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Why power prices aren't falling

Robert Peston | 09:49 UK time, Monday, 20 October 2008

There was a hope that a global economic slowdown, which has led to a fall in oil prices, would also lead to a fall in the gas and electricity prices we all pay.

Oil refinery, GrangemouthWell, don't hold your breath - for all the pressure that the prime minister, no less, put on the energy companies this weekend to cut their energy tariffs.

I've been talking to those who run our big power companies. And this is what they say:

1) gas prices are still 70% higher than where they were last winter, in spite of a fall in the past few weeks;
2) electricity prices are double where they were last winter;
3) there is very little spare capacity in the electricity generation market, because of the age and fragility of our generators, so there's a risk that - if another generator were to fall over - electricity prices could rise further;
4) over the summer, energy companies bought power on the forward market at prices that are higher than where they are today;
5) it's currently very difficult to hedge power prices at the slightly lower prices now prevailing, because the credit crunch has reduced the capacity of financial firms to take the other side of bets on the future path of energy prices (which is why certain power companies are no longer providing big fixed-price contracts to huge industrial consumers);
6) all the power companies are generating much reduced profits from their retail energy businesses, such that if they suffer a further margin squeeze they may well find it harder and more expensive to raise credit (another painful impact of the credit crunch);
7) power companies have no idea whether this winter will be cold, and therefore whether there will be a surge in demand for gas and electricity, which will lead to a spike in wholesale prices.

Put it altogether and what you've got is the near-certainty that those increased prices we saw in the summer - with British Gas increase the gas tariff by 35% and electricity by 9% - will prevail for many more weeks to come, and possibly all through the winter.

All the power companies will do what they can for those on lowest incomes. And they are conscious that for small businesses, the high cost of energy can prove fatal.

But the vast majority of us would probably be foolish to factor into our budgets any significant fall in what we pay for energy.

UPDATE, 10:40AM: If you are looking for gloom, today's public sector net borrowing figures are simply dreadful: £37.6bn for April to September, up from £21.5bn a year earlier.

And this horrible increment has come before we've seen any significant impact of the economic slowdown on personal and corporate tax receipts.

Public sector net borrowing in the current fiscal year may well turn out to be at least 50% greater than the £43bn forecast by the chancellor in March.

And, as I've been pointing out (see "Spend, Spend, Spend?") all the pressures on the government are to spend more in the short term, to lessen the downturn in the economy - which will lead to even greater public-sector borrowing.

Which is why many economists would argue that the priority for the Treasury is not to raise taxes or slash public spending now, but to map out a credible path for reducing public sector debt from 2010 onwards.

If the chancellor fails to do this, sterling and UK government bonds will come under very heavy selling pressure - and the cost for the government of servicing all that debt could rise quite sharply.

UPDATE, 12:36PM: I have looked again at where we are on wholesale gas and electricity prices - and they don't imply we are close to serious reductions in what we're charged.

Wholesale gas prices for delivery in the first quarter of 2009 are 62% above last winter's price. And electricity prices for the same period are 67% up, year on year.

As for wholesale electricity prices for November and December, they are even higher.

What's galling is that wholesale gas was supposedly priced off the oil price on the way up - but now that the oil price has more than halved, the gas price seems to have de-coupled (to use the awful jargon).

There's a bit of a smell around all of this. Few would probably argue that the gas market is either rational or efficient.

Comments

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  • Comment number 1.

    prices are also dictated by what we get from Europe. Being very reliant for gas and LNG has proved a bad thing when the UK is hte only de-regulated market in the EU.

    on top of that, the more worrying issue is that we are in fact getting closer to running out of power in any event, no matter what the short-term price issues are.

  • Comment number 2.

    Seven terrible excuses. Sounds just like the banks before the crash...

  • Comment number 3.

    AT LAST - WE'RE IN A RECESSION.

    What is the Government doing about it? They quick enough to step in a offer massive support for businesses (if they were called banks). What about the rest of us??

    Your item Robert, exactly as I said on 18th Oct no. 15 below. Care to work your way thru the rest?

    1. There is no more real money in the UK economy than there was in the 90s.
    2. The 'increased wealth' is paper money. More will be printed.
    3. The media will quietly let the 'recession' story die, recessions are not dramatic news like share collapses, de facto 'it's here' so 'no point going on about it'.
    4. The recession has probably been covertly welcomed by the Govt because it will lead to greater dependency on welfare. Brown is an expert at 'giving to the poor'
    5. The repossession, foreclosure, insolvency, seizure juggernaut is well under way, cue Northern Rock.
    6. We will not 'come out of this' as journalists eg: John Humphries (Today prog Sat 18th) like to remark. What happens during a recession is that wealth moves away from the affected countries - it does not come back. The shift after the 90s was to tax havens and investment in the Far East. That will continue apace.
    7. Loss of expertise, technology, capacity will increase exponentially - many industries took 15 years or longer to recover from the last recession.
    8. Diversity and choice of all things consumer will be drastically reduced as retail operations reduce their stockholdings and procure ever-cheaper options.
    9. Customer service will get worse, the trading transaction of the future will not be 'money for goods' it will be the handing over of the money itself. In the main the goods will be worthless junk that looks like the real thing but will fall to bits the second time you use it and it will come from the Far East.
    10. Import will increase, export will die and the balance of payments deficit will get appreciably worse very quickly
    11. The NHS bill will expand rapidly to pay for the many people who become ill due to stress and worry.
    12. Rental prices for those forced from their homes will go up dramatically as agents seize upon yet another new opportunity to recover their loss from the drop in house sales.
    13. Crime will increase as the most desperate and daring in the lower levels of society decide to take what they cannot get by other means.
    14. Our currency will become valueless around the world.
    15. Utilities will increase their profits by raising their prices unchecked.
    16. The most skilled and able will move away from the UK to where their skills are actually wanted.
    17. The younger generation will cease to believe in the worth of the nation and act accordingly. The warning signs of the danger to cohesive society of ‘feral’teenagers and gang culture have been around for over a decade.
    18. Drug use, dealing and alcohol abuse and violence will increase.
    19. Driving standards, indeed all interpersonal standards will slip ever lower.
    20. More and more prisons will be built

    Those are some of the direct consequences of the last recession. It happened last time and some; I have no reason at all to suppose it will be different this time. The problem with the last recession was that the government under Major deferred the decision as to whether we were 'in one or not' that by the time they agreed it was too late and a ghastly kind of 'New Order' had enveloped the country. No thought was ever given to how it might be better dealt with in the future, then or now.

    Of course, there are numerous measures that could be taken and in my view should be to restore the UK to trading nation status, living by the outstanding excellence of our UK produced products, slamming the door on imported food, 2nd rate goods of all kinds from retail items to cheap tools, and end to inward investment, a call to best brains to come home and rebuild the nation, separation from the EU, an end to currency trading, social and legal reform measures on the scale of the introduction of the Welfare State to protect ordinary citizens from the fallout, capping of interest on credit, freezing of repayments (a kind of moratorium) to give folk a breathing space.
    And many other things. There are risks attaching some of those proposals but at least they are proposals presented in open forum for discussion and proposals you will not find at all on the mainstream party websites. There you will find pretty contemporary stuff that simply isn’t any use anymore. You will of course describe some to the things I have mentioned as impossible or 'barmy'. So be it, but I am not a politician so can't be held-to-account for being too, er bold or imaginative.

