Why power prices aren't falling
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.
Well, 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.
I'm 
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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.
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Seven terrible excuses. Sounds just like the banks before the crash...
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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?
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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?
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Thank god they all operate on an open book basis so all this can be checked.
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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.....
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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.
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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.
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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.
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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.
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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.
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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!
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I agree with Loggy1948, we need investment in renewables as a matter of national emergency.
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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.
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#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.
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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.
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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.
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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..
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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.
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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!
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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.
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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?
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And Brown is still happy to waste billions on upgrading Trident nuclear weapons and on fighting unnecessary wars abroad.
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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.
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"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......
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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.
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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.
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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
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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 .
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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"
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#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.
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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.
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> 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.
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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.
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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.
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#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.
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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?
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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
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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.
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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
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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.
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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....!!!
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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.
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"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).
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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!
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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.
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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.
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@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.
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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!
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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...
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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
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#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!
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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.
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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!
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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.
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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.
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#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?
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#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
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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..............
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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...
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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.
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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.
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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!
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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!
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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!
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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!
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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.
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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.
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#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".
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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
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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..
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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.
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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.
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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.
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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."
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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.
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Everyone should buy from ONE suppier forcing others to reduce prices,--- so start a price war?
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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.
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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.
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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.
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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.
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#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
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Robert:
I have no idea why the power prices are not falling....
But, it would be a good idea to figure out why!!!
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#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.
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#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.
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#8 - Perhaps you can provide an example from anywhere in the world where a nuclear power plant has been built to cover peak load.
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Why all the fuss? Broon will save the day as we all know he's from the planet Krypton!
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Surely we can cut down trees to keep warm. lets hope theres enough of them to go round,
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#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.
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Shurly...
regulate
regulate
regulate
....hasn't worked.
Therefore we need....
NATIONALISE
NATIONALISE
NATIONALISE
After a whopping great windfall tax of course!
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#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.
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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.
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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)
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#88
Hmm, like they are doing in the Amazon rain forest, and one of the causes of the green house effect...
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"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!
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#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...
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#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.
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@ number3 Guycroft.... Can I vote for you at the next election please?
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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.
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Robert
Things aren't working the way they are supposed to. Never heard of that before.
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@94
ok your correct, its not the trees fault we have a naff goverment. but would it be ok to stripe the wood out of the houses of parliament then.
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"Not much Uranium mining in Britain."
We have enough stockpiled to get us way into the 23rd century as long as we reprocess....oh hang on hes just sold reprocessing off to a foreign company so hes probably sold the stockpile too.Someone somewhere has to come up with joined up thinking at government level.....selling these companies off to stop people getting decent pensions is not a long term measure for the country.
#77
I totally agree wish it could be organised,it is the only way these companies can be brought to task if they suddenly loose their customers.
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#93
But those pension pots would not need to earn so much if the power companies didn't charge so much and cause inflation! But your comments have just given me an idea, nationalise both the power companies and the pensions - but wasn't that were we were ant just post world war two until May 1979...
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#93 tonyparksrun
?On a lighter note?as a seasonal proposal: let?s all buy British made pressents this Christmas! (if you can find any)?
That would (therefore) be from the choice of a RollsRoyce jet engine or some of Pfizer?s Viagra.
The former will shortly (though only partly) be relocating to Germany.
I guess that only leaves the latter to give to my father/mother-in-law as an Xmas present!
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It doesn't just smell it stinks.
They told us we needed new power stations but didn't say it would be at the cost of the poor consumer having to pay for it in huge rises in prices.
This at a time of recession and impending poverty.
No wonder Gordon Brown went very quiet on this especially after oil prices plunged.
The deviousness of these politicians is incredible as is their contempt for the people they are supposed to represent.
Just another way of diverting even more public spending onto the poor unsuspecting taxpayer.
Freezing to death today is a price worth paying for political gain tomorrow.
Only for this government.
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Robert
You make some good points.
1. Nuclear Power. The Independent on Sunday profiled this very well a few weeks ago. Basically all the stations combined can produce electricity to a maximum of 70 percent of capacity. One reactor is so corroded that the core would meldown if switched on. Another operates at 20 percent of capacity due to safety concerns. If there is a very cold winter blackouts are not predicted but guaranteed. In 2012 some of the reactors will be switched off permanently as they will reached the limit of their shelf life. It takes about 5 to 7 yeaars to build new plants - we are currently in the planning stage. Oh, and as the UK stations are cooled by gas it means higher costs. There is also a shortage of enriched nuclear fuel, causing India and China some grief as they have new reactors built that are producing not a lot - very expensive reactors you might say.
2. Hydro-Electric Power. As part of the renewable energy emphasis a subsidy is available for plants that produce electricity under a threshold. Scottish and Southern Electric owns several stations and has replaced existing turbines with ones of lower capacity in order to enjoy the generous subsidy. It is perfectly legal, but is simply a by product of shoddy legislation. So even less electricity being produced.
3. Gas. North Sea gas is finite and will run out at some point. If we are to import it will there be an infrastructure in place on order to do so? The US imports Liquified natural Gas (LNG) in huge ships with specialist docking facilities on the west, east and south coasts. It is an extremely hazardous activity, and expensive to set up.
4. Coal. China has the right idea. I believe they were building new stations at a rate of one a month. Somehow I doubt that the UK could match that rate.
5. Of all the renewables, why is solar power in the UK always ignored? The Germans and and the Emirates are taking this very seriously, investing in photo voltaic cells as a polymer surface by passing the need for heavy chunky solar panels.
