Energy price cap increase and meter reading advice

[mrcharly-YHT]

Isn't peat the very worst of all fossil fuels?

In Ireland, yes.

On the Western Isles, I think it is on a par with cutting your own firewood.

(based on the fact that a greater volume of peat develops each year than is removed)

I’m not sure that is correct. Peat regrowth is about 1mm per year, and banning the use of peat is becoming more widespread due to the impact that removing peat is having on the environment.

big sigh

There are fundamental differences between Ireland and the Western Isles.

Ireland permits commercial extraction, nearly all extraction is done by draining the bogs to give machinery access. Even when the cutting is done by hand, they drain the bogs so they can drive in and out.

In the Western Isles, selling peat is illegal. You can only cut peat for your own use.
Cutting is done by hand, extraction by carrying it to a road. The bogs are not drained.
Indeed, the old banks show a higher rate of growth than outside the banks, because the banks form a sort of 'swimming pool' that remains wet and sodden all year round.

You have to consider the volume of growth vs volume of extraction. Sure, the decomposed peat only forms at 1mm a year - but a year's supply for me is one spade width, two spits deep (about 600mm) deep, for 50m. It grows back faster than extracted. This can be seen in the banks, where the centre (oldest growth) is nearly level with the top of the bank (which has also been growing and getting deeper).


Nearly everyone considering banning peat use looks at Ireland. What they do is wrong, wrong, wrong.

It is like comparing clear-felling old growth forestry (with no replanting) with selected thinning plus replanting.

[Paul H]

Similar here. Before all this started we were paying about £80/month.

I'm still on a flexible. Have you used Octopus' crystal ball thing on their website? Using that shows to stay on an even keel, based on today's predictions, we will soon need to up our payments from the current £155 to about £240 or so.

Nevertheless, that is still cheaper than their fixed offerings.

Mine has already nearly tripled, from £27 to £72 and I'm being offered a fixed rate of £110.
Then there's the devalued Economy Tariffs, which hardly get a mention.  Those living in cheaper rented accommodation and relying on storage heating, which only makes sense if there's a cheap rate to run it at,  will be disproportionately hit. I complained to BG that they had based my first three months after being moved to them on a singe rate tariff, so they re-calculated on their Day/Night rate and it went up £30.  I had to argue with them to get it changed back!

[andyoxon]

Octopus fixed rate offer for us is now ~£4150 pa. (£345x12)      In June we spent £140 on G&Elect.

Similar here. Before all this started we were paying about £80/month.

I'm still on a flexible. Have you used Octopus' crystal ball thing on their website? Using that shows to stay on an even keel, based on today's predictions, we will soon need to up our payments from the current £155 to about £240 or so.

Nevertheless, that is still cheaper than their fixed offerings.

Yes, I've looked into Octopus' crystal ball and seen that if we were to maintain a DD of £140 pm we'll have a ~£1200 balance deficit next April/May.

[psyclist]

big sigh

No need for the sigh. Thank you for the detailed explanation.

[Adam]

I'm on the Octopus Go fixed tariff until December, which means 4.76p/kWh between 00:30 and 04:30 and 13.14p/kWh the rest of the time for electricity.  The gas was 3.76/kWh back in February and is now 7.12p/kWh as that's variable.  Plus around £180 pa fixed charge.  However, my £80 pm DD is still building up a credit.

We live in a 3 bed flat.  2 PCs are on 24/7, TV maybe 1 hour a day, washing machine & dishwasher every 3 days or so, and an electric car charged roughly every 3 or 4 weeks.  So around 300 kWh per month for electricity and 150 kWh for gas.

I appreciate that for electricity my fixed rate (with the cheap night-time tariff) is under half the current rate.  However when they talk about the price cap going from the current £1,971 pa to a possible £3,500 pa in October, is this based on an assumed household with 4 TVs on all day, plus multiple other devices and central heating on all day?

