The cost of the UK government’s energy policies is now a bigger share of household electricity bills than wholesale prices, British Gas has said. This week, the company raised its electricity prices by 12.5 per cent for 3.1m homes, even though wholesale electricity prices have fallen over the past three years, complaining that it has been making a loss on selling electricity to homes. In a breakdown of its costs, British Gas said that while the cost of wholesale electricity has fallen by 21 per cent since 2014, the cost of “government mandates and policy” has risen by 104 per cent, and the cost of transmission, distribution and metering has risen by 10 per cent. The government policies include several subsidy schemes for renewable energy to help meet the UK’s carbon emissions reduction targets, and the installation of digital smart meters in homes.
FT 3rd Aug 2017 read more »
Keith Baker: the price cap won’t work because the market is not only broken, it never worked in the first place. Incredibly high start-up costs mean energy is a natural monopoly, in which a small number of companies have been protecting significant investments in fossil fuels and nuclear power since the sector was first privatised. Community ownership doesn’t just help solve the energy problem, it also helps make people and communities more resilient. Towns and villages can’t become energy cooperatives overnight, however. They need investment, technical expertise, and an awful lot of support to get up and running. The Labour manifesto included support for a publicly owned energy company in each region, and the SNP has proposed something similar. It’s not a complete solution, but it’s a big step in the right direction.
The Conversation 3rd Aug 2017 read more »
British Gas’s row with the government deepened after the company claimed that energy policies would soon account for more of an electricity bill than wholesale costs. Britain’s biggest energy supplier has been at loggerheads with ministers and Ofgem, the industry regulator, since announcing on Tuesday that it was raising electricity bills by 12.5 per cent. The company, part of Centrica, has been under pressure to justify its claims that rising policy and network costs were to blame. It said these had increased by £98 since it last raised prices at the end of 2013. Yesterday it published figures claiming the cost of government policies on electricity bills would hit £165 per household next year, up from £81 in 2014. It said wholesale electricity costs had fallen from £170 to £134 over the same period. A spokeswoman for the government said that it did not “recognise these figures”. She highlighted Centrica’s own submission to Ofgem showing that, last year, it spent £1.2 billion on domestic wholesale electricity and only £500 million on policy costs. The government spokeswoman added: “Policies driving energy efficiency improvements have more than offset the cost of energy policies and have resulted in lower energy bills.”
Times 4th Aug 2017 read more »