Energy Price Cap
Discussion
We now find ourselves in the rather grotesque position of having people who can't afford to put heating on, cook or wash whilst energy companies are posting record profits, bonuses for staff and handouts for share holders.
Don't get me wrong I am all for businesses and people making money but even the most hardened capitalist must see the issue here and agree something has to change.
Question I have, is the energy price cap set by government or should it be? Then if the cap is set low, consumers are protected to a degree and profiteering is then reduced? I though the idea of a cap was to control the price limits, so a state intervention in private business. Why should tax payers fund the shortfall in people's pockets thereby carrying the penalty for the energy companies.
I agree on Liz Truss' approach that taxing less allows people more freedom and handouts is not the answer but none of this is really scratching the surface and the impact is working up the pay scale.
Are there any other realistic options?
Don't get me wrong I am all for businesses and people making money but even the most hardened capitalist must see the issue here and agree something has to change.
Question I have, is the energy price cap set by government or should it be? Then if the cap is set low, consumers are protected to a degree and profiteering is then reduced? I though the idea of a cap was to control the price limits, so a state intervention in private business. Why should tax payers fund the shortfall in people's pockets thereby carrying the penalty for the energy companies.
I agree on Liz Truss' approach that taxing less allows people more freedom and handouts is not the answer but none of this is really scratching the surface and the impact is working up the pay scale.
Are there any other realistic options?
Note that whilst the French have cheap prices the government has spent quite a sum of money buying EDF out, and by the end of the year will also have a 60bn euro debt to service, inevitably EDF will be supported by taxation. Not sure about others.
Back to OP's question, OFGEM set the prices. It is set based on the wholeale price of energy on the market, the retail company buy from the producers and then sell to us. The cause of the pice rises in in the production, so the retail companies have to pay more for thr energy they sell on, therfore they pass the increases on to us.
So, if the prices are set low, you squeeze the retail companies in to default, because they have to pay more than they sell for. The reason why a bunch of retail companies went but is because they were selling to us on cheap contracts while wholesale prices increased.
The retail companies don't have huge profit margins, its the wholsalers that need to be bought in to line. The only way I can see that working is if they are profit capped, but it probably needs co-ordination through Europe (possibly beyond..) to be effective.
Ref Germany - they're in an interesting position in that they have dismissed Nuclear power and are (were?) seeking to dismantle their nuclear stations. Ok, but what do you replace it with ? renewables ? sure but its hugely expensive and isn't getting any cheaper as the tech matures.
Back to OP's question, OFGEM set the prices. It is set based on the wholeale price of energy on the market, the retail company buy from the producers and then sell to us. The cause of the pice rises in in the production, so the retail companies have to pay more for thr energy they sell on, therfore they pass the increases on to us.
So, if the prices are set low, you squeeze the retail companies in to default, because they have to pay more than they sell for. The reason why a bunch of retail companies went but is because they were selling to us on cheap contracts while wholesale prices increased.
The retail companies don't have huge profit margins, its the wholsalers that need to be bought in to line. The only way I can see that working is if they are profit capped, but it probably needs co-ordination through Europe (possibly beyond..) to be effective.
Ref Germany - they're in an interesting position in that they have dismissed Nuclear power and are (were?) seeking to dismantle their nuclear stations. Ok, but what do you replace it with ? renewables ? sure but its hugely expensive and isn't getting any cheaper as the tech matures.
Tom8 said:
We now find ourselves in the rather grotesque position of having people who can't afford to put heating on, cook or wash whilst energy companies are posting record profits, bonuses for staff and handouts for share holders.
Don't get me wrong I am all for businesses and people making money but even the most hardened capitalist must see the issue here and agree something has to change.
Question I have, is the energy price cap set by government or should it be? Then if the cap is set low, consumers are protected to a degree and profiteering is then reduced? I though the idea of a cap was to control the price limits, so a state intervention in private business. Why should tax payers fund the shortfall in people's pockets thereby carrying the penalty for the energy companies.
