Energy price rises and price cap discussion.

[DelayRepay]

I remember when I was a student we had an expensive, unreliable token based heating system. The landlord never seemed to care that it would frequently fail. So we spent a lot of evenings in our local pub, with £1.50 pints, to save the hassle. I half tempted, as a 37yo professional adult, to start doing that again (assuming the pubs stay open)...

If you find a pub selling pints for £1.50, would you please let us all know where it is?!

 

[duncanp]

If you find a pub selling pints for £1.50, would you please let us all know where it is?!

How about this one, in London of all places.

Pub believed to be selling Britain’s cheapest pint at just £1.49 a glass

Ruddles Best and Greene King IPA are the beers available for the bargain price of just £1.49 a pint at Wetherspoon's pub The Walnut Tree in Leytonstone, East London

www.mirror.co.uk

Pub believed to be selling Britain’s cheapest pint at just £1.49 a glass​

Ruddles Best and Greene King IPA are the beers available for the bargain price of just £1.49 a pint at Wetherspoon's pub The Walnut Tree in Leytonstone, East London

Among soaring prices and a cost of living crisis, one pub is selling what is thought to be Britain's cheapest pint for only £1.49.

Drinkers at an East London boozer can enjoy three pints of Greene King IPA or Ruddles Best for less than a fiver.


The bargain beer is reported to be available at a Wetherspoons in Leytonstone called The Walnut Tree.

One drinker at the pub was quoted on Thursday as saying: “It’s a family-orientated pub with flowers outside.

"The drinks are cheap and the food’s good. What more can you want?

“I come by when I fancy a drink but don’t want to pay crazy prices — £1.50 is fair enough and means you can get three pints with a fiver.”

 

[Bletchleyite]

If you find a pub selling pints for £1.50, would you please let us all know where it is?!

If you want the cheapest pub it's going to be a 'Spoons. I think they may well indeed do well out of this!

 

[Dai Corner]

Doing the maths...

Say you live alone and only have a 2kW electric heater. That will cost near enough £1 an hour to run on the capped tariff of 52p/kWh. You'd have to make your £1.50 pint last an hour and a half to break even.

A more typical price round here is £3.50 a pint and I find 1KW of heat and warm clothing is usually sufficient. I don't think I'd get away with sitting in the pub for seven hours and only buying one pint!

 

[najaB]

A more typical price round here is £3.50 a pint and I find 1KW of heat and warm clothing is usually sufficient. I don't think I'd get away with sitting in the pub for seven hours and only buying one pint!

Learn to play guitar (if you don't already) and offer live music - if you're good enough you'll probably not even have to buy the pints!

 

[kristiang85]

If you find a pub selling pints for £1.50, would you please let us all know where it is?!

Well obviously there is spoons, but my local one is pretty grim. However another pub has £3.60 pints, which isn't too bad.

Obviously I don't expect to find £1.50 pints anymore...

 

[Dai Corner]

Learn to play guitar (if you don't already) and offer live music - if you're good enough you'll probably not even have to buy the pints!

I don't think I'd be heard above the jukebox or live bands at my regular pub. Which is probably just as well as I have no musical talent whatsoever and was always on the triangle in music lessons at school!

 

[Jimini]

How about this one, in London of all places.

Pub believed to be selling Britain’s cheapest pint at just £1.49 a glass

Ruddles Best and Greene King IPA are the beers available for the bargain price of just £1.49 a pint at Wetherspoon's pub The Walnut Tree in Leytonstone, East London

www.mirror.co.uk

There's plenty of.. ahem.. people watching opportunities in that boozer!

 

[DelayRepay]

Learn to play guitar (if you don't already) and offer live music - if you're good enough you'll probably not even have to buy the pints!

With tips like that, have you considered joining the Government? Combined with a new kettle, nobody need ever worry about their energy bills again!

 

[Trainbike46]

Are the rest of Europe ramping up nuclear/solar/wind etc.? There is a European energy market. It is no good if one country produces a lot of electricity if it still gets sold across Europe at a high price because of a Europewide shortage.

France and Finland are building new nuclear, the netherlands and germany are expanding offshore wind, ireland is expanding renewables.

