Energy Suppliers, Suppliers of Energy. Gas / Electric

Ah, thank you
Will also have a read of that later
By candlelight

One of the reasons for the big increase in electricity prices is that they are stupidly tied to gas prices. Gas is one of the ways we generate electricity and is v. expensive (well, the price they pay on the European market is expensive, which accounts for around 20% of what we use I think), hence the price hike.

If they didn't peg electricity prices to the price of imported gas, we wouldn't be in this shit. Nuclear (apart from the eye-watering upfront costs) and renewables are still incredibly cheap ways of generating electricity. They could pretty much do this overnight, but it would mean gas-powered generation plants take a pretty big hit. Ofgem is required to ensure the market doesn't fail, which doing this might bring about, so instead we all get hit with massive bills.

Ofgem is required to ensure the market doesn't fail

Well I can see that has its merits
Is that its whole remit?
The whole Of-this-that-the-other world of regulators is just a shower of shit isn’t it
Apologies, I need to go and do some reading rather than fire dim questions on here

I’m not sure I’d go as far as saying electricity prices are pegged to gas prices, but yes gas is still the major fuel source used to generate elec in the UK, so an increase in the cost of inputs (gas) will lead to higher prices.

That percentage has been falling for some time though as renewable sources come on stream, but energy is a global market (like oil) and not just UK/EU focussed.

OFGEM are also the reason you’re not paying the market rate of >£6k per year for usage, but it’s pegged at £3.5k. Look at the stories of commercial energy users which are not covered by OFGEM in the same way.

Example: https://www.bbc.co.uk/news/uk-62753056

From today's Times...

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Used to work in power generation industry, won't go on too much but essentially in the Uk we built a few low grade gas plants (one in Barrow in Furness have worked on) which gets its gas from a small field literally just offshore (can see the platform from land). These work great for a few reasons in a few locations...
Easy to build, converts old tech coal as infrastructure already there. already have a workforce. burns low grade/mixed gas that isn't really used for national gas pipe network. Can turn it on and off really quickly unlike nuclear and is predictable. Very good for stemming holes in the grids power demands, literally minute by minute adjustments can be made.
Negatives. Isn't really much cleaner than modern coal, all things considered, better to have existing coal (all the embedded carbon/knowledge/infrastructure/materials) is better than flattening it and building new gas for just a small % difference in tailpipe emmissions.

Whats happened now is anywhere the national grid power lines of any decent size are in a remote/cheap land location, and near to a household gas pipeline. Bingo. A big slab of concrete is poured in a greenfield site and a dozen little gas/CGT turbines in shipping container/modules pops up. They run to make money, coming on at peak times only to generate and make up holes in the grids supply/prevent grid stall/black out situations from happening (extremely costly).
However in last decade or so, more and more and more of these little sites have popped up, ALL the coal is gone (well there are a few big machines, but pissing in the wind isn't far off their effectiveness when there are grid issues), and they are just making money for whoever is the owner/group rather than providing any real value to the country and the energy system as a whole, sort of the Uber peak demand kind of a model.
But now we are quite reliant on these small gas/CGT modules, and there are quite a few old coal been partially demo'd and replaced/renovated with gas as the fuel. But they aren't burning low grade/mixed/local gas they are burning high grade domestic heating gas, for power, and there are costs, hence electric unit price they generate even on low demand days is a chunk above the price coming out of many other sources.

So its not just a UK problem, but in the 2005-2020 period, the powers that be have allowed way too many of these small 'station's to come in, partially out of convenience (don't have to build some extra nuclear any time soon) and partially because someone somewhere will make a bundle. But the UK is particularly negatively affected by these things when the gas price fluctuates really by any amount.

That’s saying the same thing (that we use gas to generate elec and therefore need to change our approach).

Interesting to see, and all for a move away from fossil to renewable from both a climate and energy security POV, seems to make sense. Think OVO/Scottish Power said something similar this week re moving away from reliance of imported fuels: https://www.bbc.co.uk/news/business-62742303

Peaking plants are being argued (by their owners, I expect) as facilitating more renewables because they are available to pick up the slack when the sun isn't shining and the wind isn't blowing.

But you're right - we are reliant on them for peak generation and the price they charge is obviously higher than that charged by nuclear/wind/solar.

That’s saying the same thing (that we use gas to generate elec and therefore need to change our approach).

Yeah, I wasn't arguing we don't use gas to generate electricity. Just that the price we pay for electricity is artificially set at the level of whatever source of electricity costs the most. So currently, that's imported gas, which accounts for 20% of the gas we use to generate electricity. Because it's now really expensive, the unit price for electricity across the board is really expensive. The price is set at a rate that allows plants that use imported gas to generate electricity to make a profit. Meaning those that use domestically produced gas (80% of the electricity generating mix) or wind/solar to produce electricity are getting paid way more for their electricity than they would if prices weren't pegged at the rate for the highest-priced source.

I was about to ask here what people thought about leaving the country for a few month in the winter and there is already a Guardian article about it.
https://www.theguardian.com/money/2022/sep/03/energy-bills-winter-save

edit, ignore post read my tariff numbers wrong

My family found a few mega deals for basic accom in warmer parts this winter (jan/feb) forr the 2 month that were less than what gas + electric bill will amount to (for a month) and thought that was a good idea. House back here still will have standing charges, council tax etc and all the other stuff running on it, not as if you have no costs because you aren't here.

Ignore the jetting off to another country, transfers, etc, planet will have to take another one for the team :(

Yeah, you probably can't make massive savings but if I am forced to spend thousands more for essentially nothing but another miserable winter then maybe being somewhere else is nicer.

Saving the planet won't work either way, even the pandemic had not much of a positive effect, airlines just continue flying empty. Nobody is talking about potential CO2 savings because of millions of people not being able to heat this winter.

Important to understand why this is the case..
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/48371/5349-electricity-market-reform-policy-overview.pdf

And
https://www.gov.uk/government/publications/contracts-for-difference/contract-for-difference

A policy failure which assumed a plentiful supply of cheap gas (ignoring past events).

useful MSE calculator on if you should fix. My offer from British gas is at the borderline/worth considering level

Everytime I've been on twitter this week I've seen something from a pub/restaurant showing their renewal quote for gas and electric going from 3/4k p year to around 24k. No cap for businesses I think? That is going to have an incomprehensible impact

Correct. OFGEM price cap is only for domestic suppliers. Also a kick in the teeth for those in large shared housing or blocks of flats run by a developer, they are often classed as commercial (as developer is) even if the units are rented to residential so no price cap for them…

That's v. useful. I was going to fix mine, but that calculator reckons the deal I've been offered is way too expensive.

what happens when you move into a new place? do you wait and see what the incumbent offers or ‘compare the market’?

Good luck finding a supplier that will easily take you on! They technically have to if you ask, but given that the cheapest current tariff (till October) is variable it’ll be the same for everyone. Best bet is to stick with the incumbent (which will be on variable tariff) and see what they offer for customer-only tariffs once you’re signed up. The MSE piece linked up thread by Bobble is useful to know if you’re over/under paying for any fixed tariffs they offer existing customers.

However if the incumbent is Bulb then just move anywhere else… Octopus are making it the least difficult to join at the moment (just need to call, website says nothing available)

What's the problem with Bulb? (As I'm currently with them)

Well they are in special administration, so now owned by the government, so at some point they will be closed down, I guess when prices drop, but nothing inherently wrong with them now.