    You should, however, before doing that, ask yourself whether democratic process has some part to play now. It does:

    'Have I written to MP and what is my MP doing for me?'

    And:

    'What imaginative and robust measures is the Govt now implementing to build the country we want to have?'

    What kind of country do we want? Does anyone care what we want? One thing is for sure, history proves it, tomorrow will not be as yesterday was. Everyone wants something different from the next man excepting that we all have in common a desire to be slightly better off and not worse. But life gets harder doesn’t it? Why should that be? Do we not employ governments to make things better? Of course we do, that is the modest expectation of a democratic society. But whatever we do want, there are anyway no measures of any kind in place to create that thing. None at all.

    Indeed, as the days drift into weeks and the socio-economic trainwreck gathers pace in what I am sure will prove to be the worst period of social upheaval since the 1st World War, this government will increasingly seek to divert attention from that issue by rolling out endless, worthless half-baked legislation and proposals that are neither pressing nor relevant at this time.

    If as a people we do not pressure our Parliamentary representatives at this critical time we will have their dull, plodding 'vision for Britain' rubbed in our faces. And worse is yet to come. The bulk of realisable wealth (property, investments, pensions) is firmly in the hands of the generation 40+. The bucket is well and truly empty and cannot be filled by dreaming for one second that everything will be OK. And those in their twenties now and more especially those that come after will look back on these as ‘the years of the generation who took everything’ and left no worthwhile legacy at all.

    Where are the like of the great reforming minds that dominated world politics in the middle of the last century? Where are the demagogues? Why is the Chuch not speaking out? Where is any leadership in this?

  • Comment number 4.

    Interesting blog. It's easy to assume lower oil prices = lower energy prices, and thus that the lack of a price decrease just means the energy companies are being their usual greedy selves. You don't tend to think about these other matters. Still, I would take the claim of "much reduced profits" with a pinch of salt - reduced from "outrageously huge" to "substantially massive" perhaps.

    The fact remains that we can't seriously expect private energy companies to operate at a deficit, but energy is a necessity in today's world, so how do we ensure that we get affordable energy at all times?

    Simple: nationalisation. We've done the banks, let's start on the energy companies - better to have our Government in control than France's, surely?

  • Comment number 5.

    Thank god they all operate on an open book basis so all this can be checked.

  • Comment number 6.

    Sorry, but these 7 points sound no more than attempting to justify a scam on the UK public to protect (increase?) profit margins and feed shareholders.

    Do big businesses not understand that sometimes you make 'big' profits and some times you make 'little' profits?

    The long-held notion that you can 'always' make 'big' profits and that profits must always show 'growth' year on year has now come to an end.

    The sooner they realise that the better - and if the energy companies they weren't in a 'monopoly' cartel they would realise it sooner.....

  • Comment number 7.

    Your point 5: "credit crunch has reduced the capacity of financial firms to take the other side of bets on the future path of energy prices" is absolutely right.

    The consequences go further: since they can't get hedges so readily, these industrial energy buyers will need to pass through the huge volatility of electricity prices directly to their customers, just as petrol-stations do, which makes for very difficult financial planning.

    Which represents another turn of the screw for many companies. Yet another example of the interconnected nature of the economy.

  • Comment number 8.

    This all emphasises our need to become as self-reliant as possible on energy. Much is made of the regulation in France on prices but because most of their electricity is nuclear-generated, they are not so vulnerable to world fuel prices.

    The sooner we can make massive investment in renewables (wind, wave, tide, marine current) and nuclear the better. Renewables are not completely reliable - we need nuclear for peak load. PWRs are able to respond instantly to demand, unlike older gas-cooled reactors.

    North Sea gas can in the longer term also be replaced by hydrogen generated with off-peak power. This can be used both for domestic heating and transport.

    It is not just climate change that suggests this course of action - it is plain economic sense. The government should give >100% capital allowances to any green and domestically produced power and gas supply, much as was done to develop the North Sea oil industry. It is even more strategically important today.

    In the meantime we will just have to grin and bear the cost.

  • Comment number 9.

    According to the owner of my local petrol station, whenever petrol prices go up he always has empty tanks, and has had to buy the next load of fuel at the higher price, and whenever petrol prices go down, he has full tanks, and has to sell at the higher price until he's cleared his stock.

    It seems ot me the energy companies are using the same excuse. I believe them just as much as I believe my local garage owner.

  • Comment number 10.

    This is why you don't privatize power companies. A public company with aging generators would build new ones. A private company with aging generators uses them as an excuse to reduce supply and hence raise prices.

  • Comment number 11.

    Supply and demand form the bedrock of all economics and energy is no different.

    We are now waking up to the painful reality of a decade wasted on liberal/green indulgance in planning for non existant man made climate change while resisting genetically modified crops when we should have been building new nuclear power stations and boosting crop yields. Perhaps if we had electricity would be cheaper, we would therefore need less gas, bread may be less than £1 per loaf. The only thing that would not have changed was another wet and cold summer. So enough of MMR global warming fantasy.

    Shouting about 'greedy' energy companies is about as useful as a barking at the moon. We need a return of a real government that will make the long term strategic decisions needed. This is now extrememly urgent because we are now in danger of experiencing power cuts in the next few years and not of being flooded by melting ice caps.

  • Comment number 12.

    Wow, someone actually says things as they are in the power industry( I am an electrical engineer and the ammount of misreporting that goes on is downright demoralizing).

    Sad fact of the matter is that we have been steadily reducing generating capacity for some time. That will only serve to increase prices and reduce system stability regardless of what happens to fuel costs.

    About 1/3rd of the coal fleet is running on borrowed time because of EU air quality regulations. Once they drop out prices will rocket as meeting peak demand will approach impossible.

    That can only cause a further increase in power prices(and probably routine blackouts).

    But don't worry, those windmills that cost 3 times more per KWh actually generated than coal plants will save us!

  • Comment number 13.

    I agree with Loggy1948, we need investment in renewables as a matter of national emergency.

  • Comment number 14.

    Dear Robert

    The British people are RIPPED OFF all the time, the problem is
    THEY DO NOT COMPLAIN ENOUGH,
    THEY ACCEPT THE DELIBERATIONS OF ECONOMIC ISSUES AS A FACT OF LIFE WHEN, AT THE END OF THE DAY THESE UTILITY SUPPLIERS RELY ON THE CUSTOMER TO KEEP THEM IN BUSINESS.??
    THERE IS ABSOLUTELY NO NEED FOR THIS PROFITEERING.

  • Comment number 15.

    #13

    Investment in renewables isn't going to happen or rather UK investment in UK renewable technology isn't going to happen. As with wind we may well end up buying most of the technology from elsewhere.

    As to clean coal then technically it's doable now. We just have to accept that the technology is Norwegian.

    That's another thing to thank Gordon and his chums in financial services for.

  • Comment number 16.

    Energy companies doing all they can to help low income users - what a load of tosh.

    Forgetting the in built unfairness of pre-pay meter charges and for some there is no direct debit option the basic tariff configuration reduces the average unit cost for high energy consumers.

