Countdown to Fridays OFGEM Q4 Price Cap Announcement

[nowty]

Cornwall Insight release final predictions for October’s Price Cap
https://www.cornwall-insight.com/cornwa ... yvbsNZ2LFQ

[Swwils]

I've seen £6500+ for April's. Looking at the season ahead data I am not surprised.

Already seen fixed B tarrifs for 90+p per unit.

[spread-tee]

Isn't the market great??

Desp

[Oldgreybeard]

All the generators that aren't burning gas must be rubbing their hands with glee at their massive increase in profits. Not sure that is morally sound, TBH, given that there will be a lot of people on the verge of poverty lining their pockets, for no additional effort by those producers at all - it is just clear additional profit.

[spread-tee]

Absolutely, the cost of producing gas and oil hasn't gone up much since this time last year, and why should electricity be sold on the wholesale market in alignment with the most expensive supplier? What kind of competetive market is that ?? It is the kind of market designed to syphon money out of our pockets and into the shareholders pockets. It is almost as shitty as the water companies business model.

Desp

[nowty]

One way of looking at it is,

I'm a wholesaler of aluminium (or whatever) and I have two tonnes for sale and there are buyers for both tonnes which are of the same specification.

Each tonne comes from a different manufacturer and they can only supply me with one tonne each so the supply and demand is exactly equal. Manufacturer B has a manufacturing process cost 6 times higher than that of manufacturer A.

Manufacturer A still sells me the aluminium at the price its competitor B sells it for even though its own costs are 6 times cheaper because it knows the buyers have to buy it and there is no more excess aluminium on the market.

So I as a wholesaler also have to charge the buyers the same high price for both tonnes of aluminium even though I know the aluminium from manufacture A cost a lot less to make.

Leccy is leccy no matter who or how its generated and there is going to be a shortage of it in Europe this winter to the point that power cuts may happen.

National Grid is already drawing up emergency plans, its all over the press today.

[Swwils]

The best analogy for people not familiar with it is:

When you sell your house do you sell it for what it cost to build?
Or the going market rate that's determined by others around you.

Same thing for energy market.

[Joeboy]

I'd like to be making 70p per kWh off the ripple wind turbine!

Although Octopus are, c'est la vie!

I wonder if the solar generation companies are flexible contracts to grid or fixed? Purely personal as I'm wondering if it will be reflected in dividends down the road?

[spread-tee]

One way of looking at it is,

I'm a wholesaler of aluminium (or whatever) and I have two tonnes for sale and there are buyers for both tonnes which are of the same specification.

Each tonne comes from a different manufacturer and they can only supply me with one tonne each so the supply and demand is exactly equal. Manufacturer B has a manufacturing process cost 6 times higher than that of manufacturer A.

Manufacturer A still sells me the aluminium at the price its competitor B sells it for even though its own costs are 6 times cheaper because it knows the buyers have to buy it and there is no more excess aluminium on the market.

So I as a wholesaler also have to charge the buyers the same high price for both tonnes of aluminium even though I know the aluminium from manufacture A cost a lot less to make.

Leccy is leccy no matter who or how its generated and there is going to be a shortage of it in Europe this winter to the point that power cuts may happen.

National Grid is already drawing up emergency plans, its all over the press today.

Exactly, what we have is producers selling for what "the market" is willing to pay rather than what the product costs to supply. I am not convinced this is how strategically important resources should be traded. This is not how we were sold privatisation and free markets, I well remember Thatchers bullshit at the time, now the chickens have come home to roost and a lot of us are in for some very hard times. This is demonstrably terrible for the country and anyone who hasn't got very deep pockets.

Desp

[Oldgreybeard]

I wholeheartedly agree, Desp.

The electricity market is definitely not open competition, and bears absolutely no resemblance to any sort of free market. It is deliberately rigged by the government to set the price at that imposed by the most expensive producer.

The costs of producing electricity from nuclear, wind, hydro, solar, even coal, haven't increased a great deal, yet because the gas price has risen, almost two thirds of UK electricity producers will see an absolutely massive increase in profit for doing nothing at all. The solar farm down the road from me was making a useful profit when they were selling at around 4p/kWh. Their cost base hasn't changed much, if at all, and yet now, thanks to the gas price increase their profit has increased by several hundred percent.

The really demonic thing about this skewed system is that everyone needs electricity. it isn't a luxury that people can live without. Poorer people will die this winter because they cannot afford to heat their homes, and whilst dying from the cold they can rest assured that they have contributed to the massive increase in profits for all those producers that are not using gas.