[Pickled Onion]

Back in the pre-industrial heating world, my usual firewood supplier wants £525 for 800kg of kiln-dried hornbeam logs.  They were £400 last year.  I didn't realise Putin controlled that too  :'(

Presumably diesel is required to chop down the trees, transport them, cut them up, deliver the logs. And some kind of fossil fuel to kiln-dry them.

[rogerzilla]

Back in the pre-industrial heating world, my usual firewood supplier wants £525 for 800kg of kiln-dried hornbeam logs.  They were £400 last year.  I didn't realise Putin controlled that too  :'(

Presumably diesel is required to chop down the trees, transport them, cut them up, deliver the logs. And some kind of fossil fuel to kiln-dry them.

I don't know about the kilns, as some are wood-fired.  The main driver is demand, I think.  People want a form of heating that can't be cut off at the mains.

[felstedrider]

I'm on the Octopus Go fixed tariff until December, which means 4.76p/kWh between 00:30 and 04:30 and 13.14p/kWh the rest of the time for electricity.  The gas was 3.76/kWh back in February and is now 7.12p/kWh as that's variable.  Plus around £180 pa fixed charge.  However, my £80 pm DD is still building up a credit.

We live in a 3 bed flat.  2 PCs are on 24/7, TV maybe 1 hour a day, washing machine & dishwasher every 3 days or so, and an electric car charged roughly every 3 or 4 weeks.  So around 300 kWh per month for electricity and 150 kWh for gas.

I appreciate that for electricity my fixed rate (with the cheap night-time tariff) is under half the current rate.  However when they talk about the price cap going from the current £1,971 pa to a possible £3,500 pa in October, is this based on an assumed household with 4 TVs on all day, plus multiple other devices and central heating on all day?

The forecast £4,200 pa is based on a deemed average consumer that uses 2,900kWh of electricity and 12,000kWh of gas per year.

[Cudzoziemiec]

There is a campaign to get people to cancel direct debits on 1st October. The idea is that cancelling a DD is not legally the same as refusing to pay and you can't be cut off without going through a legal process. Faced with a large coordinated non-payment and the need to go through a million court cases, suppliers might review their pricing. The date has been chosen to also impact the incoming PM.
https://dontpay.uk

[felstedrider]

There is a campaign to get people to cancel direct debits on 1st October. The idea is that cancelling a DD is not legally the same as refusing to pay and you can't be cut off without going through a legal process. Faced with a large coordinated non-payment and the need to go through a million court cases, suppliers might review their pricing. The date has been chosen to also impact the incoming PM.
https://dontpay.uk

Suppliers can't review their pricing without taking a loss.   Supplying domestic consumers is a loss making activity.   The margin is between the producer and the wholesale market so stopping paying your supplier will just cause them to go bust.

The media are quite bad at explaining this.

[mrcharly-YHT]

There is a campaign to get people to cancel direct debits on 1st October. The idea is that cancelling a DD is not legally the same as refusing to pay and you can't be cut off without going through a legal process. Faced with a large coordinated non-payment and the need to go through a million court cases, suppliers might review their pricing. The date has been chosen to also impact the incoming PM.
https://dontpay.uk

Suppliers can't review their pricing without taking a loss.   Supplying domestic consumers is a loss making activity.   The margin is between the producer and the wholesale market so stopping paying your supplier will just cause them to go bust.

The media are quite bad at explaining this.

Is the wholesale market (energy producer selling to supplier) fixed or an open market (i.e. suppliers can constantly switch, buying energy on a daily basis)?

As I understand it, prices to consumers are driven by the most expensive energy production prices.

[felstedrider]

There is a campaign to get people to cancel direct debits on 1st October. The idea is that cancelling a DD is not legally the same as refusing to pay and you can't be cut off without going through a legal process. Faced with a large coordinated non-payment and the need to go through a million court cases, suppliers might review their pricing. The date has been chosen to also impact the incoming PM.
https://dontpay.uk

Suppliers can't review their pricing without taking a loss.   Supplying domestic consumers is a loss making activity.   The margin is between the producer and the wholesale market so stopping paying your supplier will just cause them to go bust.

The media are quite bad at explaining this.