    This is because the two band charging rates starts with the highest band which is typically much greater than the second band. The more you use the lower the effective unit cost.

    Not only does this penalise the low users who are nearly always on low income but is perverse in relation to incentivising energy efficiency.

    On the bigger picture the profit motive for energy companies drives their true mission which is to increase energy consumption. A privatised energy industry is ultimately incompatible with addressing climate change.

  • Comment number 17.

    Robert, the power generators profit margins have never been higher! We are being taken for a ride here. The dark spread (or profit from burning coal) is at least 3 times as high as it was this time last year. This is because coal prices have collapsed (following oil down) but power prices remain high. Not because of the issues you mentioned but because the power market is a nice little club with a handful of traders.

    And don't get lulled into believing that the utilities were paying higher prices earlier this year. The utilities have been experts at hedging their fuel price. In fact, one particular nuclear power generator buys enough coal (both physical and financially settled) to help push up the price of power and therefore make huge margins on their nuclear power generation, especially when you consider that the price of uranium has actually fallen.

    The price of power should be linked to the price of the fuel that is used to generate it and not some arbitrary power market that trades at the level the generators feel comfortable with. Every tonne of coal entering the UK should be sold clean i.e. with the right amount of emissions certificates attached. That would put the pollution burden on the supplier and not give the utilities another nice way to game prices as they currently do with the EU emissions market.

  • Comment number 18.

    Nice one so basically We will pay what they think they can get away with ????



    If you want to look at why we should be at the energy firms throats you only need to look at the difference in prices they for instance charge in the companies home country and what it charges in the uk.....

    The gas is the same it cost the same it will always cost the same but they can somehow magic cheaper price rises in France than here...

    They are a cartel , they act as a cartel and our government turns a blind eye....when big shipments of LNG start coming into this country are we going to see cheaper prices compared to the rest of europe for handling it ??? i can guarantee not.

    We have been left in the lurch by a none existent energy policy and are colluding with these firms to maximise their revenue streams.

    Rise in oil prices was blamed for the last hike in prices now they claim that a drop in oil prices has no effect on the price of gas ???? Dick Turpin wore a mask and only took what was in your pocket these people are taking what might be in your pockets in 3 months time......

    Perhaps we should take the rise in prices but block the euro pipeline.....just import what we our selves need and sign contracts with Norway etc based just on what we ourselves require.

    I'm sure with the investigative journalists the bbc have the energy firms can be shown to be lying please do this on behalf of the people who pay their licence fee's ,its not funny being held to ransom..

  • Comment number 19.

    For the last 200 years we, the world, have been living in a time of cheap abundant energy and hence have been burning it up with no regard to the future. Well as this week's New Scientist magazine has shockingly revealed we actually live on a finite planet!!! Supplies of oil have probably peaked, i.e. the production is on a bumpy plateau and at some time soon will inexorably turn down. Natural gas is forecast to have a worldwide peak some 5-10 years later. The corresponding best guess for coal is in 2030.

    Our own North Sea supplies of oil and gas peaked in 1999 and it is appalling that almost nothing has been done over the last few years to remove our dependence. Gas storage is a few days compared to months in Germany. during winter the North Sea cannot supply enough gas, we must rely on storage or buy it back at higher prices from those who have bought it cheaply in the summer and stored it.

    The current lower price of oil and gas is temporary.

    Since much of our economic growth has been on the back of this abundant energy, we are in for a rude awakening.

  • Comment number 20.

    POINT SEVEN - power companies have no idea whether this winter will be cold???

    What on earth is the point on the Met Office spending all those many millions on supercomputers for weather forecasting, if they can't give the power companies a simple hot/warm/cold winter forecast. Scrap the Met Office now and at least we can save the country a little money!

  • Comment number 21.


    The government should be more pro-active in getting money back from the bankers who, as individuals, took money from the system that they had not earned.

    I hear that these creatures are STILL planning to pay themselves bonuses this summer, albeit at a reduced level. This is criminal. The govenrment should get those bonus pots and put them towards the national purse.

  • Comment number 22.

    I remember regular blackouts as a child-are they coming back? I think I'd better move the gas barbeque into the kitchen and invest in candles and oil lamps, perhaps a couple of gas heaters?

    Yet again, the people don't matter-when will our government stop pandering to greedy banks and corporations and look after those they were elected to represent?

  • Comment number 23.

    And Brown is still happy to waste billions on upgrading Trident nuclear weapons and on fighting unnecessary wars abroad.

  • Comment number 24.

    prices will continue to increase and there is not alot the public can do about it.
    these companies have to keep making a good profit or face being taken over by a competitor and then the profits have to be higher to pay for the takeover.
    last week we had the PM stating that petrol prices should be brought down by retailers and suppliers, what about reducing the tax on it to help its reduction in price no the government wouldnt do that they would loose too much.
    thus as with energy prices the government should step in and decree a fair level for end users and if the companies refuse and keep raising there prices then the government should wrest control of them and nationalise the whole lot.

  • Comment number 25.

    "PWRs are able to respond instantly to demand, unlike older gas-cooled reactors."

    i would just like to say thats not quite true they are quicker but have to be up and running and online....no power plant using steam generation can be instant response....

    The only reliable instant energy is hydro where the height and volume behind the dam can guarantee the amount to be produced..but they are expensive to build and mantain..

    We do desperately need nuclear in large amounts to balance the supply out.....if we dont then we need candle manufacturers because the lights are going to go out......

  • Comment number 26.

    Government has to be really effective in talking down fuel prices. Lower road transport costs can only be good all round.

    As regards power generation, I thought we were going to pay the French to make nuclear for us.

    Tescos should and probably will be running the country for a while. At least we will have those profits to tax, and one or two consumer price cuts here and there.

    No mention of manufacturing and the profitable export of services of course, but then there was never going to be.

    On we go.

  • Comment number 27.

    rather than just parrot what they tell why not check if what they saying is true?

    centrica is making 70% profit from uk gas storage.

    The prices are back to oct 07 levels.

    British Gas issued a leaflet with a graph on it showing the july price spike as an excuse for raising prices. for some reason they didn't show on the graph what happened after july.

    as for the excuse they don't know what the prices will be in the winter so we'll keep them high anyway that is ridiculous.

    with the forced liquidation in hedge funds its clear 50% of the oil price WAS speculation and not demand. They were telling us it was 10%. So that myth has been blown out the water.

    the uk is one of the few countries not to have a feed in tariff. 19 eu countries do. In germany it provides more energy that the whole of uk nuclear, and generates 100,000s of jobs. the UK govt has killed every bill trying to bring it in. HMG likes high prices because it wants to sell nuclear. Time for a feed in tariff.

  • Comment number 28.

    How can we check their figures?? WE CAN'T
    You normally have a view but NOT THIS TIME

    I believe some of the rise is due to a problem with a pipe line from the North Sea, maybe that excuse is for next month.

    I honestly believe we should nationlise Gas, Electricity and Water. At least we would not need to pay dividends, nor make large profits.

    I really feel sick when I think of the problems our elderly with have to put up with this winter.

    Ron Norton

  • Comment number 29.