I agree on Liz Truss' approach that taxing less allows people more freedom and handouts is not the answer but none of this is really scratching the surface and the impact is working up the pay scale.
Are there any other realistic options?
The price cap was introduced by the current Government as a means of protecting consumers - it drove numerous private suppliers to the wall. Unfettered capitalism would see higher prices. Don't get me wrong I am all for businesses and people making money but even the most hardened capitalist must see the issue here and agree something has to change.
Question I have, is the energy price cap set by government or should it be? Then if the cap is set low, consumers are protected to a degree and profiteering is then reduced? I though the idea of a cap was to control the price limits, so a state intervention in private business. Why should tax payers fund the shortfall in people's pockets thereby carrying the penalty for the energy companies.
I agree on Liz Truss' approach that taxing less allows people more freedom and handouts is not the answer but none of this is really scratching the surface and the impact is working up the pay scale.
Are there any other realistic options?
Crafty_ said:
Note that whilst the French have cheap prices the government has spent quite a sum of money buying EDF out, and by the end of the year will also have a 60bn euro debt to service, inevitably EDF will be supported by taxation. Not sure about others.
Back to OP's question, OFGEM set the prices. It is set based on the wholeale price of energy on the market, the retail company buy from the producers and then sell to us. The cause of the pice rises in in the production, so the retail companies have to pay more for thr energy they sell on, therfore they pass the increases on to us.
So, if the prices are set low, you squeeze the retail companies in to default, because they have to pay more than they sell for. The reason why a bunch of retail companies went but is because they were selling to us on cheap contracts while wholesale prices increased.
The retail companies don't have huge profit margins, its the wholsalers that need to be bought in to line. The only way I can see that working is if they are profit capped, but it probably needs co-ordination through Europe (possibly beyond..) to be effective.
Ref Germany - they're in an interesting position in that they have dismissed Nuclear power and are (were?) seeking to dismantle their nuclear stations. Ok, but what do you replace it with ? renewables ? sure but its hugely expensive and isn't getting any cheaper as the tech matures.
Interesting, thanks. Yes makes sense although capping private businesses always seems to be counter intuitive. Re the germans they turned off all nuclear following Fukushima, not sure where they thought their earth quakes were coming from. They also turned off all coal almost overnight so bought into dependency on Putin's gas and they are now in the fix of their own making. Back to OP's question, OFGEM set the prices. It is set based on the wholeale price of energy on the market, the retail company buy from the producers and then sell to us. The cause of the pice rises in in the production, so the retail companies have to pay more for thr energy they sell on, therfore they pass the increases on to us.
So, if the prices are set low, you squeeze the retail companies in to default, because they have to pay more than they sell for. The reason why a bunch of retail companies went but is because they were selling to us on cheap contracts while wholesale prices increased.
The retail companies don't have huge profit margins, its the wholsalers that need to be bought in to line. The only way I can see that working is if they are profit capped, but it probably needs co-ordination through Europe (possibly beyond..) to be effective.
Ref Germany - they're in an interesting position in that they have dismissed Nuclear power and are (were?) seeking to dismantle their nuclear stations. Ok, but what do you replace it with ? renewables ? sure but its hugely expensive and isn't getting any cheaper as the tech matures.
The pitch is also that green energy is cheap. Wind costs nothing etc. That myth has finally been dispelled.
Tom8 said:
We now find ourselves in the rather grotesque position of having people who can't afford to put heating on, cook or wash whilst energy companies are posting record profits, bonuses for staff and handouts for share holders.
Don't get me wrong I am all for businesses and people making money but even the most hardened capitalist must see the issue here and agree something has to change.
Question I have, is the energy price cap set by government or should it be? Then if the cap is set low, consumers are protected to a degree and profiteering is then reduced? I though the idea of a cap was to control the price limits, so a state intervention in private business. Why should tax payers fund the shortfall in people's pockets thereby carrying the penalty for the energy companies.