Is the wholesale market (energy producer selling to supplier) fixed or an open market (i.e. suppliers can constantly switch, buying energy on a daily basis)?

As I understand it, prices to consumers are driven by the most expensive energy production prices.

The power market is mostly over the counter so you trade with utilities, spec players, funds and banks until you get to the spot market which is a central, cleared exchange.   Gas is mostly traded on an anonymous exchange these days.   Larger suppliers will have a range of names they can trade with and will take the best price available when making hedging decisions.   Smaller independent suppliers tend to be in exclusive wholesale arrangements but they are usually given the market price plus an agreed trading fee.   The cost of trading has increased as liquidity has dried up and credit is harder to come by but it's probably a max of a 1% mark-up so insignificant in the grand scheme of things.

The wholesale market is currently a single number - well 24 numbers a day.   The delivered price is set by the marginal plant which is, at the moment, gas.   Hence all power is expensive.   You need very windy/sunny days coupled with low demand to not need gas generation and, at that point, the wholesale price collapses.

The price cap is set using the forward market (not futures as they keep saying in the press but that's a nuance).   The forward power market assumes, correctly, that gas plant is needed, and is trading high.

Windfall taxes are being imposed on gas producers whose margins have increased significantly but I wouldn't be surprised if the same applies eventually to renewable production which has also benefited (if they haven't fixed forward).

[Cudzoziemiec]

I only heard about it last night and confess I haven't really looked at their website, which no doubt explains it better than the bloke I was talking to down the pub (we weren't in a pub, nor was there any alcohol involved, but metaphorically could have been). As it was explained to me, bringing about a change in the way the market operates and reducing the profits of the gas producers is a large part of the aim.

(It was also emphasised that, obviously, you should not do this if you're on a prepayment meter, unless you really are willing to live without electricity.)

[felstedrider]

I only heard about it last night and confess I haven't really looked at their website, which no doubt explains it better than the bloke I was talking to down the pub (we weren't in a pub, nor was there any alcohol involved, but metaphorically could have been). As it was explained to me, bringing about a change in the way the market operates and reducing the profits of the gas producers is a large part of the aim.

(It was also emphasised that, obviously, you should not do this if you're on a prepayment meter, unless you really are willing to live without electricity.)

Much has been made of, for example, Centrica's recent profit announcement.   The problem is they report as an entire company so you need to dig into the divisions.   They do own gas production and this bit has printed cash but supply has lost them money continuously since the price cap was announced.

Similarly, Shell announced huge profits but their supply business lost £100m in a year.

Companies that own production transfer the commodity between their production and supply business at market, not at cost.   Ofgem were going to legislate for this at one point but they backed down.   It's good industry practice anyway.   The regulator, here at least, has never been particularly good at controlling wholesale markets and I do feel this should be passed to be under the FCAs remit.

[andyoxon]

I'm on the Octopus Go fixed tariff until December, which means 4.76p/kWh between 00:30 and 04:30 and 13.14p/kWh the rest of the time for electricity.  The gas was 3.76/kWh back in February and is now 7.12p/kWh as that's variable.  Plus around £180 pa fixed charge.  However, my £80 pm DD is still building up a credit.

We live in a 3 bed flat.  2 PCs are on 24/7, TV maybe 1 hour a day, washing machine & dishwasher every 3 days or so, and an electric car charged roughly every 3 or 4 weeks.  So around 300 kWh per month for electricity and 150 kWh for gas.

I appreciate that for electricity my fixed rate (with the cheap night-time tariff) is under half the current rate.  However when they talk about the price cap going from the current £1,971 pa to a possible £3,500 pa in October, is this based on an assumed household with 4 TVs on all day, plus multiple other devices and central heating on all day?

The forecast £4,200 pa is based on a deemed average consumer that uses 2,900kWh of electricity and 12,000kWh of gas per year.