    Has anyone noticed that prices on the wholesale markets seem to rise in the summer when the forward prices are agreed for the next winter. Then after the summer they fall so advantage cannot be taken of them. I suppose that is what supply and demand do?

    I remember reading that we have the least storage capacity for gas in Europe, hence gas cannot be bought and stored during the cheaper times (also ties up capital).

    Also no energy strategy in the last 10 years does not help. The French have been busy building nukes (soon they will be doing the same for us). Ok people don't like them and they are expensive in capital costs, but once operational the marginal costs are not much. Hence the French can cap the rises in energy prices.

    As for not doing anything my Grandmother is getting £400 for winter fuel allowance plus the energy utility will pay for her additional loft insulation worth £150-£300 before heating savings, the cavity walls (if she had any) and 4 low energy bulbs. Ok I know not everybody benefits from this but for pensioners I cannot say the Government is not doing anything .

  • Comment number 30.

    3) there is very little spare capacity in the electricity generation market, because of the age and fragility of our generators, so there's a risk that - if another generator were to fall over - electricity prices could rise further;

    If this happens we should hook up one of our nuclear submarines or aircraft carriers.They would be glad to come to our "defense"

  • Comment number 31.

    #29, what year will they do the loft insulation? I hear the waiting list is circa winter 2009 or spring 2010 if you are lucky.

  • Comment number 32.

    The energy companies essentially behave the same as the banks or as most other companies for that matter: they all try to grab as much money as possible in order to safeguard their PROFITS. That is simply how the economy works, when the ultimate measure of success for a company, any company, is profit.

    Normally, in a true free market, you would expect this behaviour to be counter-balanced by us, the consumer, having a free choice to either buy the product or use the service or not. Unfortunately, with energy and banks, and other essential services, it doesn't work, because we don't have the choice NOT to have the product. Maybe we can cut back how much of the product we consume, but we need some of the product, one way or another.

    Creating competition-like conditions and adding an official regulator has proved insufficient to correct the problem. In essence, because it does not change the fundamental driver of the companies involved: profit. It only tries - but fails - to mitigate the consequences.

    Essential (public) services do not belong in the for-profit sector. I am not saying that they must always be in the public sector, just that their ultimate KPI (Key Performance Indicator) should not be profit.

  • Comment number 33.

    > reducing public sector debt from 2010 onwards.

    Let's start with the Olympics, then. Then we can cut 9b right off the top, still leaving 1b. That should be more than enough to organise some running and jumping.

  • Comment number 34.

    because the uk has 13 days gas storage while germany and france 100 days they can buy our gas in the summer when its cheap and sell it back to us in the winter at the winter prices. its a big racket.

    what the energy companies did was lock in those 2 year deals at the price spike high.

    again like the fsa the energy regulator is sleeping on the job and seems to have a cosy relationship with those it should be regulating? the fsa was afraid to be criticised when that would be a sign they were doing something right?

    if energy companies are not criticising [not even a murmur] the energy regulators then that means they are not doing their job in protecting the public?

    we have millions of acres of factory roof that could be earning money. no need for nuclear. but there is for a feed in tariff.

  • Comment number 35.

    Robert I think you're being a tad too kind to these energy companies. The key point, as I see it, is the remark you make about buying energy on the 'forward markets'. I've suspected for some time that these companies have 'speculated' badly on future prices to the detriment of their consumers. The've all done it, locked themselves in to what they thought were going to be reasonable assumptions about future prices. As with petrol retailers, these companies will not reduce their prices when they can. They will squeeze the consumer until it becomes politically unacceptable to keep their prices 'artificially' high.

  • Comment number 36.

    #8 "North Sea gas can in the longer term also be replaced by hydrogen generated with off-peak power. This can be used both for domestic heating and transport."

    Not really.

    Firstly it would take so much off-peak power to generate the hydrogen that it would cost 4 times as much as the electricity needed to generate it.

    Then the storage issues. To liquify hydrogen would require massive amounts of more power and transportation is extremely dangerous. Being such a small molecule it can leak in small quantities through the gaps between the copper atoms in pipes and it pours out through standard pipe fittings ( I speak from 1st hand experience- attaching hydrogen cylinders in the lab is highly dangerous)

    Domestic boilers cannot be modified to run on hydrogen. We'd all need new central heating and ovens as happened when we switched from town gas to North sea in the 60's.

    Hydrogen cars are chicken & egg like. No one will build a hydrogen car until a network of fuel stations exist. No oil company will provide hydrogen pumps until a market exists for them. Equally I'm filled with dread at the idea of the general public trying to fill up with liquid hydrogen at -230 degrees C. I use liquid nitrogen which is tricky enough, but at least it doesn't explode!

    Its far cheaper and safer just to build far more nuclear plants and constant renewables (more hydro and tidal) and use electricity for heating rather than gas.

  • Comment number 37.

    Just goes to show what corporate porkies are banded about.

    The utililty companies and forecourts both used the sharp increase in oil prices to justify sharp, steep hikes in retail prices.

    Looks like they didn't expect to see the price fall so sharply or so quick. Pestons point about the avaiability of oil futures is valid. But didn't they hold future conracts at the time of the price hikes and still blamed the current price of oil.

    Something here doesnt stack up.

    Additionally didn't the energy companies get levelled with windfall taxes? Didn't the pay chunky dividends? Why the hell has that not been reinvested in infrastructure and capital projects?

  • Comment number 38.

    Between 1730 and 1830 enclosure was authorised Parliament.
    The reduction and elimination of common rights was devastating for many smallholders and wage workers.


    Between the 1990 and 2010 foreclosure was sanctioned by Parliament.
    The reduction and elimination of common rights was devastating for many smallholders and wage workers.

    GC

  • Comment number 39.

    Power companies should be forced to reveal profit margins through the distribution chain.
    We are all aware per litre of fuel how much is down to the cost of oil, refining,distribution and taxation and a small profit.
    Now is the time for the energy industry to reveal its profits margins on a monthly basis , monthly due to fluctuations in the buying markets.

  • Comment number 40.

    Your update just confirms that when the Spend, Spend,Spend on top of waht they spent,spent,spent T bonds will be shot, currency will be shot and taxes will be hiked

    Worse case senario is that we go to the IMF

    There is no way to go now without severe hardship on all

    and that j**k banker on the AM programme smiled and stated we are not returning to the resession of the 70's

    The lights ARE going to go out

  • Comment number 41.

    We need investment in X Y Z?

    So why don't you do it then?

    They are all traded on the stock exchange and are BARGAINS at the moment.

    Oh wait. You would rather spend my money on reducing your central heating bill.

  • Comment number 42.

    Robert - Re doom and gloom...
    Your UPDATE, 10:40AM:... today's public sector net borrowing ...

    Come on Robert... This needs to be a blog in its own right...

    Its too important to be tagged on here...

    Please create a new blog with more of your "opinion" comments....!!!

  • Comment number 43.

    What would not be acceptable would be for Energy companies to cut corners in the maintenance of installations.
    I think that rail companies 'saved money' years ago by cutting down on maintenance, and there was a case of this in the Underground not so long ago.
    That would raise the risks to the public. The ultimate cost would be higher.
    What is needed are sound practices, not cutting corners. Perhaps, as with mortgages and banking, the days of fixed price deals should come to an end. Then storage and development of new technology could partially shield the public from the volatility of the markets.