Every european country is expanding renewables, though not all as quickly as they should be

 

[Nicholas Lewis]

I share your opinion on that (though I'd be paying it either way, standing charge or general taxation), but it isn't most of the standing charge.



It's not unreasonable that the standing charge should be quite high, because the cost of all the fixed infrastructure and maintenance of it utterly dwarfs the cost of the actual gas and has nothing at all to do with consumption levels. If you go on holiday for 2 weeks and use no gas in that period, the pipework between your house and the North Sea (or Russia! ) doesn't suddenly vanish and reappear when you get home.

The problem is the standing charge is covering more than just pipes and wires its being used to cover environmental levies, costs of balancing the system. The biggest unfairness is the £100/domestic meter that has been loaded onto it to pay for the failed suppliers the directors of which have kept all their large salaries and have dumped their liabilities on their suppliers. Then if govt push the cost of dealing with Bulb onto consumers that is going to add at least another £150 and potentially much more as they are buying gas in the open market currently.

These losses should have never been allowed to accrue but diabolical regulation by OFGEM has got us to this position and quite frankly teh whole lot needs to be nationalised and any attempt at legal and financial redress crushed at sourced. Yes it might make GB un-investable from overseas entities but these people are only interested in the good times never want to deal with the bad times.

 

[najaB]

These losses should have never been allowed to accrue but diabolical regulation by OFGEM has got us to this position and quite frankly teh whole lot needs to be nationalised and any attempt at legal and financial redress crushed at sourced. Yes it might make GB un-investable from overseas entities but these people are only interested in the good times never want to deal with the bad times.

I agree that the energy supply market needs reform, but the danger of being overly-aggressive in the implementation is that it risks cooling investment sentiment in other areas, not just the energy market. The worst thing that could happen right now is the UK getting a reputation for being hostile to business.

 

[AM9]

I agree that the energy supply market needs reform, but the danger of being overly-aggressive in the implementation is that it risks cooling investment sentiment in other areas, not just the energy market. The worst thing that could happen right now is the UK getting a reputation for being hostile to business.

Instead of hostile to foreigners.

 

[Nicholas Lewis]

I agree that the energy supply market needs reform, but the danger of being overly-aggressive in the implementation is that it risks cooling investment sentiment in other areas, not just the energy market. The worst thing that could happen right now is the UK getting a reputation for being hostile to business.

Maybe but when you've got wind farms taking the proverbial like Orsted bragging they've built the biggest wind farm in the world where they got a CfD to support there investment they've used a loophole not actualise their CfD which would be £73/MWh because they can earn £200/MWh + in the open market. So whence OFGEM expected the CfDs to be working in favour of consumers with these high prices to provide some offset we find they are actually now contributing to increasing the overall prices. If the govt just bail out consumers they are gifting huge profits to the likes of Orsted which is tantamount to fleecing consumers.

 

[Trainbike46]

Maybe but when you've got wind farms taking the proverbial like Orsted bragging they've built the biggest wind farm in the world where they got a CfD to support there investment they've used a loophole not actualise their CfD which would be £73/MWh because they can earn £200/MWh + in the open market. So whence OFGEM expected the CfDs to be working in favour of consumers with these high prices to provide some offset we find they are actually now contributing to increasing the overall prices. If the govt just bail out consumers they are gifting huge profits to the likes of Orsted which is tantamount to fleecing consumers.

Do you have a news article/other source to link to? I'd love to read more!

 

[Nicholas Lewis]

Do you have a news article/other source to link to? I'd love to read more!

https://www.thetimes.co.uk/article/...verts-1bn-in-savings-from-consumers-px85d9nlm

Consumers could miss out on more than a billion pounds of energy bill savings from the world’s biggest offshore wind farm after its owner delayed a contract to provide cheap power from the project.

The Hornsea Two wind farm, capable of supplying 1.4 million homes, is fully operational, Orsted said yesterday. The Danish energy group said that the project 55 miles off the coast of Yorkshire would “provide low-cost, clean energy for millions of homes”.

However, households will not see any benefit from its promised low-cost power until April next year and will not get the full benefit until April 2024 because of Orsted’s decision to delay the contract

 

[najaB]

https://www.thetimes.co.uk/article/...verts-1bn-in-savings-from-consumers-px85d9nlm

Another article says differently:

Last year, Denmark-based Orsted delayed the start of a government-backed contract to sell electricity from Hornsea 2 at fixed prices for 15 years. That could have opened an opportunity for the company to make huge profits in the meantime since day-ahead electricity in the UK currently trades above £400 a megawatt-hour, more than five times Orsted’s contract price. The new start date is March 2023.