The Cornwall Insight tweet.  https://twitter.com/CornwallInsight/status/1556968840902463489?s=20&t=ugBrpJc0OiYJRYo0GRxpHg

We're on 2100 kW/h Elect (72% TDCV)  & 11200 kW/h Gas (93% TDCV) over the last 12 months, so still expecting a price hike.  Just have to cut back on usage as far as poss.

[felstedrider]

I'm on the Octopus Go fixed tariff until December, which means 4.76p/kWh between 00:30 and 04:30 and 13.14p/kWh the rest of the time for electricity.  The gas was 3.76/kWh back in February and is now 7.12p/kWh as that's variable.  Plus around £180 pa fixed charge.  However, my £80 pm DD is still building up a credit.

We live in a 3 bed flat.  2 PCs are on 24/7, TV maybe 1 hour a day, washing machine & dishwasher every 3 days or so, and an electric car charged roughly every 3 or 4 weeks.  So around 300 kWh per month for electricity and 150 kWh for gas.

I appreciate that for electricity my fixed rate (with the cheap night-time tariff) is under half the current rate.  However when they talk about the price cap going from the current £1,971 pa to a possible £3,500 pa in October, is this based on an assumed household with 4 TVs on all day, plus multiple other devices and central heating on all day?

The forecast £4,200 pa is based on a deemed average consumer that uses 2,900kWh of electricity and 12,000kWh of gas per year.

The Cornwall Insight tweet.  https://twitter.com/CornwallInsight/status/1556968840902463489?s=20&t=ugBrpJc0OiYJRYo0GRxpHg

We're on 2100 kW/h Elect (72% TDCV)  & 11200 kW/h Gas (93% TDCV) over the last 12 months, so still expecting a price hike.  Just have to cut back on usage as far as poss.

It's interesting how this information is most easily found via 3rd parties (as an aside, I really like Cornwall's stuff and we use them a lot) as opposed to on the Ofgem website.   I was pretty sure I knew the numbers for average consumers but wanted to make sure before posting.  I could not find the info on the Ofgem website.

I have a 118 page consultation on supplier resilience and protecting customer balances to work through this afternoon......

[ian]

£410 for our summer bill (despite using less electricity and gas, not sure how). For a four-bed detached house. Pretty sure that's about third more than last year, despite using about a quarter less gas and electricity.

Still not sure why BG is now back to sending paper bills, never the same receipt mechanism twice (sometimes it's email, other times by text, and the app, which claims it should, doesn't). Is it that hard to save a billing preference? Apparently.

[Pickled Onion]

  You need very windy/sunny days coupled with low demand to not need gas generation and,

So why are we not going hell-for-leather on renewables?

Oh hang on, I know the answer to that. It's the fucking NIMBYs with their five year objections to anything, pandered by a fucking Conservative government who think the climate emergency is some kind of Woke Conspiracy and energy is not a global commodity subject to whims of mad fuckers like Putin, Xi and the House of Saud.

[Cudzoziemiec]

Not entirely true. The Conservative government think the climate emergency is an excellent opportunity to boost their incomes and invest the profits in private mountain-top hideouts.

[felstedrider]

The Government don’t build power stations, investors do.  The projects have not shown decent returns since the removal of some of the subsidy regimes, so new build has stalled somewhat.

One benefit of high energy prices is that these projects now present good returns but they take a couple of years to build.  Post-COVID supply chain issues are causing problems in terms of delivery.

The main problem is that Governments think in 5 year cycles but you need a 25 year plan for energy.   Where we are now started with decisions made 20 years ago.

[rogerzilla]

The "dash for gas" always struck me as moronic (this was years before climate change was a worry).  We had 250 years' coal supply and only 35 years' gas.  But gas power plants have a really short payback time before they go into profit*.  It was nothing to do with CO2 reduction.

*think about the delivery (merry-go-round trains on dedicated railway lines), storage and pulverisation of coal before you even get to burn it, and the size of boiler and chimney you need when you do.