I agree on Liz Truss' approach that taxing less allows people more freedom and handouts is not the answer but none of this is really scratching the surface and the impact is working up the pay scale.
Are there any other realistic options?
The companies which are making big profits are the companies extracting oil and gas out the ground, and they are not necessarily the same companies supplying you with electricity at home. Don't get me wrong I am all for businesses and people making money but even the most hardened capitalist must see the issue here and agree something has to change.
Question I have, is the energy price cap set by government or should it be? Then if the cap is set low, consumers are protected to a degree and profiteering is then reduced? I though the idea of a cap was to control the price limits, so a state intervention in private business. Why should tax payers fund the shortfall in people's pockets thereby carrying the penalty for the energy companies.
I agree on Liz Truss' approach that taxing less allows people more freedom and handouts is not the answer but none of this is really scratching the surface and the impact is working up the pay scale.
Are there any other realistic options?
The whole industry is subsidising consumers to the tune of billions of pounds right now. 30 companies have gone bust. The idea that energy companies are making huge profits is a misnomer spread by people who don't understand quite how it works. The government wanted the big 6 broken up, and the result is lots of companies who just buy wholesale power and sell it on to consumers, at the moment, at a huge loss. The Big 6 which had a diversified portfolio would have done better, as the whole idea was that when the consumer side did badly the other sides did well, but the government didn't like that.
One way or another someone pays. Either the government borrows money to pay for it and we pay it back later, or we pay now.
b
hstewie said:
hstewie said: By coincidence I just saw this.
Something isn't working.
If people weren't playing politics, they'd post actual prices in kWh.Something isn't working.
The UK is suffering at the moment %-wise because we're mostly dependant on gas which has gone from cheap to expensive.
A year or two ago, French electricity costs were high compared to UK bills, now their nuclear power looks cheap.
Electricity in China was always cheap, but coal based.
We are paying the price of our 'green' policies to reduce CO2.
The other thing is, the UK gov't is giving handouts to consumers, other governments may be intervening differently which affects the price?
OutInTheShed said:
The UK is suffering at the moment %-wise because we're mostly dependant on gas which has gone from cheap to expensive.
A year or two ago, French electricity costs were high compared to UK bills, now their nuclear power looks cheap.
Electricity in China was always cheap, but coal based.
We are paying the price of our 'green' policies to reduce CO2.
The other thing is, the UK gov't is giving handouts to consumers, other governments may be intervening differently which affects the price?
Most of this is untrue to be honest. A year or two ago, French electricity costs were high compared to UK bills, now their nuclear power looks cheap.
Electricity in China was always cheap, but coal based.
We are paying the price of our 'green' policies to reduce CO2.
The other thing is, the UK gov't is giving handouts to consumers, other governments may be intervening differently which affects the price?
France usually has the cheapest power in Europe, but for the last few months half their entire fleet has been offline because they found some issues with the pipework so all the similar reactors are offline for checks. We used to buy 2-3GW (about 7-10%) of our power from France but instead we are selling them 3GW. They went from the cheapest power in Europe to the most expensive. Winter power in France is worth about 80c/KWh, or about 65-70p/KWh wholesale, so well over 80-90p/KWh retail.
It has very little to do with "green" policies. If our entire system was run on renewables we'd be insulated from the gas and coal prices, and clearly the answer to high gas prices is not to burn more gas! Each MWH which comes from solar or wind or nuclear is a MWh of gas we don't have to buy.
Panamax said:
I love the whole absurdity of a "price cap" when every time costs increase they just increase the cap - so it's not a cap at all! just more hot air from useless politicians.
Without the cap, retail companies could charge what they wanted, they'd all play roundy roundy and we'd be paying even more. The cap goes up because the wholesale prices increases.Ref cost of renewables: https://watt-logic.com/2022/04/11/cost-of-renewabl...
Tom8 said:
We now find ourselves in the rather grotesque position of having people who can't afford to put heating on, cook or wash whilst energy companies are posting record profits, bonuses for staff and handouts for share holders.
