to use too.
August 2, 2017
You can read The Guardian free online.
August 2, 2017
–
Please Mrs May – after you’ve delivered us from the EU, deliver us from the BBC also.
August 2, 2017
The BBC gets its five news items per day from Social Media for nothing. With added details, footage from CNN and others then circumventing copyright issues by silencing the original commentary, recording-over it with their own commentary and cutting the original into smaller pieces.
We should give our licence fee to CNN.It is just as as Fake News as the BBC which should ease the brains of liberal-lefties unable in accepting reality,but with original longer and intelligent commentary.
August 2, 2017
Whereas almost no one actually buys and reads the Guardian other than a few students perhaps. So they have to make it fee on line. Just in case anyone wants to have a laugh at the silly agenda’s of say Alibi-Brown or George Monbiot.
I see tha Venezuela is going rather badly – is Corbyn still a big fan of this let’s kill the economy dead approach?
August 2, 2017
The only purpose of the ‘regulators’ is to take responsibility off the shoulders of ministers and to lose it amongst their well-paid, unelected, unaccountable pals.
What we need to encourage competition is a standard product that must be offered by all suppliers. That should be possible for things like car and travel insurance and a doddle for gas, electricity and water.
The present situation is like going to a pub and finding that the beer is free but comes in 500ml glasses but that they charge for entry which has a 5% discount if you pay an annual membership fee – i.e. totally impossible to compare like-with-like. Electricity ought to be sold by the unit but the clowns in Ofgem brought the standing charge back so they had to invent a standard customer just to make comparisons ‘easy’.
August 2, 2017
Government policy to combat global warming is to raise energy prices. But they then complain when it happens ? Shouldn’t they be celebrating the fact people will be forced to use less energy thus reducing CO2 emissions ? Or maybe I’ve missed something.
August 2, 2017
No government policy is to push up energy prices, export jobs over seas and then blame it all on the greedy energy companies and the likes. It has been for years, even before Ed Miliband’s insane climate change act.
T May is a big fan of green crap, even criticising Trump over withdrawing from the idiotic Paris Climate Accord. Look at her choice of ministers here, Greg Clarke, Claire Perry ….
August 2, 2017
The Miliband Legacy is responsible for past, present and future rising electricity prices. The mad, picked out of the air, 2050 Climate Change Act CO2 reductions will never be known to be achieved.
Everything you mention – the renewables obligation, the energy Green deal, EU targets, the carbon floor, the Warm homes scheme, feed in tariffs and smart meter promotion costs, stems from the CCA.
Too much NO², or is it really too much CO² (the green house gas that plant life loves). Ministers got it wrong again, and the German Car Giants cheated, on the CO² reduction and particulates.
Gove’s 2040 cut off date for diesel/petrol cars, more gesture politics and ‘pie in the sky’? It all comes from the 2017 Election Manifesto, if any one read it.
Is he copying the French? The French minister who announced this, a former climate activist and TV wildlife presenter, is a Monsieur Hulot, sharing his name with that famously gauche comic film character played by Jacques Tati, who was always making silly mistakes.
Not a word about the manifesto promise of affordable energy costs. Another little snippet: – A successful industrial strategy requires competitive and affordable energy costs. We want to make sure that the cost of energy in Britain is internationally competitive, both for businesses and households.
Don’t you know Countries using fossil fuel will always be more competitive. On the sly Germany is burning brown coal.
We will therefore commission an independent review into the Cost of Energy, which will be asked to make recommendations as to how we can ensure UK energy costs are as low as possible, while ensuring a reliable supply and allowing us to meet our 2050 carbon reduction objective. 2050, there is the rub.
To meet the CCA 2050 green house gas reduction promised, you are going to have to phase out the use of natural gas for heating and cooking. So when are you going to tell the Public the starting date – 2030, 2040? Or, are you waiting for all the still to be commissioned smart meters to be turned into instantly variable tariff WHITE METERS?
A Parliamentary report, based on an Imperial College study, estimates that this will boost our electricity needs to 350GW, nearly six times higher than our current peak demand.
The simple answer to really affordable electricity is REPEAL the Climate Change Act.