[ian]

The internet website seems to be full of people claiming they're being offered monthly direct debits in the order of thousands of pounds etc. I confess, that seems a bit high, as mentioned we're paying approximately £100/month at the moment for electricity and gas on variable rates. Obviously, that's more than last summer and will continue to rise, but I'm not sure I really understand much of this. Not that I'd touch a direct debit with a utility supplier, I'm not giving access to my bank account to organizations that can't manage a billing preference. Fuck them, send me a bill and I'll pay it.

It's also not clear to me why suppliers can't lose money when the market moves against them. That's is actually business and the nature of profit and loss.

[felstedrider]

The internet website seems to be full of people claiming they're being offered monthly direct debits in the order of thousands of pounds etc. I confess, that seems a bit high, as mentioned we're paying approximately £100/month at the moment for electricity and gas on variable rates. Obviously, that's more than last summer and will continue to rise, but I'm not sure I really understand much of this. Not that I'd touch a direct debit with a utility supplier, I'm not giving access to my bank account to organizations that can't manage a billing preference. Fuck them, send me a bill and I'll pay it.

It's also not clear to me why suppliers can't lose money when the market moves against them. That's is actually business and the nature of profit and loss.

What the last year has taught me is how, despite the market being open for 20+ yrs, little the layman understands.   The general statement is - "I used to lay £100/mth and now I'm paying £150/mth".   The reality is that that is the amount your supplier is taking from you each month but it is an estimate that needs to be reconciled to actual consumption.   You can be under or overpaid at the end of the year.   I'm currently paying £154/mth on a fixed rate and have built up a bit of a credit and have been told I could drop my payments but I'm leaving them there for now.

If you choose to pay as billed then it's more accurate but it used to be cheaper to pay by DD and the best rates were only available on that basis.   Also, though, it's quite a privilege to be able to pay.   Budget monthly amounts help consumers to manage their cashflow as there's a lot of seasonality to bills.   I don't doubt that some suppliers have gamed this in the past but Ofgem have been cracking down on it.

On losing money, energy suppliers have very thin margins and low capitalisation.   Those that aren't part of a bigger group will simply fail when they take a loss which is why 31 have gone bust in the last year.   The ones that have survived have financial support at a parent level - as a stand alone business they would fail.   This and Ofgem's latest suggestions around financial resilience will destory any remaining independent players and we'll be back to an oligopoly (in the domestic sector at least).

[ian]

To be fair though, the oligopoly ensures supplies have sufficient capital to run an actual business where they can absorb a loss when markets are against them and make profits when it isn't, which is the nature of business, as is failure. That so many have failed is more a measure of the lack of robustness in the process of allowing suppliers into the market, regulation seems to have been tissue-paper thin.

I get that it's a luxury to ignore seasonality (and I understand how the fix works) and pay-as-we-go, but what I don't understand are the extraordinary rates being communicated – assuming they are real. Some of the examples I've seen would have people paying £15-20k a year which is clearly nonsensical. Even if our current bills were multiplied by a factor of ten, we still wouldn't hit that, and it's not like we live in a tiny flat.

[felstedrider]

To be fair though, the oligopoly ensures supplies have sufficient capital to run an actual business where they can absorb a loss when markets are against them and make profits when it isn't, which is the nature of business, as is failure. That so many have failed is more a measure of the lack of robustness in the process of allowing suppliers into the market, regulation seems to have been tissue-paper thin.

I get that it's a luxury to ignore seasonality (and I understand how the fix works) and pay-as-we-go, but what I don't understand are the extraordinary rates being communicated – assuming they are real. Some of the examples I've seen would have people paying £15-20k a year which is clearly nonsensical. Even if our current bills were multiplied by a factor of ten, we still wouldn't hit that, and it's not like we live in a tiny flat.

The new Ofgem regs would stop people coming in without enough funding, but stable door, horse, etc, etc.   If they decide to retrospectively apply these to existing suppliers then a few more will exit.   The consultation is 120 pages long and has been one of my tasks this week.   For too many years Ofgem used the number of suppliers and switching rates as a measure of success.

Average consumer is likely to be paying sub £200 a month come the Winter.   I suspect high numbers quotes are likely system issues.   Unless they have a swimming pool or a weed farm.