  • Comment number 44.

    "If the chancellor fails to do this, sterling and UK government bonds will come under very heavy selling pressure - and the cost for the government of servicing all that debt could rise quite sharply."

    Funny that Robert, I made exactly the same point on Nick Robinson's blog a couple of hours ago. Let Brown think he is Superman (kit available in Toys r us for £9.99) in reality he is and always has been a disaster.
    When are you going to update his biography? Might be best to give him another 18 months of having to live the the reality of "Britain's best chancellor of the last 100 years" (Labour spin).

  • Comment number 45.

    Don't worry. When we see the figures from the utility firms and they're showing record profits, don't be surprised to hear their pips squeaking with a windfall tax!

  • Comment number 46.

    Energy prices can be reduced by taxing the fat cats in that industry and capping their pay.

    These people should be named and shamed plus foreign companies should not be allowed to own energy companies in UK.

    The grates problem is the "Greens", if we have build more nuclear rectors and cool power plants we will not be in this mess.

  • Comment number 47.

    I feel you may have a been a little too trusting of the explanations given.

    1. Given the collapse in oil prices so far, there should at least be a knock on effect.

    2. Prices are NOT double what they were last winter (I have the last four years' prices in front of me as I type).

    3. There isn't sufficient generation capacity: this is the consumers' problem how? If a supplier has a supply problem, then it's the suppliers' job to fix it not the customers'. What have they done to fix it over the last few years? Is it more a case of taking the profits and assuming someone else will sort it out for them?

    4. So they made a bum deal on their contracts? My problem how?

    5. and 7. Bizarre and irrelevant to a pricing decision.

    6. Yup, let's blame the credit crunch. The number of times I've heard bleating about "we canna take the squeeze" on margins from customers and suppliers over the years.

    When the privatised energy companies were given the rights to sell in an oligopolistic market, there was the understanding that they would a) be reasonable in the profits they took and b) ensure sufficient investment to maintain supply.

    A failure on both counts.
    Flimflam and whining don't impress.

    Time for greater regulation and intervention by HMGov.


  • Comment number 48.

    @23 Irish_Mark

    And Brown is also happy to waste trillions on bailing out banks that took advantage of poor supervision by BoE to hoodwink us all.

  • Comment number 49.

    No one understands their domestic energy bills so how can we trust what we are told. Insofar as teh supposed spend spend spend approach by the Chancellor, to say this wont cost us is crazy.
    He has no money and if he borrows more it will wreck the pound and whack up inflation, to say that is no cost to us begs the question has the gpvernment got a clue what its doing.
    Finally its hard to justify the Met office (#20)as a going concern. Their forecasts are pitiful and barring a few occassions I have yet to see them get anything right. Why spend al that money to get it wrong so often. You woudl think the Chancellor would realise the errors of his spend suggestion now and save us all any more damage.
    At least then he will leave office with his head held high as the first Chancellor not to screw us just because he could!

  • Comment number 50.

    With profit as their top concern and the consumer nor the regulator able to stop them in practice, energy companies 'naturally' behave as follows:

    a) Maximise profit by raising prices as much as possible, using any reasonable justification, i.e. certainly when wholesale prices have gone up, but also when these prices are only forecast to go up, ie before it actually happens.

    This may even be used to increase their own profit margin: if a 10% increase in wholesale prices results in a 10% increase in consumer prices, the company has effectively managed, not only to cancel out the wholesale price increase, but also to increase its own profit margin by 10% !

    b) Maximise profit by reducing costs by minimising spend on infrastructure and maintenance, even though maintenance and investment are at the same time used as valid arguments for consumer price increases. The problem: who guarantees that the extra money raised will actually be used for what is was raised for?

    I am worried that, eventually, this will all lead to another government bail-out. As, in the end, the infrastructure will have to be renewed and expanded, but, having creamed off all possible profit earlier (compare bankers bonuses), there will be no money left. As an essential service, however, not doing anything about the situation is not an option. Therefore, the government = "Joe Public" - not to be confused with "Joe, the plumber" - will have to step in...

  • Comment number 51.

    It doesn't exactly fit here, but there seems to be a contradiction in views expressed.

    The standard answer given by the pundits to a recession is to go spend you way out of trouble. Yet the reason we have got a recession stems from spending way beyond our means.

    Likewise we give the banks a hard time for lending imprudently and give them a massive bailout. They start lending prudently and we have a fit that we can no longer access funds to sustain a lifestyle that we have foolishly become accustomed to!

    I can see that public spending might head off a vicious cycle that could lead to a depression and might take the short-term edge off a recession, but the end point of restructuring: to live within our means with only prudent borrowing is inescapable. The concern is that today's slap-happy public spending is a tax burden on tomorrow's recovery.

    Isn't there a case for a short sharp correction rather than years of tax driven austerity

  • Comment number 52.

    #47. "There isn't sufficient generation capacity: this is the consumers' problem how?"

    Its our (the consumers) problem because the lights will go out unless its fixed!

  • Comment number 53.

    Robert thank you for the insights into whats happening to our system, am I wrong or is it melting down and all that is being done is to tinker with the symptons, not treating the cause.

    Some months ago the postings here seemed to be predominately about how to make money(or keep it)! More and more I notice comments on social issues, are we finally waking up to the real issues as we move towards 2012?

    Posting No 3 from guycroft was particularly interesting, finally, a big picture, opening up a big debate about big problems, very thought provoking! I personally will be forward these ideas to my MP and pushing for action for ordinary people, giving money to the money lenders and casting out the poor? Hmm not sure thats the way it was done!

    We are all in this together, rich and poor and only together can we bring about a fairer, more just world. Like it or not society is in for massive change on a scale not seen before. Greed is not good! Keep up the good work.

  • Comment number 54.

    After Nationalising our Banking system with cruel and crippling terms, I suppose it will be the Insurance Companies next and then the Utilities and then we might as well ally ourselves to Russia and China as there will be little difference. The Socialist Republic of Britain. Gosh, Gordon would go down in history but more alongside Stalin and Chairman Mao rather than Churchill! This country will not start to recover until we rid ourselves of this detestable, power-mad dictator and his crew of 'yes' men who have greedily, consumed and wasted much, much more of tax payers cash than the banks.
    Get Gordon out!

  • Comment number 55.

    With some electricity companies you can sign up for 'green energy' only. What I would really like to know is whether the price of green electricy has gone up as well and if so what is the reason.

  • Comment number 56.

    Depends what we spend on. If you build new road, railways, infrastructure that create work and provide domestic demand in the way that the French do and are quantifiably/economically beneficial then there is some merit in this short term. In the same the M40 was extended in the early 90's and the second Severn crossing was commissioned. These remain visible and useful to the economy today, but still have to be paid for in the long term.

    Unfortunately Gordon Brown spent on employing legions of moderately educated bureaucrats who then spent their income on imports, so losing the money from the economy and any multiplier effect. The employment created under Labour never provided the replacement lower level jobs for those lost by de-industrialisation and mechanisation .