Don't get me wrong I am all for businesses and people making money but even the most hardened capitalist must see the issue here and agree something has to change.
Question I have, is the energy price cap set by government or should it be? Then if the cap is set low, consumers are protected to a degree and profiteering is then reduced? I though the idea of a cap was to control the price limits, so a state intervention in private business. Why should tax payers fund the shortfall in people's pockets thereby carrying the penalty for the energy companies.
I agree on Liz Truss' approach that taxing less allows people more freedom and handouts is not the answer but none of this is really scratching the surface and the impact is working up the pay scale.
Are there any other realistic options?
What do you mean by "Why should tax payers fund the shortfall in people's pockets thereby carrying the penalty for the energy companies", what is "carrying the penalty for energy companies"Don't get me wrong I am all for businesses and people making money but even the most hardened capitalist must see the issue here and agree something has to change.
Question I have, is the energy price cap set by government or should it be? Then if the cap is set low, consumers are protected to a degree and profiteering is then reduced? I though the idea of a cap was to control the price limits, so a state intervention in private business. Why should tax payers fund the shortfall in people's pockets thereby carrying the penalty for the energy companies.
I agree on Liz Truss' approach that taxing less allows people more freedom and handouts is not the answer but none of this is really scratching the surface and the impact is working up the pay scale.
Are there any other realistic options?
The cost of energy is a Global issue, you mention profiteering "profiteering", as mentioned elsewhere no one is interested when oil and gas prices are low with O & G companies making little profit with many in the industry made redundant.
The Government are playing a blinder blaming the O & G companies, they need to stand up and start doing what they should be doing, managing the future of UK energy strategically with firm plans on energy transition between O & G, Renewables and Nuclear.
You mention "profiteering", the biggest "profiteers" from the current crazy climate with ZERO RISK OR INVESTMENT are the Government themselves.
Until the Government start taking responsibility on the future of energy in the country we are in a real bad way......................their focus has always been to deflect all blame with the O & G companies and play they are the EVIL ones out there.
Imagine there was no oil and gas available...... then you have a massive problem, way worse than what we have now.
Let's not kid ourselves here,
Who pumps oil out of the ground? Shell and BP
Who refines the crude oil into lighter products? Shell and BP
Who sells petrol from petrol stations? Shell and BP
Have the costs of extracting, refining and retailing oil/petrol/gas increased significantly? No
Who's taking a big slug of extra profit? Errrm....
Who's collecting massive additional tax (VAT) as a result of the price increases? Errrm....
Meanwhile Putin is selling 50% as much oil/gas as previously but receiving at the least the same amount of cash as he was receiving before, while Western Europe is struggling to source the energy supplies it needs. And the Arabs are laughing all the way to the bank - as usual.
Who's getting screwed here? Errrm....
Who pumps oil out of the ground? Shell and BP
Who refines the crude oil into lighter products? Shell and BP
Who sells petrol from petrol stations? Shell and BP
Have the costs of extracting, refining and retailing oil/petrol/gas increased significantly? No
Who's taking a big slug of extra profit? Errrm....
Who's collecting massive additional tax (VAT) as a result of the price increases? Errrm....
Meanwhile Putin is selling 50% as much oil/gas as previously but receiving at the least the same amount of cash as he was receiving before, while Western Europe is struggling to source the energy supplies it needs. And the Arabs are laughing all the way to the bank - as usual.
Who's getting screwed here? Errrm....
Condi said:
The companies which are making big profits are the companies extracting oil and gas out the ground, and they are not necessarily the same companies supplying you with electricity at home.
The whole industry is subsidising consumers to the tune of billions of pounds right now. 30 companies have gone bust. The idea that energy companies are making huge profits is a misnomer spread by people who don't understand quite how it works. The government wanted the big 6 broken up, and the result is lots of companies who just buy wholesale power and sell it on to consumers, at the moment, at a huge loss. The Big 6 which had a diversified portfolio would have done better, as the whole idea was that when the consumer side did badly the other sides did well, but the government didn't like that.