August 2, 2017
The energy/immigration policy is utterly insane !
August 2, 2017
12.5% rise ? – -that should give a good hit to all those in the ” Eat or heat ” brigade.
August 2, 2017
Do you mean the millionaire pensioners who have had it too good over the last few years and have done the young out of their birthright? They’ll soon put a stop to that come the next election which may not be far away. They wanted to do away with the heating allowance too for anyone not on pension credit so that will come too. Best invest in funeral directors.
August 2, 2017
Only in England.
August 2, 2017
The rises in the cost of all forms of energy are unacceptable and the Regulators concerned should be sacked and replaced by competent individuals with a track record of cost cutting .
In the case of SSE for example ( I am one of their customers ) , they announced a very substantial rise in the dividends to their shareholders just at the time of their latest price hike ! . Regulators have to supervise all aspects of energy supplying costs ,efficiency of operations , management skills , profits and shareholder distributions . Unless they have this scope and power , it will not be possible to give the user public a fair deal . My reasoning should also apply to Water suppliers .
I’m glad that John has highlighted this issue . I sincerely hope it will penetrate into Government policy . For the Conservatives it could be a real winner with public sentiment .
August 2, 2017
Why do politicians buy into their predecessors monumental mistakes, as in the case of energy, then either tinker around the edges or complicate the issue with their own ‘solutions’, as in the case of price caps.
Scrap the green crap, encourage fracking and let the market decide. But it will never happen. It is written into the statute books and as bad legislation is never repealed British consumers will simply have to suffer.
August 2, 2017
Rather than implement green energy policies implement policies to reduce the world’s population. This is the cause of most of our problems and is set to get worse. According to a recent United Nations report, the population is growing by 83 million per year. To compensate for this additional human footprint you would need to make an awful lot of energy savings. Western countries are just becoming less efficient allowing industrial production to move to the growing economies in the East. Unless the root cause of the problem is tackled you won’t solve anything only make it worse.
August 2, 2017
Well their high energy policy does indeed produce much higher winter death rates amongst the elderly. Perhaps this is their plan.
August 2, 2017
@ Christine
Very well said in total agreement with you. Nothing will change until the world leaders accept what they are doing is just solutions and then try and address the real problem which is the worlds ever growing population.
August 2, 2017
If the Government is serious about reducing energy prices then it needs to get rid of the climate change act and green subsidies – oh and a good start would be to (again) promise to get rid of the 5% VAT on energy when we leave the EU.
All this makes all cars being electric by 2040 a nonsense.
August 2, 2017
I can remember when, in my youth, it was claimed by experts and politicians that nuclear-powered energy would be so clean and incredibly efficient that electricity would probably be free.
I’m 72 now, and still waiting……
August 2, 2017
Ofgem seems to have altered its website since I last checked it. It used to say in the first few sentences something along the lines that it did not have the power to force energy companies to set prices but more or less acted as an arbitrator between the energy company and the consumer. The website now appears to have a lot of waffle in common with other similar organisations which basically says very little
It seems very similar to the old FSA, or whatever they are called these days, which was brilliant at resolving issues between individuals and financial institutions, but was next to useless when it came to oversight of the whole financial industry.
Government policies need oversight by government.
August 2, 2017
Regulators have no teeth – it was designed that way just to take heat off Ministers but not actually do anything. They are more like industry associations than defenders of the public.
August 2, 2017
No joke. NASA is advertising for a “Planetary Protection Officer”. Job is to protect us from all the stuff and potential weird things out there in the Cosmos, aliens, microbe laden asteroids and meteorite hits on Earth , of course etcetera to Infinity.
It goes without saying no-one from Ofgem need apply.
August 2, 2017
One is not going to get the job if one cannot even properly read the list of duties: It appears the main responsibility is to ensure that other planets and celestial objects will not be contaminated by Earth’s “products”. Check on the NASA website. One might get a somewhat more correct information than from FoxNews.