    It is paradox that having worked in the public sector those so fixated on their Union membership and rights would be the same people in the next breath demanding a contract is awarded under best value (cheapest price) to tick the boxes. In reality this means many of those performing the contract would be on the minimum wage with poor T+C, but those who purport solidarity do not and cannot see this.

  • Comment number 57.

    #36. Peter_Sym

    Q. Re Hydrogen economy....

    Do you know what the economics of Lithium Hydride are as a fuel carrier (of hydrogen)? (OK, keep it absolutely dry when being handled!)

    The major limitation I understand it is the limited physical quantities of Lithium available (also a problem for a large increase in car batteries for electric cars.)

    But what of its economics of production?

  • Comment number 58.

    #22 Tigerjayj

    WARNING!

    I strongly advise you (and all others) not to use barbecues inside the home due to the DEADLY dangers of carbon monoxide poisoning. Using a barbecue indoors is most likely to prove FATAL for all inhabitants!

    (Not-with-standing the fire risk!)

    http://www.workplacesafetyadvice.co.uk/gas-carbon-monoxide-poisoning.html

  • Comment number 59.

    It never ceases to amuse me....I'm talking about any business that makes the statement 'Profits are down'! They still managed to increase companies and presumably their own wealth, but they bemoan the fact that they did not make more £'$$$$. In the event a company has a drastic year with nil £'$$$$ profits they generally cut'n run and leave the rest of us behind @ the drop of a hat. The sooner utility companies are brought back into public ownership the better, but lets do it now with compulsory purchases before some Richard Head goes and turns these utilities into a Banks Mk II fiasco..............

  • Comment number 60.

    This questioning of power company profiteering is long overdue.

    In a nutshell, if these companies cannot supply power to business and household customers at reasonable prices at all times, then they will eventually have to be nationalised.

    Large profits and dividends are irreconcilable with hypothermia. If the latter ensues this winter, then the former will be stopped, even if it takes poll-tax-style riots.

    The govt. is naturally a bit cautious about wading into this area so soon after launching itself into banking, but...

    If power prices are not cut drastically before it gets cold, the govt will intervene. You cannot have boom time prices during a global downturn.

    What is Cameron et al.'s view on this issue?
    The silence is deafening.

    Tell Sid...

  • Comment number 61.

    What will the terms of the Building firm bail out be?

    Will they get 100 percent of the asking price of their flats ?

    Will they be treated as badly as the Banks?

    See B and B.

    Will they be forced to merge and Nationalised?

    Lets talk about Housebuilders now.

  • Comment number 62.

    Whilst Oil prices are coming down, renewables costs can't have changed much albiet they may experience "less windy or wavey" days but how can they justify matching thier less sustainable producers prices pound for pound???? I guess its supply and demand and the demand for green energy will continue to rise so why not capitalise on it? or is it that they have been running at a loss and are using the current market to recoup initial costs? I appreciate some electricity providors are from mixed sources but at least 1 claims to be 100% renewables and hence the reason I query this.

  • Comment number 63.

    So basically it is a catastrophic failure of the Labour government over the past 10 years to ensure energy security for the UK and make sure the domestic energy market works effectively.

    Once upon a time it was just a matter of mining the coal and putting it on a train to the powerstation. Now, we have middlemen and hedge funds in the process all profit gouging.

    On top of that we have lost the engineering skills to build nuclear power plants, and too many people are willing to sacrifice the nation on the alter of environmentalism. If the man-made global warming predictions turn out to be true, it will happen anyway because of China. Meanwhile, our own industry will be taxed and regulated out of existence, but funnily enough you never hear about "green" import tariffs on goods from countries like China that pollute with complete disregard. British industry does not stand a chance, and that is why there will be no jobs in this country in the wake of the banking collapse.

    It is time the government actually put this country first and people stopped considering "protectionism" a dirty word. Globalisation just means big profits for the few at the expense of the many!

  • Comment number 64.

    I agree with your updated comments. Gas in any form is always associated with a very bad smell. Scandalous that the Treasury and the Premier point-blank refuse to order a price cut, after all they issue the licenses to supply and operate. Guess the Treasury prefers to collect the Corporation Taxes from profits made and VAT charged to the end consumer. Can you see Government surrendering easy cash in this environment?
    Ah, the benefits of unregulated enterprise!

  • Comment number 65.

    Quote
    4) over the summer, energy companies bought power on the forward market at prices that are higher than where they are today;
    Unquote

    Surely that is their problem! They paid too much for their supplies, they should not be able to simply pass the losses to the consumer!! When they get it right and make huge profits, they don't pass them to the consumers do they? So why should we have to stump up for their bad trading? We are all easy meat for these unscrupulous profiteers!

  • Comment number 66.

    You forget one more reason why the prices remain high.

    The markets don't trust Gordon Brown. The pound has fallen to 5 year lows against the dollar ... and energy is priced in dollars!

    So Gordon's borrowing binge is costing us dearly ... firstly in the interest we pay to solve Gordon's failures ... and secondly because it drives our import prices up as the pound sinks with Gordon's other failures!

    Don't worry about recession. Worry about a recession with added stagflation!

  • Comment number 67.

    In response to #54:

    Although I have spoken out in the past against Gordon Brown remaining Prime Minister, basically because he is not a natural leader, I now find myself, a bit reluctantly, in agreement with what the Labour Party has said about him all along: there is no better choice at the moment.

    I don't like Brown's style, but I do not, for one minute, doubt his honest intentions to do what he keeps calling, in an old-fashioned and therefore sadly slightly off-putting way, "the right thing". I cannot say the same about (eg) David Cameron and co.

    At the moment, I have no clear solution myself, and I hope that, with the resources available to him in his office, Brown will manage to find a way out of this mess. I also trust that the combined background of his personal upbringing and the Labour Party will result in a solution that favours people over money.

  • Comment number 68.

    As soon as you privatise a untility industry sector you get a bigger bill because a dividend has to be paid to shareholders. Despite protests that there is competition between utility providers it always raises the question of just how far from a monoploy or cartel you really are. As utilities are a strategic resource they are never really clear of government instruction - they are in a odd hybrid situation. Examples in the energy sector are the demand to implement high cost renewable power, to hold buffer capacity, to collect surcharges such as energy efficency grant money, and to maintain volume capacity, (incidentally there is no reason why capacity should not drop or be held static, forcing consumer efficency measures). The desire to privatise was to get cash in from the sale, a short term gain, and to get the sector off the PSBR, public sector borrowing requirement, ie allow private investment into the sector because the government did not want to loan money. In many utility cases investment was overdue. The cash raised from the sale of the sector was not put back into the sector and the flush of oil revenues from the North Sea was not used to make strategic investments in replacement energy technology, both revenue streams were used to reduce taxation and balance the government books at the time. The problem is that investment in the private sector understandably leans towards short term quick payback models, hence the dash for gas under Thatcher. EDF, (France) appear to be one of the most effective energy business models by definition, as they are in expansion, (into the UK) and they are majority owned by the French government apparently giving them security and potentially very long term strategic investment horizons. Whilst introducing private sector management and innovation into the public sector is important there are ways of doing this without wholesale privatisation which was a political objective. You reap what you sow and energy is progressively going to be a bigger and bigger problem as more energy efficency technology, ie cleaner energy, and better use of it, is going to demand very high levels of investment so bills are on the whole only going to rise, even if fossil fuels hold out and world demand for energy does not accelerate. I am afraid all roads lead to Rome, Rome being Number 10, whoever is resident, and very poor longterm strategic thinking which will come back to haunt us.