One way or another someone pays. Either the government borrows money to pay for it and we pay it back later, or we pay now.
Can’t rally add too much to this as the pair is insightful common sense being applied.The whole industry is subsidising consumers to the tune of billions of pounds right now. 30 companies have gone bust. The idea that energy companies are making huge profits is a misnomer spread by people who don't understand quite how it works. The government wanted the big 6 broken up, and the result is lots of companies who just buy wholesale power and sell it on to consumers, at the moment, at a huge loss. The Big 6 which had a diversified portfolio would have done better, as the whole idea was that when the consumer side did badly the other sides did well, but the government didn't like that.
One way or another someone pays. Either the government borrows money to pay for it and we pay it back later, or we pay now.
I’ve asked in various posts about this to provide a domestic energy supplier that is making extraordinary profits. I’d love to see a few examples. Not “I saw the fancy cars in their car park” kind of evidence.
Sure the oil majors are benefitting from the billions of pounds of investment they have made , but I failed to see a call to rally when they were posting record losses ….
There is a difference between domestic energy suppliers and *energy companies * but the govt is not looking at that distinction as any perceived action is a vote winner……
Panamax said:
I love the whole absurdity of a "price cap" when every time costs increase they just increase the cap - so it's not a cap at all! just more hot air from useless politicians.
It's a cap on what the suppliers can make. It can't change the wholesale price of gas/electricity.I haven't verified these claims so take them with a pinch of salt, but if true, somebody wants a slap!
https://twitter.com/evolvepolitics/status/15573200...
https://twitter.com/evolvepolitics/status/15573200...
evolvepolitics said:
@evolvepolitics
New research has found that oil giant Shell paid £0 in tax on their UK oil and gas production in 2021.
Instead they were net beneficiaries, pocketing £100m in handouts from the UK government.
The likes of Norway and the US gained £17bn in tax from the firm over the same period.
New research has found that oil giant Shell paid £0 in tax on their UK oil and gas production in 2021.
Instead they were net beneficiaries, pocketing £100m in handouts from the UK government.
The likes of Norway and the US gained £17bn in tax from the firm over the same period.
evolvepolitics said:
@evolvepolitics
Since 2016, both BP and Shell have been huge net beneficiaries of the UK tax system, having been handed a cumulative total of £727m of UK taxpayers’ money over this period.
This is despite the firms making £10s of billions in profit and paying £bns in tax in other jurisdictions.
Since 2016, both BP and Shell have been huge net beneficiaries of the UK tax system, having been handed a cumulative total of £727m of UK taxpayers’ money over this period.
This is despite the firms making £10s of billions in profit and paying £bns in tax in other jurisdictions.
evolvepolitics said:
@evolvepolitics
Had the UK implemented the same tax regime as Norway on these oil and gas corporations, British taxpayers would now be better off to the tune of over £1,000,000,000,000 (one trillion pounds).
You can find out more about this incredible tax scam here:
Had the UK implemented the same tax regime as Norway on these oil and gas corporations, British taxpayers would now be better off to the tune of over £1,000,000,000,000 (one trillion pounds).
You can find out more about this incredible tax scam here:
Crafty_ said:
...
Ref Germany - they're in an interesting position in that they have dismissed Nuclear power and are (were?) seeking to dismantle their nuclear stations. Ok, but what do you replace it with ? renewables ? sure but its hugely expensive and isn't getting any cheaper as the tech matures.
Apols for selective quoting, but that's simply not true. The cost of renewable energy is dropping, and quicker than forecast.Ref Germany - they're in an interesting position in that they have dismissed Nuclear power and are (were?) seeking to dismantle their nuclear stations. Ok, but what do you replace it with ? renewables ? sure but its hugely expensive and isn't getting any cheaper as the tech matures.
This link may be a little biased: EnergyPost, but this article is similar: UCL - Renewables are cheaper than ever.
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