August 2, 2017
For those concerned about CO2 emmisions, impose a carbon tax as the sole action needed to drive their reduction. This would also have to be charged on imported goods in proportion to the CO2 used in their manufacture, else we aren’t reducing CO2 emissions at all, merely outsourcing them. At the same time stop all subsidies for solar, wind, renewables, insulation smart meters, etc. etc. Also repeal as redundant any regulations not there for public safety. If these things actually make sense with the carbon tax in place they’ll happen anyway as they will be saving money- the point of a carbon tax is that the harm from CO2 would be included in the price of everything, no need to worry about carbon footprints or anything else.
This would provide the government with both revenue and savings, which could be put to reducing taxation on other things.
For those skeptical about the unique dangers posed by a trace gas, I would simply point out that something is going to be taxed, why do you prefer an income tax to a carbon tax?
And with the carbon tax in place, simply buy the cheapest power you can get.
Alternatively just junk climate subsidies, taxes and regulations and buy the cheapest energy possible.
August 2, 2017
I have yet to see any evidence that privatising public utilities has brought prices down.
All that has happened is our utilities are owned by foreign company’s/countries and profits are not used for the benefit of consumers or even funding the NHS.
August 2, 2017
Ah, but Tory dogma is that public ownership is bad, unless that public owner is foreign. We’ll see the NHS sold off to foreigners as soon as the public will wear it for a short term gain for the budget and a long term loss for the country as is the case with the utilities.
Mrs. Thatcher had the idea of a share owning democracy bur reckoned without the great British public. As soon as they showed a couple of hundred quid profit on their discounted shares they sold off and bought a new telly or holiday and then foreigners hoovered up up the shares. Never mind, made a nice tidy sum for the City boys.
Reply Nonsense. The Conservative party is wedded to the NHS and is not going to flog it off to foreigners.
August 2, 2017
Reply to reply.
Is that a guarantee? They did not intend foreigners to own the utilities, but things have a way of happening. If you privatise any part of it, sooner or later it will happen in the same way. Investors invest for profit not ideolgy and would sell their grannies for a quick buck. Tell me nonsense again. I’ll remind you later.
August 2, 2017
This chart of gas and electricity price indices (BEIS data) for consumers shows that prices were stable or falling before competition was largely eliminated by the formation of the Big 6 in 2002 (a consequence of Labour’s Utilities Act 2001), and have grown ever since with market competition being replaced by government diktat on energy policy:
https://uploads.disquscdn.com/images/0b6a3d3b29d473835d057cd795026be0d7e8825afae9a5ab6078b884082fabc1.png
August 2, 2017
It’s nice having debates. Things merely…happen…in other countries and debate in official terms is impossible.
But in our advanced country, if we still debate as a necessary part of our living ,on Energy to homes, then our society has failed. Were there not woodcutters, charcoal producers in Sherwood Forest and elsewhere since green became fashionable as annual camouflage in a predominantly deciduous forest?
We need a British Economy as opposed to the debatable economies and mythologies of elsewhere; for, we are big.
August 2, 2017
It no good relying on the government anymore, If you want something done you will have to do it yourselves. Crowd funding is the way to go in your own areas to get yourselves cheap electric from the market, the best place to start one up is at your local political association where people meet to talk about things. The hard thing to do is rising the money to start with, so you need adds on social media, local newspaper, local radio, with feet on the ground, this is where your local political association coming in to it own, it has all the things you need to get the message out to the people and small business in your area to gather the money to start one, with grants if you get them from local council or elsewhere, and put the money in a credit union not a bank, so that the money will be lent out in local area to local businesses and people, while getting better interest rate on the money, over time you can pay back the money that has been lent.
You need someone who has work or who is working at a electric company to buy in the electric when it is cheap, you need a couple of meter reads to read the meter once or twice a year and couple of books keepers or accountants maybe with some software, and they can be volunteers or paid under a none profit organization for tax reasons, because you will not be making a profit, and when you have it up and running right you can add the gas on.
August 2, 2017
One barrier to competition in the energy market is that you can research the best deal and switch, but then someone changes a tariff and you need to think about switching again. I suggest having only two dates a year on which suppliers can change svr tariff. These dates would be different for each supply area. Then, when you find the best deal, it continues to be the best deal for at least six months.