However, the company hedged the output from the wind farm at an even lower price than the one in its contract, said Paul Haines, a company spokesman.

“So we will not actually profit from higher electricity prices,” Haines said by email.

UK Wind Farm Owner to Miss Windfall Profit Despite Subsidy Delay

Renewable energy developer Orsted A/S won’t make a windfall profit from the surging costs of UK power despite delaying the start of a price cap on its latest and largest project off the coast of England.

www.bloomberg.com

 

[Nicholas Lewis]

Another article says differently:

UK Wind Farm Owner to Miss Windfall Profit Despite Subsidy Delay

Renewable energy developer Orsted A/S won’t make a windfall profit from the surging costs of UK power despite delaying the start of a price cap on its latest and largest project off the coast of England.

www.bloomberg.com

Thats Orsted losing out on their trading account but by not being actualising the CfD consumers are losing out as the current price electricity price is way above the strike price. Legally Orsted can do this as they have 18 months grace from full commissioning to decide whether to actualise the CfD contract. So in 18mths if prices are still high and Orsted take a view this the new norm they don't have to actualise the CfD but then they are stuck with the risk for the life of the asset what price they might be able to secure but us consumers don't get the benefit of competitive renewable energy.

Also just to double down and despite Kwarteng calling out the owners of Moray East for doing the same thing earlier in the year he then signs off on perpetuating the same arrangement for allocation round 4 which has 11GW of new assets in which there is now a risk the consumer won't see the benefit of cheaper electricity.

 

[najaB]

Thats Orsted losing out on their trading account but by not being actualising the CfD consumers are losing out as the current price electricity price is way above the strike price. Legally Orsted can do this as they have 18 months grace from full commissioning to decide whether to actualise the CfD contract. So in 18mths if prices are still high and Orsted take a view this the new norm they don't have to actualise the CfD but then they are stuck with the risk for the life of the asset what price they might be able to secure but us consumers don't get the benefit of competitive renewable energy.

True, but it's not like they're making out like bandits. As it says in the article they're currently selling for less than the CfD price, so the fault lies in the fact that what consumers pay is based are based on the highest cost producer.

 

[Dai Corner]

True, but it's not like they're making out like bandits. As it says in the article they're currently selling for less than the CfD price, so the fault lies in the fact that what consumers pay is based are based on the highest cost producer.

What consumers on the capped prices pay, yes. Some/many/most (I've no idea and haven't been able to find out) will be paying much less.

 

[JamesT]

What consumers on the capped prices pay, yes. Some/many/most (I've no idea and haven't been able to find out) will be paying much less.

I think the vast majority are on price cap tariffs now. https://www.ofgem.gov.uk/publications/ofgem-updates-price-cap-level-and-tightens-rules-suppliers says

The price cap protects around 24 million households on default or variable rates on credit meters.

A quick google suggests there were 27.8 million households in 2020.
This does make sense, it was last year when utilities starting going bust (their customers automatically ending up on variable tariffs) and the rest stopped offering new fixed deals. Most of the existing fixed deals will have timed out by now as they were usually only for a year.

 

[Dai Corner]

I think the vast majority are on price cap tariffs now. https://www.ofgem.gov.uk/publications/ofgem-updates-price-cap-level-and-tightens-rules-suppliers says
A quick google suggests there were 27.8 million households in 2020.
This does make sense, it was last year when utilities starting going bust (their customers automatically ending up on variable tariffs) and the rest stopped offering new fixed deals. Most of the existing fixed deals will have timed out by now as they were usually only for a year.

Thanks.

On 24 February this year (the day Russia invaded Ukraine) I was offered (and accepted) a 12 month fixed price tariff with no exit penalties to run from April at 8.3p/kWh for gas and 32p/kWh for electricity. The April cap was 7p / 28p so it was a 'no-brainier' for me. I thought many more would have done the same but it seems not. The advice from 'moneysaving experts' not to fix but to rely on the cap has probably cost millions £thousands.

