Countdown to Fridays OFGEM Q4 Price Cap Announcement

[Moxi]

They had to fiddle it that way otherwise no one would supply the base load, as I said, that "fudged patch" works ok when there are more generators than there is demand but now the generation capacity is closely matched to demand the whole thing is stood on its end and we pay the price. They either need a new "fudged patch" or better the government builds and operates the spinning reserve which then leaves the market free to bid for the base load re-introducing competition and driving prices down rather than up.

The government then just add in the annual operating costs for the spinning reserve - maybe as part of the standing charge - it would mean more expensive power than we have had in the past 3 decades BUT not as eye wateringly expensive as it is now.

The market ensures competitive prices and the decoupled spinning reserve ensures grid stability - note the spinning reserve could well become stored capacity in future but I thought i would stick to the old terms for now.

Moxi

[Oldgreybeard]

I have a feeling that any party that suggested bringing back the key essentials for life under government control, with guarantees that they would always be affordable for all, might well get a lot of support.

If there was a way to clearly highlight, in very simple language, how the current system artificially drives prices up for consumers, and, in the case of water in particular, results in corners being cut that both harm the environment and cause inconvenience to consumers, then I'm certain that would help. One big problem is that very few people understand just how skewed the market is, or just why the high prices they are having to pay are linked to a broken competitive market model.


Edited to add:

Just had a look at our neighbours in Ireland to see what they pay for electricity. National average electricity bill there is around 1200 euros at the moment. That pretty much says it all, when we're looking at consumers here facing an average electricity bill of more than double that. Not sure where Ireland gets its electricity, but it doesn't have any nuclear and I'm pretty sure they don't have coal, so they are probably importing gas and oil, which should be more expensive, yet for some reason they are paying around half that which we are.

[Moxi]

As someone who works in the water industry I thought you might appreciate a read of this :

https://capx.co/knee-jerk-nationalisers ... lly-works/

I believe it was primarily aimed at the Grudion as one of our long lost members used to call it

What I do like is that it does place the emphasis back where it belongs with HM Government.

Moxi

[Moxi]

Maybe full nationalisation isn't the right route but maybe placing distribution under a "national grid" style organisation might be the right answer- one thing is for sure our water rates and bills do not reflect the costs associated with production and processing.

Moxi

[Oldgreybeard]

We don't have mains water, so my only experience of dealing with the water industry was at our last house. That was fed by a cast iron pipe that was shared with one other house, and which had been installed in 1934, when the two houses were built. The pipe was a constant source of leaks, I lost count of the times the water company came out to try and fix them over the years.

I remember one conversation with a chap that came out to survey the pipe, he was clear that the pipe was long overdue for replacement, was probably leaking at several places along its length, but that there was no budget to replace it anytime in the near future. He also mentioned that they had spent more money over the previous few years repairing it than they would have spent if it was replaced, but that those costs didn't count as they effectively got written off each year as maintenance costs, with those costs coming out of a different pot to the infrastructure replacement cost.

I know roughly what it would cost to replace a run of cast iron pipe under a lane from when we had a cable put in here. My guess is that the cost to replace that nearly 90 year old ~100m length of cast iron pipe would be around £20k at the most, including the work to close the lane and make good the surface. It cost me around £12k to get a cable laid under a lane for about the same distance around 10 years ago, using a proper highways contractor, getting a road closure, etc, so £20k sound about right allowing for ten years of relatively low inflation.

[nowty]

Edited to add:

Just had a look at our neighbours in Ireland to see what they pay for electricity. National average electricity bill there is around 1200 euros at the moment. That pretty much says it all, when we're looking at consumers here facing an average electricity bill of more than double that. Not sure where Ireland gets its electricity, but it doesn't have any nuclear and I'm pretty sure they don't have coal, so they are probably importing gas and oil, which should be more expensive, yet for some reason they are paying around half that which we are.

Maybe your quoted 1200 Euros is a bit out of date. Leccy in Ireland seems to cost approx 32 euro cents which is about 27p which is about the same as the current OFGEM capped rates. Also the figures below are only based on 4,200 kWh's of leccy (gas not included).
https://www.moneyguideireland.com/much- ... -bill.html

How Much Have Electricity Charges Increased ?
This is a summary of the changes in the annual electricity charges for an average usage home in Ireland over the past 5 years : (based on Electric Ireland standard rates)

€947 in mid 2017
€1063 in October 2018
€1005 in January 2019 (A decrease)
€1044 in October 2019
€1013 in April 2020 (Decrease)
€1098 October 2020
€1274 Nov 2021
€1509 in May 2022
€1674 in August 2022

From April 2020 to August 2022 – electricity bills in Ireland will have increased by 65% with Electric Ireland – but other suppliers’ prices may have increased by more than this. The increase would have been closer to 70% if it wasn’t for the VAT decrease.

[nowty]

OFGEM, announcement has been made,

Average standing charge and units rates for Oct to Dec are likely to be,

Leccy 48p SC and 52p / kWh
Gaz 28p SC and 15p / kWh

[Oldgreybeard]

The good news for me is that I took the opportunity this morning to mention adding more PV, as my wife was in a state of consternation about the price increase. She gave me a golden opportunity by asking me what we were going to do, so I suggested the solar panel walkway along the side of the house and she thinks it's a great idea. Luckily it was sunny here at the time, with the sun shining right on that wall, so she could see straight away that it was a good idea. Sometimes good things can arise from bad news

[Fintray]

The good news for me is that I took the opportunity this morning to mention adding more PV, as my wife was in a state of consternation about the price increase. She gave me a golden opportunity by asking me what we were going to do, so I suggested the solar panel walkway along the side of the house and she thinks it's a great idea. Luckily it was sunny here at the time, with the sun shining right on that wall, so she could see straight away that it was a good idea. Sometimes good things can arise from bad news

So for you it was a good day to exploit bad news rather than a good day to bury bad news.

[Oldgreybeard]

So for you it was a good day to exploit bad news rather than a good day to bury bad news.

Exactly! Sometimes it pays to pick the right time to suggest something that might be controversial.