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Electricity price predictions

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Majordennisbloodnok
(@majordennisbloodnok)
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Posted by: @hughf
Posted by: @editor

On the other hand you have pensioners riding the bus all day to stay warm. There's a moral imbalance here. 

 

Not meaning to open a can of worms, but I find it odd that the younger generation don't house and care for their elderly relatives, it would resolve the 'elderly in energy poverty' issue...

...assuming, @hughf, that the younger generation and their elderly relatives live in a part of the country where the former can still afford to get their feet on the first rung of the housing ladder in the first place. Difficult to house your elders if you're already priced out of getting your own home.

Incidentally, where did you get your data on how many people of employable age do/don't help support their retired relatives? Does that same source have any figures on what the picture looked like 20 years ago? You've made the statement that people don't currently support their elders, but I'm interested to know what that assertion is based upon. You may well, of course, be right, but it'd be good to be able to see the data behind the situation.

105 m2 bungalow in South East England
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1 x 6 kW GroWatt battery and inverter
Raised beds for home-grown veg and chickens for eggs

"Semper in excretia; suus solum profundum variat"


   
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(@hughf)
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Posted by: @majordennisbloodnok
Posted by: @hughf
Posted by: @editor

On the other hand you have pensioners riding the bus all day to stay warm. There's a moral imbalance here. 

 

Not meaning to open a can of worms, but I find it odd that the younger generation don't house and care for their elderly relatives, it would resolve the 'elderly in energy poverty' issue...

...assuming, @hughf, that the younger generation and their elderly relatives live in a part of the country where the former can still afford to get their feet on the first rung of the housing ladder in the first place. Difficult to house your elders if you're already priced out of getting your own home.

Incidentally, where did you get your data on how many people of employable age do/don't help support their retired relatives? Does that same source have any figures on what the picture looked like 20 years ago? You've made the statement that people don't currently support their elders, but I'm interested to know what that assertion is based upon. You may well, of course, be right, but it'd be good to be able to see the data behind the situation.

I don’t have an ounce of data to back up my claims, just my personal experience from travelling to mostly Muslim counties over the last 15 years and witnessing how multiple generations live under the same roof, caring for those who are in their more senior years.

 

Off grid on the isle of purbeck
2.4kW solar, 15kWh Seplos Mason, Outback power systems 3kW inverter/charger, solid fuel heating with air/air for shoulder months, 10 acres of heathland/woods.

My wife’s house: 1946 3 bed end of terrace in Somerset, ASHP with rads + UFH, triple glazed, retrofit IWI in troublesome rooms, small rear extension.


   
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Mars
 Mars
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With the impending tariff increase in October, is the price of gas still going up, and is that still the main driver for the increase? 

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Jeff
 Jeff
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Posted by: @editor

With the impending tariff increase in October, is the price of gas still going up, and is that still the main driver for the increase? 

skynews conway gas prices 5773844
skynews conway gas prices 5773841

Oct cap mainly driven by gas prices between Feb and August. 

Year ahead and day ahead prices for UK gas in red in the charts above. 

Currently overloaded with gas in UK, no space to store any more or transport any more to Europe. Hence the price collapse

Currently UK gas powered electricity stations are burning more gas than usual and we are importing less electricity from Europe due to the price differences.

At least the year ahead isn't terrible at the moment. Some consumers may have fixed at some terrible high tariffs at times. Fixed tariffs have been very volatile.

The plan is to change the frequency of the cap and how it is calculated.

So caps are likely to be Oct, Jan, April, July


   
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Mars
 Mars
(@editor)
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@jeff, thanks for that. Do you think the quarterly cap adjustment is better or worse for homeowners?

Do you also know how long the increased standing charge is likely to remain high and is that also projected to go up?

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Transparent
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@editor I don't think the setting of the standing charge by Ofgem is adequately open to the public.

When the rates were raised last month, the BBC published a list of the increases by DNO region, citing the source as 'Ofgem'.

I went to the Ofgem website to look for additional data, and could find no information on the standing charge element of the price cap changes.

At the very least I had expected to see an announcement a month in advance of any standing charge changes. There was none.

This is probably an oversight. Ofgem are usually meticulous in providing information to the public. However, it's a serious one because it means that this element of our energy bills can't be inspected or challenged.

The portion of the standing charge rises which are passed on to DNOs are likely to increase further, in line with their projected expenditure on grid re-enforcement works over the next 7 years of the RIIO-ED2 agreement.

The portion which gets used for retro-fit of energy-efficiency measures and FiT payments (referred to as the Environmental and Social Obligation) is the part which MPs are lobbying the Chancellor to suspend. But it's questionable how much effect that would have on the looming fuel-poverty crisis in 6-months time.

 

This post was modified 2 years ago 3 times by Transparent

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Jeff
 Jeff
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Posted by: @editor

@jeff, thanks for that. Do you think the quarterly cap adjustment is better or worse for homeowners?

Do you also know how long the increased standing charge is likely to remain high and is that also projected to go up?

That is two very big questions with lots of variables, including what happens politically, with the regulator, globally etc. 

I agree with @transparent who will know more about specifics

So these are my amateur rather rambling thoughts.... 

The standing charge is opaque now and it is not clear to me at least what happens next given the huge amount of money we can all see is needed.

1. Upgrading the network, e.g. National Grid mentioned a figure of 30 to 35 billion just for them over the next 5 years today, all going on bills one way or another. They announced record profits, and just imagine the profits of all their suppliers as well. It is a very easy  return on capital for these companies, very poorly regulated IMHO. 

2. We have barely started the refit of homes, and the current grants of 30,000 heat pumps a year for 3 years doesn't feel enough to me even if heat pump prices do fall. 

