Right... major fail on my comprehension there.
And the price rises are just due to less sellers in the market, so less competition for the remaining right?
The cost of gas has gone through the roof because a major supplier to Europe (Russia) is no longer supplying.
That means there is now not enough gas to go round, so those selling it can command a higher and higher price - even though the cost of extracting the gas is the same as before.
If you are taking gas from the North Sea, you can now sell it for loads more, because everyone is desperate for it.
Good summary here: https://www.bbc.co.uk/news/explainers-62644537
It’s not just Russia limiting supplies, but this has been rising for the past year due to a variety of factors (end of lockdown and increase demand in Asia, low wind in Europe…). Russia limiting suppliers and EU embargoes/sanctions have made the global supply situation worse. It’s also worth mentioning that it’s similar to a stock market, and it’s traded partially on confidence. If confidence is low, price goes up even if supply volumes remain the same.
As Howard said, producers/extractors are having a field day as they can sell a thigh prices. Suppliers have to buy on the open market and as such are affected by the high prices with no reward. There are some suppliers that are also producers (EDF/BG/Shell) and then some suppliers that are just suppliers (Octopus, OVO)
And to clarify it's the government who's set the price of 1 tin of soup.
That's because back when tins of soup cost £0.10, Tesco had no qualms about charging your nan £5 a tin because she forgot to switch her contract annually. Now the shoe's on the foot and it's the energy suppliers getting shafted
Thanks yeah I'd conflated the two, as my supplier is British gas, which obviously falls into the 'both' category.
And presumably the energy producers are the ones that are supposed to be shifting to renewables over time?
In which case my question still stands: Truss claims that a winfall tax on their profits would discourage reinvestment in renewables, but does it even count as profit if it's reinvested in infrastructure?
I guess it probably does and you'd need to put the onus on the producers to show they were reinvesting wisely if there was some caveat to a windfall tax, which is a tall order AND all that still wouldn't protect anyone from 4k gas bills in the short-term.
Energy producers will produce whatever is profitable. They’re just in the business of selling fuel to make power. Govt regulation could go some way at forcing them to change (by increasing relative costs of production eg great big carbon taxes), or subsidising the cost of renewables to make it more financially attractive to change.
Some suppliers (Octopus springs to mind) are beginning to have purchase agreements with windfarms; where they agree to buy all energy produced from that farm, and so remove the traditional O&G extractors from the equation. This means cheaper energy for consumers as it isn’t tied to the global market.
I thought the price of energy was fixed based on the most expensive option available on the market at the time?
I'll give truss credit for looking to break that at least.
In the U.K. i think thats the price of elec paid to renewable generators is based on the prevailing cost of most expensive producer, as they don’t have “input costs” per se. It is tied to the to most expensive means of production, but that’s set at a global price of units of gas (as that’s what gas power stations have to pay)
Breaking the link between gas price and elec price is good news for renewable generators in a way if they can leverage their cheaper elec to suppliers to pass on with cheaper tariffs. However it also means they can’t sell their elec at the gas inflated price. Interesting piece here: https://www.bbc.co.uk/news/science-environment-62832029
So, we’re moving into our new house this week and need to sort suppliers. Slightly complicated one as it has two gas and electricity supplies (separate meters/accounts). I also plan to install an electric vehicle charger, so want someone who has a low off peak rate for night time charging.
Obviously most suppliers are saying they won’t take new customers, but I believe if you phone them then part of their licence means they have to take you on?
Anyone well versed in all this that could help point me in the right direction? I’m clueless to be honest
Octopus might take you on with a referral ? Try this
Pretty much as you said! They don’t have to make it easy, but they can’t refuse a request to join according to their license. Most will now require a you to phone, with their websites showing “closed”. Octopus and OVO I think make it the easiest to find a number to join. Both do reasonable EV charging rates under a specified EV tariff, but they may not be selling it with prices where they are. If it’s for the future then maybe not a major concern. It’d certainly be a bit more if a pain getting two suppliers switched over but shouldn’t be impossible! You’ll probably be asked to get a smart meter especially if going the EV tariff route, but you’d probably want that anyway.
Good to know. The new place is already with OVO if that makes a difference?
Should make it a lot easier, both supplies (gas and elec) with OVO? If so, then do nothing and just sign on and take over the account as the new homeowner. You’ll be on the variable price which is now capped by the govt at £2500 for average usage (unit cap, not bill cap) under the Energy Price Guarantee so unless you are currently on a good fixed rate deal with your current supplier at your current house (in which case try and take that with you), this is currently the cheapest tariff in market from 1st October
We're with Octopus, they've been pretty good, it took about 6 weeks to get a smart meter installed and moved onto an EV tariff which works out very well with our storage heaters overnight. If you do a lot of miles it's a no brainer
Good to know, thanks. Octopus have agreed to take us, but need to compare them with OVO today before making a decision.
Defo, let us know how you get on cos I didn't even know about OVO having an EV tariff
My mums gas has gone from a 40 quid charge to 180...after a chat they reduced to 100 pm.
She is on a state pension this increase is massive chunk gone. I'm lucky I can pay amd help out but many won't be in the same position. The choice of food or warmth is v real.
Our DD has just gone from £300 to £435 but I have no way of checking how accurate it is because EDF bill 6 monthly, the smart meters they installed don’t work and their customer service is appalling.
For context it used to be ~£120, several energy supplier collapses ago.
Mates have a big problem with EDF, yes large house, were paying around £3-700 pm depending on the month, just been amended to the new figures and looking like first direct debit of £1800 has already been started from their account, obviously can't get hold of them, and cancelling it with bank/provider could lead to credit issues. Had a smart meter for years, but its one that seems to go on the blink, could literally be as simple as the network the sim card is on doesn't have good signal as only sends sporadic outputs, often at a similar time to them making manual reports to supplier, which then contradict each other and mess up the process more.
Read an interesting bit of paper from our own supplier (who is over 1 year now waiting for our meter/old energy 7 clunk click box to be removed) saying if there is no one in, they'll just break the door down, nice!
Switch? They'll have to take closing meter readings then refund you anything you've overpaid.
Honestly I don't know why anyone would stay with EDF (unless you're still on a fixed deal or something else is stopping you switching?).
The Octopus referral link apparently worked for @TTM (which I'm quite surprised by!) so you'd be very welcome to use mine:
Switching might also be a solution for your mates @BrickMan - if my smart meter was on the blink I'd feel a lot more hopeful about Octopus sorting it out than EDF...
I cut ties with EDF a few months ago, as they were/are still trading in Russia.
We went with Utility Warehouse https://uw.co.uk/ and have been very happy with the change.
We bundled electricity, gas and broadband (were with EE, previously TalkTalk, previously BT) and have definitely saved on each.
Call 0333 777 3 212 to sign up, if you are happy with the rates, and please mention Account 8354381 as the referrer (me :-) )
By the way if Octopus (and others) are still paying out referrals that seems pretty mad in a market were taking on new customers costs, so I wouldn't bank on it happening (although they're normally true to their word).
But I'll be interested in whether you actually get that referral @Howard
Well, if your mates bills were £700pm then £1800pm under new conditions doesn't sound off, so I don't really see what the problem is here as bills rise in October. If its an early SMETS1 Smart meter then they may want to get that changed, as a separate issue.
It was more just of a 'wow, thats a lot' rather than its wrong.
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