  • Comment number 69.

    #22
    I have the sitting room fireplace opened up, the chimney swept and the cast iron Chimenea in from the garden installed. Methinks this winter it's back to childhood days of the early 50's when all rubbish was recycled on the fire and healthy walks spent collecting firewood.

    #29
    The BBC news this am is of vans driving round spotting our under insulated homes. I have, like hundreds and thousands of others, a 20's house with solid 1st floor walls. The cost is £3+k to insulate @ today's standards. There is no Govt grant available for solid wall insulation, so a waste of time, money and fuel to thermal imaging my home.

    # 47
    Right on - This pensioner remembers the picture on a tabloid front page of a teaspoon of "nuclear" power that was going to "fuel a nation". Heady days back then when "we never had it so good".

  • Comment number 70.

    My understanding is that the gas price has a link to oil prices but it is about 6 months behind so the fall in oil will not have filtered through yet

  • Comment number 71.

    Robert,

    Not only is the economic news getting worse, but the the RATE at which it does so is accelerating...

    Bearing in mind that the 'downturn' is now reaching the Far East and will affect (not impact) their previously exempt economies and that this is happening 15 months after sub-prime kicked all of this off, what prognoses may any of us reasonably expect?

    Here's an example:

    http://www.actionforex.com/fundamental-analysis/weekly-forex-fundamentals/economics-weekly%3a-uncertain-outlook-for-uk-economy-2008102065012/

    Despite ministrations from the IMF, World Bank, The Fed, UK Treasury that those in power know what's happening, the data just may not be good enough or reliable enough or relevant enough!

    Recession Hell!

    We're all headed into a Perfect Economic Storm.
    Destination - unknown..

  • Comment number 72.

    Dear Robert
    I ama firm believer in Atomic Power.and we need need more atomic power stations. ----at least 20.
    Now had we built 20 since 1987, "What would the price be , being that we would be INDEPENDANT OF EUROPE
    The only issue here is the bumbling and fumbling of Politicains who failed to grasp the importance of a just a basic power demand policy.The failure at the end og the daylies with GOVERNMENT.

  • Comment number 73.

    Come to think of it.

    WHEN lower gas prices feed through with a global 'downturn' and various gas contracts lapse and get renegotiated at lower rates, this will be a real positive for:

    Russia.

    (Joking of course).

    With the RTS down some 70% since the Summer, they'll really be throwing their economic might around won't they?

    Seems we can expect NO 'gas supply warfare' - they'll be desperate for the revenue.

  • Comment number 74.

    Like most people, I do tend to scratch my head when I read my energy bills, I wish there was a weekly consumer program on the BBC that explained all the jargon.

    The power companies could go on and state their prices in plain English, then we could all use the cheapest supplier.

    It would be fun (and money saving to us ) to see the energy companies battle it out in a more transparent way.

  • Comment number 75.

    I think you forgot to report reason No 8: "And I discussed this with the CEOs of the other big energy companies on the golf course at the weekend, and they said they weren't going to reduce their prices either, so there's really no need to reduce ours."

  • Comment number 76.

    Now that Ed "Moribund" has promised that the UK will pee higher up the Carbon-reduction wall that any one else ( sane offers, only , please ), we can be sure that only the uber-rich will be able to afford a one-bar electric fire in winter.

  • Comment number 77.

    Everyone should buy from ONE suppier forcing others to reduce prices,--- so start a price war?

  • Comment number 78.

    I hear that the bail out program is only to bail out there debt. Would that be true?
    This was a large amount of money, do you think they could have done this?What do you think about the bail out program for the banks?
    Do you know if they would have sent that
    Money to all American 21 and up. They economy
    Would be soaring.
    1.people would pay house payments
    2. Buy homes
    3. Purchase auto’s
    4. Open business’s
    5. Shop a whole lot more
    6. Pay off debt, credit cards and so.
    That gave each a whole lot of money to work with!!!!!

    That makes for work, money flowing threw our economy,
    Banks making money. Stores making money.
    Auto’s being made……….so on .

    Just give it to the big dogs who did this in the first place, sure makes since to me….ha ha.

  • Comment number 79.

    Yes, it has surprised me lately just how much common sense has been missing from the various political pronouncements and expert analyses of what's happening at the moment.

    Common sense tells me that the government can't come in to work one morning and by the end of the day/week/month announce the most stupendous, unplanned increases in public spending (and contingent liabilities) and for that NOT to feed through into the sort of horrendous figures like the PSNB 'shock' above. Are we really so surprised?

    There will be lots more of this to come. Half-decent analyses of the dire straits in which we find ourselves should be pointing out that British government finances are now in a truly shocking mess, thanks to Gordon Brown's terrific handling of the economy.

    Sure, Gordon Brown and his apparatchiks will attempt to deceive us, in keeping with the past 10 years or so of spin, stealth taxes and government profligacy, but hopefully more and more honest/rational commentators and reports will be seen in the public domain. Pointing out that it may not be e'er long before the IMF takes an active part in running the British economy.

    Gordon Brown's been rumbled.

  • Comment number 80.

    Oil price today in the low 70 dollars zone because of reduced demand and people are talking about global recession...

    Consequence will be that oil companies will invest less, projects will be delayed etc and so depletion of existing resources will speed up. Oil cos are only interested in keeping shareholders happy not providing the world with cheap and plentiful energy.

    So - when we start crawling out of recession and demand increases again the price will be even higher than it would have been because supply will have lost it's ability to react...

    Answer = nationalise the oil and gas companies.

  • Comment number 81.

    Robert

    Does the oil price not reflect the fact that fewer air flights are being made, cars are being driven less, fewer plastic goods are being manufactured etc.

    Whilst gas is necessary for heating and to provide electricity. These usages are essential in that people cannot opt out of usage easily, or are the speculators knowing this keeping prices high on essential gas because other commodity prices are falling away.

  • Comment number 82.

    #73

    re Russia and gas supplies

    Seems we can expect NO 'gas supply warfare' - they'll be desperate for the revenue."

    One problem in that last comment, whilst they will be desperate for our custom we will be even more desperate to do business - it's a sellers market and that will not change in the short term, this is why Russia was able to march into Georgia without any real reproach from wider Europe

  • Comment number 83.

    Robert:
    I have no idea why the power prices are not falling....

    But, it would be a good idea to figure out why!!!

  • Comment number 84.

    #57. As you say its a case of availability of lithium. Actually mining and purifying the stuff would make a mockery of any 'green' claims such a car would have and the weight and size of the fuel tank would have a drastic effect on fuel economy. Unless someone somewhere invents a catalyst for making hydrogen from water using a fraction of the energy currently needed I think a hydrogen economy is a non-starter.

    There are a few small hydro schemes in scotland that use nightime excess power (from nuclear) to pump water uphill. This is then released at peak times during the day to meet extra demand on the grid. This sort of system should be expanded especially as it doesn't need a terribly large reservoir.