3. We are still paying for the failed suppliers at the moment

4. General inflation is high as we all know and interest rates are rising. This  will feed into higher funding requirements for changes and hence  higher standing charges. 

5. Things like the warm home discount may have to rise dramatically potentially loaded onto bills

6. We need to upfront fund part of the cost of the new nuclear power stations, will this go onto standing charges to some extent? It is certainly going onto bills somewhere as things stand. 

7. We have the £200 "loan" on our winter bills to pay back over several years, and this loan may increase. Hence impacting fixed costs on our bills for years to come.

8. We may see a dramatic rise in customer debts....  which needs funding... 

Etc. 

It may be some cost increases get shifted to general taxation but this is politically sensitive. 

There is an awful lost of investment still to come. 

Generally i feel the sector and regulation is a disjointed mess of independent companies. 

I can't quite believe how poor ofgem and the government has been sometimes. 

Another example is some of the recent wind farms holding off starting taking CFD payments as they can make a lot more money on the wholesale market which is basically linked to the higher price of electricity generated by gas power stations. Nothing illegal but somewhat ironic. 

We will gradually see some costs switched from electricity to gas but this will take some time..... This will help those that have moved from mains gas in a few years. 

Basically i wouldn't assume any big reductions in standing charges unless i am missing something

As for the quarterly price cap, it basically feels like a fudge to limit the risk of more suppliers failing. In the longer term we need to get more people onto time of use tariffs (with some protections)

We don't have an energy industry we can trust, hence the need previously for the price cap, but the cap potentially made things  worse last year. 

We currently have a mess where suppliers really need to hedge, but at the same time we need to gradually move to time of use. The transition needs to be carefully handled as we have seen recently. There are bigger brains than me i hope working this all out.... With very high volatility the time of use tariffs are hard to make work as we have seen. 

So i suspect the quarterly reviews will mean more volatility for many consumers already on the variable rate or coming off fixed rates now and being horrified at the high fixed rate deals generally. 

In the meantime just take advantage of any anomalies like Octopus Go where you can i suspect, buy some batteries and solar panels and as Derek always says do what you can to reduce your consumption in the first place. 

It is not all bad news, we may find unit prices come down a bit next year. I think the government are betting on this. 

Getting the country off gas longer term  should help as long as we don't get ripped off by the network operators, wind farms, nuclear power stations, heat pump installers etc. Let's hope the government and regulators have a grip.... else as a country the transition will be painful for many but OK for the few that can navigate the cheaper  options with some upfront capital investment and some DIY and are fortunate to have found some good companies with availability

 

 

 

 

 

 

This post was modified 2 years ago 3 times by Jeff

   
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(@kev-m)
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The new price cap of £2800 is going to mean 36p or so per kWh.  Not good, not good at all. 😐 

To think I was a bit miffed when I had to sign up for 14p when my cheap fix ran out last year.  I'm stocking up on coal and wood over the summer, sorry planet...


   
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Transparent
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Allow me to provide some source references for that post from @kev-m  We may need to refer back to this at some future date. Today is Tues 24th  May 2022.

The estimated rise in the energy price cap was provided by Jonathan Brearley (CEO Ofgem) in response to questions from the House of Commons Business, Energy and Industrial Strategy Committee. This is chaired by Darren Jones MP (Bristol North West) who is renowned for his no nonsense approach - especially when questioning directors of energy companies(!). It is worthwhile checking his background and green credentials on his Wikipedia page.

Secretary of State for BEIS, Kwasi Kwarteng MP, also spoke to the Committee today and made it clear that the Government wasn't about to hand out sufficient cash to subsidise household energy bills for the coming winter.

Even so, let's remember that almost every MP is looking for answers. Given the technical insights and accumulated knowledge of RHH Forum members, we should be providing possible solutions.

If you have positive ideas, then get writing to your MP as a matter of urgency.

Amongst my wish-list are:

  1. Ofgem to require all domestic Energy Suppliers to offer at least one ToU tariff before October.
  2. ToU tariffs should be based on regional energy generation, not data from National Grid. Thus the areas with abundant renewable energy should make it financially attractive for the local population to use/store that energy rather than it be discarded (as at present).

Add your own and let's give our MPs some ways forward.

Save energy... recycle electrons!


   
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Jeff
 Jeff
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There has been a lot in the press recently from National Grid about nodal pricing and central dispatch following on from a study. This is from today 

https://www.cityam.com/national-grid-calls-for-local-energy-pricing-to-drive-down-household-bills/

This post was modified 2 years ago by Jeff

   
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(@prjohn)
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@jeff Totally agree the grid should be broken up, this would allow for fairer and cheaper electricity for much of the country. This would also focus on needs where electricity is expensive to produce instead of piecemealing needs all over the country.


   
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(@derek-m)
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@prjohn

I wonder if the UK would still be in this position if the Electricity and Gas Industries had not been privatised? I worked in the Electricity Industry both before and after privatisation, and it quite quickly went from a culture of keep the lights on at the lowest cost, with a 5 year and a 10 year plan, to how can we cut costs and make the maximum amount of profit.

Serious questions should be asked about where all the profits are being made, and if so called 'market forces' are being manipulated by some for additional profit.

When the various electricity grids were designed and created, it was to try to ensure that power was supplied to as many as possible in the most reliable and cost effective manner. Unfortunately, as fossil fuel, particularly coal fired, generation has been shutdown, its replacement is not in the same location, which means the the grids have to be drastically changed to get the power from the new 'point A' to 'point B'. This is where a 5 and 10 year plan would have been highly useful, instead of the present situation where the UK is playing catchup, because investment was delayed until the last possible moment, because it would look better on the balance sheet.


   
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