Energy Prices

[BFTD]

Don't forget the sun going behind clouds.

[Aufc]

What are the unit prices from the April increase?

[Todd_is_God]

15 minutes ago, Aufc said:

What are the unit prices from the April increase?

They're going to be zero.

But, if not, gas will go from 7p - 15p and electricity from 28p to 55p

Edited September 6, 2022 by Todd_is_God

[Gnash]

Just done a bit of arithmetic and if the projected costs for April next year are accurate, then per person in my household I will be paying 37 (thirty seven) times more for energy than 2 years previously. 

[Aufc]

They're going to be zero.
But, if not, gas will go from 7p - 15p and electricity from 28p to 55p

Haha shambles. People are going to be absolutely fucked. All that will happen is the energy companies will continue to make fucking fortunes. The banks will also make a fortune through her scheme. She won’t impose windfall taxes on either of these unearned gains. People won’t be able to afford it. She hasn’t mentioned anything about businesses so people will lose their jobs.

The Bank of England will say that the scheme supports high costs which will fuel inflation so they will continue to increase interest rates which will push people further into misery.

Honestly, what a total shitshow this country has become and it’s only beginning

[Todd_is_God]

12 minutes ago, Aufc said:

All that will happen is the energy companies will continue to make fucking fortunes.

They (energy retailers) aren't making fortunes, though, hence the need for a £100b fund alongside a cap freeze to stop them collapsing.

[scottsdad]

This is just bonkers though, fundamentally. 

Energy producers rack their prices as high as they like. National governments borrow money to pay them whatever they want or face losing elections. The consumers in the middle - who are not using more energy, really - then get to be thankful to the government for this hand-out that they never really see. 

It's like when the European Union "bailed out" Greece years ago. All that cash went to German banks, not Greece. 

 

 

[Todd_is_God]

7 minutes ago, scottsdad said:

Energy producers rack their prices as high as they like

They aren't doing that though, that's just not how it works - they are selling their product for what the market is willing to pay for it. And that's based on need. Those that need it most will pay whatever it takes to secure it, which means more than the next person. That's why prices skyrocketted as countries scrambled to acquire what they needed for winter, and cooled a bit once demand started to ease off.

Far from bonkers, it's completely normal for any market that is based on supply and demand (see also: house prices / used cars during the pandemic).

The bonkers part is that, in the clamour to be seen to do something, no European leaders appear to have considered that Russia might retaliate to being sanctioned, and neglected to consider the impact on their own people and economies from them doing so.

[Aufc]

24 minutes ago, Todd_is_God said:

They aren't doing that though, that's just not how it works - they are selling their product for what the market is willing to pay for it. And that's based on need. Those that need it most will pay whatever it takes to secure it, which means more than the next person. That's why prices skyrocketted as countries scrambled to acquire what they needed for winter, and cooled a bit once demand started to ease off.

Far from bonkers, it's completely normal for any market that is based on supply and demand (see also: house prices / used cars during the pandemic).

The bonkers part is that, in the clamour to be seen to do something, no European leaders appear to have considered that Russia might retaliate to being sanctioned, and neglected to consider the impact on their own people and economies from them doing so.

Surely the energy producers are making a fortune though? Their cost base hasnt really changed but, because prices are tied to worldwide prices, then they are able to sell if at a ridiculously high price? 

I saw an analogy on twitter which tried to describe it. 5 people go for dinner. 4 have a sandwich and one has lobster. Instead of everything being priced as they are, the restaurant decides to charge everyone based off the price of the highest item so it becomes 5 x lobster. 

[Detournement]

 

Making Energy a speculative market was a great idea. 

Private profits, socialised losses. 

[Todd_is_God]

52 minutes ago, Aufc said:

Surely the energy producers are making a fortune though? Their cost base hasnt really changed but, because prices are tied to worldwide prices, then they are able to sell if at a ridiculously high price?

Yes they are. Which is why windfall taxes are a potential tool to offset that £100b that will be required to keep the suppliers afloat.