 

[Trainbike46]

Thanks.

On 24 February this year (the day Russia invaded Ukraine) I was offered (and accepted) a 12 month fixed price tariff with no exit penalties to run from April at 8.3p/kWh for gas and 32p/kWh for electricity. The April cap was 7p / 28p so it was a 'no-brainier' for me. I thought many more would have done the same but it seems not. The advice from 'moneysaving experts' not to fix but to rely on the cap has probably cost millions £thousands.

Not all providers were offering fixed deals at that point, and the ones that were, only offered them to existing customers, so a lot of people won't have had that option

== Doublepost prevention - post automatically merged: 4 Sep 2022 ==

Thats Orsted losing out on their trading account but by not being actualising the CfD consumers are losing out as the current price electricity price is way above the strike price. Legally Orsted can do this as they have 18 months grace from full commissioning to decide whether to actualise the CfD contract. So in 18mths if prices are still high and Orsted take a view this the new norm they don't have to actualise the CfD but then they are stuck with the risk for the life of the asset what price they might be able to secure but us consumers don't get the benefit of competitive renewable energy.

Also just to double down and despite Kwarteng calling out the owners of Moray East for doing the same thing earlier in the year he then signs off on perpetuating the same arrangement for allocation round 4 which has 11GW of new assets in which there is now a risk the consumer won't see the benefit of cheaper electricity.

But the article does say that the decision to delay was made in 2021, so before anyone realised that prices were going to go this high. I can see their decision to have known income for a longer time, it doesn't look like they were out to fleece us all, or that they even did that

== Doublepost prevention - post automatically merged: 4 Sep 2022 ==

https://www.thetimes.co.uk/article/...verts-1bn-in-savings-from-consumers-px85d9nlm

Another article says differently:

UK Wind Farm Owner to Miss Windfall Profit Despite Subsidy Delay

Renewable energy developer Orsted A/S won’t make a windfall profit from the surging costs of UK power despite delaying the start of a price cap on its latest and largest project off the coast of England.

www.bloomberg.com

Thanks for sharing!

 

[Nicholas Lewis]

True, but it's not like they're making out like bandits. As it says in the article they're currently selling for less than the CfD price, so the fault lies in the fact that what consumers pay is based are based on the highest cost producer.

OK that is relevant although i can't read the article (had my free one for the month already!). What seems bizarre is why Orsted would sell the power below the CfD price but agree with you that as a result of their actions they aren't behaving like bandits. Moray East is a different though they have behaved like bandits and to my mind government should have modified allocation round 4 rules.

I also agree marginal pricing has become flawed but in reality most power has been bought months if not years ahead by big suppliers as it suits both generators (to have known income stream) and suppliers to have a firm price known as PPAs (power purchase agreements) what they are selling. The prices that are being bandied about and being used to calculate energy cap are day ahead prices which are set by NG ESO having to find extra generation to make up shortfall which largely comes from gas where even the big well run hedges generators ain't going to sell at their cost of production because they will be buying extra over gas to generate more.

When it was run by CEGB they of course incurred the actual cost of generation so progressively added on the more expensive plant till they matched demand but the bulk of the units were being supplied at a very lost generation. Same applies now for instance Nuclear cost no more today than it did 12mths ago as does wind, solar and hydro and in reality most of this generation is locked in through PPAs anyhow so won't be benefitting from increased prices. So its the method of calculating the price cap that is also flawed as well but OFGEM probably don't have access to the PPAs to know how much and for how long suppliers are locked in at lower rates. So i certainly see the windfall tax net needs to be widens.

 

[Dai Corner]

I also agree marginal pricing has become flawed but in reality most power has been bought months if not years ahead by big suppliers as it suits both generators (to have known income stream) and suppliers to have a firm price known as PPAs (power purchase agreements) what they are selling. The prices that are being bandied about and being used to calculate energy cap are day ahead prices which are set by NG ESO having to find extra generation to make up shortfall which largely comes from gas where even the big well run hedges generators ain't going to sell at their cost of production because they will be buying extra over gas to generate more.

Not all providers were offering fixed deals at that point, and the ones that were, only offered them to existing customers, so a lot of people won't have had that option

If they'd already bought most of the power ahead why couldn't / didn't suppliers offer fixed price tariffs this Spring?

