Chatterbox Monday

No.

The problem is the system is set so every KWH is charged at the top price related to the price of gas.
The UK imports (net) about 4% of electricity used and 10% of gas used.
These are generally bought on the market and are subject to currency an market fluctuations.

The rest of the electricity and gas is domestically produced. Costs of production are up something like 10-15% in non-renewable. In renewables ( essentially solar and wind) the costs of production of each KWH is falling.

However the producers can sell at the market price of gas. This has risen by about 6* this year. There was a production shortage pre February so the price was up. Since February the price of gas has spiked partly due to the Russians reducing deliveries, but also due to Germany in particular attempting to stockpile gas.

If UK producers operated under long term contracts providing them with set, but decent margins the prices would be up maybe 20-30%. Maybe much less if the imported energy was under contracts.

The point is only 4% of the energy market for gas is properly affected by price rises. It is just that everything is priced in terms of that 4%.


It is a pretty crazy situation where BP , Centrca, Shell, Scottish power and the solar producers are making record profits, but users both business and private face ruin in many cases. If the cost of producing energy were genuinely rising there is a reasonable argument for consumers to pay. I don't think there is a reasonable argument for £6,000 a year heating bills at the moment*.

My thoughts are that the government should cap the prices domestic producers can charge. If you capped the average bill at £1,800 which is 50% up on January 2022 the producers would still be very profitable. Not capping the bills but paying for them from tax cuts or a windfall tax is very inefficient. The total cost of subsidy could top £100 billion. If you limit the domestic prices the cost would be sag £5 billion for imported gas and £5billion to support poorer consumers.

At the moment the current chancellor warned that people earning £45,000 would struggle to pay their bill this winter. That's crazy. About 75-80% of people  would be struggling to some degree.


So basically 90% of the problem is caused by not having set contracts for energy producers.

* I think there are some green arguments in favour of much higher bills, but these rises won't be going to reduce environmental damage.


TL; DR?
The Tories have fucked us. 

Again.

And again.

Yeh, wot Sheep said.

Don’t you mean carnival?

I can’t be doing with all that noise, all that enthusiastic happiness.

tl;dr

We're all fucked.

They've finally designed a vehicle for Tids...

Wow!