52 minutes ago, Aufc said:

I saw an analogy on twitter which tried to describe it. 5 people go for dinner. 4 have a sandwich and one has lobster. Instead of everything being priced as they are, the restaurant decides to charge everyone based off the price of the highest item so it becomes 5 x lobster. 

I saw this too, and it isn't a bad analogy tbf. The challenge here is that renewable energy, whilst almost free to produce, isn't free to set the infrastructure up. By pegging the wholesale price of electricity to the wholesale price of gas, investment in renewables becomes attractive as those companies can turn a profit down the line. Without that (under normal market conditions) there is little incentive to invest in producing renewable energy - you can't simply price electricity produced by renewables at the cost it takes to generate.

Edited September 6, 2022 by Todd_is_God

[Aufc]

3 minutes ago, Todd_is_God said:

Yes they are. Which is why windfall taxes are a potential tool to offset that £100b that will be required to keep the suppliers afloat.

I saw this too, and it isn't a bad analogy tbf. The challenge here is that renewable energy, whilst free to produce, isn't free to set the infrastructure up. By pegging the wholesale price of electricity to the wholesale price of gas, investment in renewables becomes attractive as those companies can turn a profit down the line. Without that (under normal market conditions) there is little incentive to invest in producing renewable energy - you can't simply price electricity produced by renewables at the cost it takes to generate.

I am sure Liz Truss has indicated she wont be introducing windfall taxes. 

[strichener]

12 minutes ago, Detournement said:

 

Making Energy a speculative market was a great idea. 

Private profits, socialised losses. 

I was assured earlier in this thread that this wasn't happening.  

 

[strichener]

10 minutes ago, Todd_is_God said:

Without that (under normal market conditions) there is little incentive to invest in producing renewable energy - you can't simply price electricity produced by renewables at the cost it takes to generate.

That is isn't the economic reality though.  If there is money to be made then someone will invest.  It doesn't have to be showing an insane ROE, there will usy be someone willing to invest to get a smaller return.  Especially when it is long term investment.  It is why most of the assets in the North Sea are no longer owned by BP, Shell etc.

[Todd_is_God]

2 minutes ago, strichener said:

That is isn't the economic reality though.  If there is money to be made then someone will invest.  It doesn't have to be showing an insane ROE, there will usy be someone willing to invest to get a smaller return.  Especially when it is long term investment.  It is why most of the assets in the North Sea are no longer owned by BP, Shell etc.

There is/was money to be made because it was pegged to the price of gas.

If you remove that, then you would need to set a profit percentage that is acceptable both to those who you have already sold the land / licences to, as well as being attractive enough to encourage new investment.

And, with almost 50% of out current electricity being produced from gas, the investment required to reduce the reliance on gas is significant.

I agree that something needs to change, but it's absolutely not as simple as just saying "ok we aren't using the gas price anymore".

[TxRover]

5 hours ago, Dawson Park Boy said:

When the wind doesn’t blow, no electricity.

Get Virge wound up a bit…

[Dawson Park Boy]

2 hours ago, Aufc said:

Haha shambles. People are going to be absolutely fucked. All that will happen is the energy companies will continue to make fucking fortunes. The banks will also make a fortune through her scheme. She won’t impose windfall taxes on either of these unearned gains. People won’t be able to afford it. She hasn’t mentioned anything about businesses so people will lose their jobs.

The Bank of England will say that the scheme supports high costs which will fuel inflation so they will continue to increase interest rates which will push people further into misery.

Honestly, what a total shitshow this country has become and it’s only beginning

Has it actually been announced?

[Todd_is_God]

So it looks like LT is ready to announce tomorrow that the Price Cap will be limited to £2,500

The devil, of course, will be in the detail, but I would imagine that means unit prices of around 11p per kWh for gas, and 42p for electricity.

[ICTChris]

How much is Liz Truss spending in her first day in office?

 

 

[Brother Blades]

I really wish that we lived in a small nation with circa 5m population & our government were able to introduce 78% corporate tax on majors whilst having a 60-40 split between state owned & public companies. We might even have a state fund of 1.7 trillion dollars?