    Equally for transport better to develop more efficient batteries or alcohol fuel cell systems as these are safe & least work with 2008 technology. It wouldn't take much extra effort to make them smaller and more efficient.

  • Comment number 85.

    #72
    "I ama firm believer in Atomic Power.and we need need more atomic power stations. ----at least 20.
    Now had we built 20 since 1987, "What would the price be , being that we would be INDEPENDANT OF EUROPE"

    But not quite so independent of Australia, Canada etc. Not much Uranium mining in Britain. I'm also a firm believer in nuclear power but its not the easy, cheap source of limitless power they claimed in the 50's.

  • Comment number 86.

    #8 - Perhaps you can provide an example from anywhere in the world where a nuclear power plant has been built to cover peak load.

  • Comment number 87.

    Why all the fuss? Broon will save the day as we all know he's from the planet Krypton!

  • Comment number 88.

    Surely we can cut down trees to keep warm. lets hope theres enough of them to go round,

  • Comment number 89.

    #34: "if energy companies are not criticising [not even a murmur] the energy regulators then that means they are not doing their job in protecting the public?"

    The energy companies do, and the energy regulators are not, but those discussions do not sell papers.

    #37: "Additionally didn't the energy companies get levelled with windfall taxes? Didn't the pay chunky dividends? Why the hell has that not been reinvested in infrastructure and capital projects?"

    Because Ofgem refused permission.

    For a long time the regulator's opinion has been that energy investment conflicts with consumer protection as it spends money that instead could be returned to the public through low tariffs and dividends. Believe it or not, energy companies have spending allowances. Ones which do not buy many power plants.

    That money has gone now, the benefits of regulation are in the past, spent on gizmos or saved in pensions. Now it is catch-up time. It will be expensive, and the regulator will not make any noise that would reveal its strategic error. One way or another the public will pay for new construction.

  • Comment number 90.

    Shurly...

    regulate
    regulate
    regulate

    ....hasn't worked.
    Therefore we need....

    NATIONALISE
    NATIONALISE
    NATIONALISE

    After a whopping great windfall tax of course!

  • Comment number 91.

    #79

    "Yes, it has surprised me lately just how much common sense has been missing from the various political pronouncements and expert analyses of what's happening at the moment."

    Of late?! This idiocy has been going on for the last 29 years, the problem we have now with power security was caused by some fool of a politician thinking that a private power company will put the interests of the country before profit, things go even worse once the same fool decided that the private company didn't even need to be a UK company.

  • Comment number 92.

    The gas and electricity pricing issue is a simple one of SUPPLY and DEMAND. However, as in stock markets, speculators can interfere in "demand", buying forward, distorting short and long term prices.

    With gas, supply (from the North Sea) is dwindling fast, and we rely on Norwegian pipelines and the Interconnector to the Continent, supplying Russian gas. As we are at the end of the pipe, it is often sold before it gets to us, reducing our import supply. Gas Demand is often weather based, and as we have no real storage capacity, Gas prices must go up. The supposed link to oil proces only seems to work one way!

    Electricity is suffering from lack of capacity and investment. The amount of downtime is huge in older stations, and nuclear de-commissioing makes this worse.

    In both cases, SUPPLY is falling, and DEMAND is increasing, inevitably leading to price inreases. Overlay this with speculator profit taking, and you have a volatile market.

    On specific days and in specific conditions our gas and electricity supply are so close to meltdown, spot prices quadruple and more. Speculators like this volatility, and there is no doubt that as speculators leave the oil market (as prices fall), they will take aggressive positions on gas and electricity contracts, profitting from short term volatility, at business and consumer expense.

    So much for the "free market". A huge % of the forward buying is not done by energy companies or energy intensive business, but by the same specuilators and hedge funds that have wrecked the banking markets.

    The predictions of our "energy supply gap" between now and 2015 are horrendous. prices to consumers and business will be way in excess of what we now price see as "expensive".

    The era of cheap energy is well and truly over. The rising prices will make renewables more economic, but they are no magic bullet, unless replicated in very large volume and quickly.

    It is too late to change things before 2015 now, as generation capacity cannot be rbought online quickly enough, and gas reserves cannot be brought on stream quickly enough. So get ready for some big price increases.

  • Comment number 93.

    Those moaning about profiteering energy companies forget that these are the assets that make up the pension schemes of those that have them. The dividend stream pays for your pension!!

    I am really concerned that politicians in general (with the notable exception of Vince Cable and Frank Field & co) are not providing the leadership for the country to adapt to the new economic reality.

    The demographics suggest that our young people will be paying for the chaos for years to come. There will be other socio-demographic consequences that are really frightening.

    Don't suppose there is the capacity in care home places to cope with the future elderly

    Also, the value in homes that would have financed (home owning) old peoples care has diminished considerably.

    How do you sell a policy of social responsibility to a generation of under 35's who have grown up with no sense other than of material fulfilment?

    What is the life choice for graduates in an economy so skewed towards financial services?

    The fault for the energy fiasco lies squarely with those that privatised our national energy assets and created a false market.

    On a lighter note...as a seasonal proposal: let's all buy British made presents this Christmas! (if you can find any)

  • Comment number 94.

    #88

    Hmm, like they are doing in the Amazon rain forest, and one of the causes of the green house effect...

  • Comment number 95.

    "Put it altogether and what you've got is the near-certainty that those increased prices we saw in the summer - with British Gas increase the gas tariff by 35% and electricity by 9% - will prevail for many more weeks to come, and possibly all through the winter."

    What do you mean "possibly" all through the winter?

    "Definately" would be a better word.

    they keep the prices high in the winter because demand is high. They keep the prices high in summer because the wholesale price is higher in the summer on the expectation that demand will be high in the winter. Result? We are screwed all year round!

  • Comment number 96.

    #89

    That still doesn't explain the record profits - post any regulations and taxation demands - that have been made and why these funds have not been used in the last 25 years to rebuild infrastructure rather than being used to pay divis and bonuses...

  • Comment number 97.

    #85 Peter_Sym

    'INDEPENDANT OF EUROPE

    But not quite so independent of Australia, Canada etc. Not much Uranium mining in Britain. I'm also a firm believer in nuclear power but its not the easy, cheap source of limitless power they claimed in the 50's.'

    But we own Australia and Canada.....don’t we?

    If they didn’t toe the line and give us a fair price we would just get Queenie to dissolve their parliamants.

  • Comment number 98.

    @ number3 Guycroft.... Can I vote for you at the next election please?

  • Comment number 99.

    It doesn't help that Europe and the UK in particular have bought into the Global Warming scam. Although it's only a matter of time (a cold winter and another cool/wet summer) before the hoax is blown apart it's going to be too late to rectify Europe's politically skewed, non scientific based refusal to invest in more nuclear and coal fired power stations.
    China, India, Russian and Brazil haven't bought the AGW scam and are charging ahead building power generating capacity. Because of Europe's and increasingly the USA's anti industrialist, anti growth and anti wealth creation policies (based on the false premise of AGW) we're going to see economic power move East.

  • Comment number 100.

    Robert

    Things aren't working the way they are supposed to. Never heard of that before.

 

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