 

[Trainbike46]

If they'd already bought most of the power ahead why couldn't / didn't suppliers offer fixed price tariffs this Spring?

Your guess is as good as mine?

 

[Nicholas Lewis]

If they'd already bought most of the power ahead why couldn't / didn't suppliers offer fixed price tariffs this Spring?

Firstly domestic consumption is about third of electricity demand and the forward market is far more active in commercial and industrial demand so the big suppliers first priority is to hedge those long term contracts. They will then take a punt about how much power to buy to cover domestic but that market had been a lot more fickle with the smaller suppliers grabbing big parts of the market so they could have been overhedged. Then with the energy cap increasing so much they are on an easy winner to make additional margin which to be fair to the big six they had been run ragged by the small suppliers and majority hadn't made much out of it for the last five years.

In hindsight OFGEM should have encouraged fixed price deals as at even elevated prices above what they were 12mths ago the rate would have been massively competitive but in the end all pricing will default to the day ahead rate so we need that to fall back and there is little on the horizon to see dynamics of the gas market changing much for at least two years.

 

[Shrop]

I don't know much about the energy price cap, it confuses me a lot, so I've literally only today given it a bit of actual thought. Could I trouble anyone to answer these points?

1. Have Government been subsidising our energy for the last few years and now everyone needs to start paying it all back? If so then that's one way of taxing everyone in the country without calling it a tax rise perhaps, and without actually calling it that unpopular term "austerity" either.

2. If there's some other need for such a huge extra costs to the population then why is it happening? I mean, how can the energy companies possibly need the money when they've already been making massive profits before the price rises? It's not as if it's due to the Ukraine war and Russia withholding oil from us, how could the 4% of our supplies that we get from them make it even remotely necessary for the scale of the massive price hikes we're facing?

3. If neither 1 or 2 apply, then perhaps it's all just been a political game whereby the Tories have been working behind the scenes to promote a scare story, which of course our scandalmongering journalists can't wait to ham up into something massive (not forgetting that most of the press are Tory anyway). The reality then, is perhaps that we have no fuel shortage whatsoever, nor any actual need to rack up the prices at all, it's just been paving the way for the new PM to come along and provide some huge form of tax (or other) help to everyone, so that they can be seen as a miracle worker who everyone will want to vote for next time round.

If all of the above is complete rubbish then please just regard it as a bit of light entertainment. Or might there be anything in this?

 

[Bletchleyite]

I don't know much about the energy price cap, it confuses me a lot, so I've literally only today given it a bit of actual thought. Could I trouble anyone to answer these points?

1. Have Government been subsidising our energy for the last few years and now everyone needs to start paying it all back? If so then that's one way of taxing everyone in the country without calling it a tax rise perhaps, and without actually calling it that unpopular term "austerity" either.

No.

2. If there's some other need for such a huge extra costs to the population then why is it happening? I mean, how can the energy companies possibly need the money when they've already been making massive profits before the price rises? It's not as if it's due to the Ukraine war and Russia withholding oil from us, how could the 4% of our supplies that we get from them make it even remotely necessary for the scale of the massive price hikes we're facing?

It IS due to the war which has affected all global energy markets.

3. If neither 1 or 2 apply, then perhaps it's all just been a political game whereby the Tories have been working behind the scenes to promote a scare story, which of course our scandalmongering journalists can't wait to ham up into something massive (not forgetting that most of the press are Tory anyway). The reality then, is perhaps that we have no fuel shortage whatsoever, nor any actual need to rack up the prices at all, it's just been paving the way for the new PM to come along and provide some huge form of tax (or other) help to everyone, so that they can be seen as a miracle worker who everyone will want to vote for next time round.

Nope.

If all of the above is complete rubbish then please just regard it as a bit of light entertainment. Or might there be anything in this?

Only if you wear a tinfoil hat.

 

[Shrop]

It IS due to the war which has affected all global energy markets.

Could I trouble you to expand on this? If the energy markets have been so massively and adversely affected, how have they still been making huge profits?

Only if you wear a tinfoil hat.

Ha ha, well I do have a sense of humour (albeit not necessarily to everyone's taste ), however there's something about all this which doesn't quite ring right, even if my initial ramblings aren't quite spot on ...