August 2, 2017
Government intervention is always the worst way to accomplish anything. Just look where intervention on Diesel engines has got us now! The government needs to get out of the way and let the free market act. Removing the regulations that make it hard to compete in the energy supply game and ditching the ridiculous book of regulations on fracking – these are the changes that will make massive differences to the cost of energy in the UK, now and in the future.
August 2, 2017
It puzzles me that the Big Six energy companies are still so dominant. Are the smaller ‘independents’ making headway on gaining market share? If not, why not? Messrs Cameron and Osborne were confident that competition was the solution to the ‘broken market’.
August 2, 2017
Smaller independents can make attractive offers when wholesale prices and costs are falling, because the Big 6 all lock in forward prices so as not to be out of line with OFGEM’s supply cost indicators (which assume extensive forward hedging). When costs rise they have no competitive advantage, and indeed may be caught out with little forward price cover, and so tend to shed customers again through being uncompetitive. On balance, hedging is a long term cost (from which banks typically make substantial profits), so the small companies can exist, although they come and go with market conditions.
All of this pales into relative insignificance against the real problems, which are caused by policies that require the sale of expensive green energy whoever sells.
August 3, 2017
Good letter here published in the Press and Journal last week explaining how we are charged for wind energy.
—————————————————–
You engage a milkman to deliver two pints a day. He delivers two on Sunday,
none on Monday, one on Tuesday, three on Wednesday, one on Thursday, three
on Friday and four on Saturday.
Job done, you have had your weekly ration of 14 pints. An average of two
pints a day.
You would sack your milkman after week one. You wouldn’t pay him extra for
being unreliable, and you wouldn’t pay for the surplus milk on the days
there is too much and you wouldn’t pay him more to take the surplus away
when you can’t use it either. But that is exactly what we do when we rely
on wind generated electricity.
Now that wasn’t so hard, was it?
August 3, 2017
Yep, look it up, the average price electric this month is 20 pounds per MWh, but it can go 50 or more in half hour bid cycle which all closed bids, which means you only know price you have paid after you have bought the electric, higher the demand for electric in day the higher price, and time of year, like now is the cheapest to buy, it can go down to less than 10 pounds a MKh..
MWh is a 1000 KWh on the 17th of may this year for one half hour closed bids the price went up to 380 pounds a MWh and can go a lot more in a few seconds. So to cap on this, if you know how much electric the national grid pumps out certain times of the day, like high or low demand you know when to put your bid in to buy, and the summer months are the cheapest, so if buy now in bulk at different times you buy in your electric for next to nothing.
August 3, 2017
Its 10 pounds a MWh not MKh.
August 4, 2017
Unlike other energy sources you can’t store electricity in large storage containers for later use. Gas, Water, and Oil remain in the pipeline even when you shut down the pumps. But once the electricity generator is switch off, the electricity is gone. So it can’t be compared to supplying milk.
If green energy sources had been introduced before privatisation they would have just been switch on and off the National Grid when generating electricity.
This was the time when generation and distribution of electricity was managed effectively by one authority, not multiple individual companies all trying to make a profit, and therefore do not have the interests of the whole network , and indeed the Nation as a priority. The electricity market is an attempt to artificially apply market commodity rules to a commodity that does not exist until purchased. Yes you might say well this is not an unusual requirement on the face of it, it’s just manufacturing an order. Trouble here is the commodity needs to be delivered at the speed of light 24×7 on demand.
The question is can you split up a natural single network, into smaller self-interest networks and expect the network as a whole to work for the benefit of the end customer.
This is also true for the railways, and the other utilities started in or before the 19th Century and became networked in the 2oth century. They started out as local undertakings but once the need to interconnect with other undertakings they needed central coordination by one authority. When politics gets involved with technology it always seems to be the customer that pays in the end. In this case the sell off, of a profitable industry to foreign buyers and high energy prices which are not directly related to the price of oil/gas, and coal ( I think we no longer dig up our own coal now).
I am sure that most labour and conservative supporters would not like the country’s strategic resources to be sold to a foreign country by their party.