The thing that gets me, is that if there is a power cut your gas central heating won't work as it relies on electicity as well. One big disadvantage of the electronic age.
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#97
...and all Canada and Australia would do is declare UDI and (in the case of Canada)have even closer ties to the US that they do already!
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#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 "
But such climate change is one of the signs of - err - climate change!
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#96: http://news.bbc.co.uk/1/hi/business/5117026.stm
The companies got permission to spend half of what they wanted to. The difference is liable to become record profits. These get disbursed. There is no choice about re-investment, it is the law.
You can read back issues of the trade press at your city library for more opinion.
Perhaps you could also write to Ofgem and ask them to explain? It is your responsibility to ask. They are accountable to the public after all.
This is not a simple tale of "greedy fat cats", it has been another convenient way for the government to put money in your pocket today at tomorrow's expense. Tomorrow has arrived. Will you be led to believe it was greed, or see the failed, politicised regulation?
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#104
"I guess that only leaves the latter to give to my father/mother-in-law as an Xmas present!"
In view of the products you cited you might like to rephrase the above - the mind boggles and I've just spat my tea over the monitor!
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#3 Guy Croft,
A slightly cataclysmic view - but one that needs espousing. I really enjoyed reading it.
Above all, it is the lack of leadership that slaps you in the face. All I taste in today's politics is people looking after themselves and protecting their own sorry bones.
You are right - if we cannot present the next generation with something worthwhile after the "golden" era that has just passed, we are destined to be the subject of study of historical economics for years to come.
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#105
Don't blame the politicians about this, the power companies have known that they UK will need this new electricity generation or gas storage capacity for the last 25 years - yet they found the money for non core acquisitions, dividends and bonuses for all these years. If any politician is to fault it was the fool how decided to sell off these utilities just so she could give away tax cuts just before seeking re-election...
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usa ask for billions more ,700 billion not enough. wonder if we will need to do the same here?
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#106
"4. Coal. China has the right idea. I believe they were building new stations at a rate of one a month. Somehow I doubt that the UK could match that rate."
Germany is going down the 'clean coal route' (as well as renewables such as wind turbines), building new coal fired power stations, of course they still have access to most of their own coal reserves - something that Thatcher made very difficult, risky and expensive although not impossible for the UK to achieve again, but would the UK politicians want to admit that Scargill was correct?!...
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Why can some Governments spend revenue on Atomic Power developments under the guise of Defence and not link it with domestic power production. France it would seem bit the Nuclear Bullet decades ago and pursued both uses.
According to World Nuclear Assn the Russians are now using decommissioned nuclear submarine power units for domestic power generation "Russia has under construction at Severodvinsk the first of a possible series of floating power plants for their northern and far eastern territories".
http://www.world-nuclear.org/info/inf34.html
Also according to the New Scientist Press Release, 11 June 2008, America is about to make all future Naval ship building from assault craft size upwards nuclear powered. National Defense Authorization Bill (sic) for 2009. So does this mean the USA will follow the Russian lead in converting surplus small nuclear units for domestic use.
http://www.eurekalert.org/pub_releases/2008-06/ns-rfc061108.php
If Govt/our money is to be spent in bringing forward infrastructure and building projects then make all new roof construction Solar power or heat generation where elevations are suitable. This should be a mandatory Building Regulation now, not 2010+. Positively predicting ones fuel bill for a new build home helps in calculating whether the mortgage is affordable, sadly British housebuilders don't realise this - yet.
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#108 and #99.
"Climate" is a long term average over a decade or longer. The trouble is that people confuse it with weather that changes almost daily. It is a bit ridiculous to say "yesterday I lived in a sunny climate, but today I live in a rainy climate"! However, a couple of hot summers and everybody shouts Global Warming. A couple of cool wet summers and they start saying it is a load of rubbish. Also, it is global climate, so you cannot judge just by looking out the window.
However, I think the impending job losses, price rises and even the lights going out will put a 0.5C temperature rise in perspective and make people in this country reconsider whether they want to be eco-martyrs while China and India race ahead with coal power.
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#109
What do you not understand about post tax and regulation spending, the Govt. has made no such demands that they can't invest such profits in the infrastructure! What Govt. (via the Ofgen) has done is to make sure that a minimum amount of investment is carried out. The problem is the fat cats of these industries, they should not need Govt. to tell them to invest rather than pocket the profits, this is exactly why the privatisation of the utilities have (with the possible exception of BT) been an utter failure.
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An awful load of nonsense talked on this blog, as always when the subject turns to energy.
Centrica (the British Gas owner) is the only one of the "Big Six" retailers who breaks out their UK retail supply business from their accounts. It is clear from their recent results that they make little or no profit from this part of their business. Do we expect them to cross-subsidise this from other parts of the cmpany? This is not realistic.
The other five main suppliers do not offer this breakdown. They should be made to do so, in order to offer a comparison. In tandem, bills should be standardised so that it is simple to compare the offers of the six and decide which is the cheapest. This would offer the suppliers an incentive, get the best possible sourcing deals, offer the lowest prices, obtain the largest market share and still have the potential to make the highest margins on the retail business.
Whether the wholesale gas and electricity markets function efficiently is another question. In the UK, I'd say for gas, yes, but for power, no. The power market has too much vertical integration and control over flexible generation is concentrated on two firms.
The gas market works far better but is hamstrung by a number of factors, including lack of transparency of information offshore UK, in Norway and in continental Europe. Public service obligations on the continent also skew the market by ensuring that gas does not move to the highest priced market.
So who needs to do what? The UK government and Ofgem must do more. The government must break up the vertical integration in the pwer market and spread the flexibility to more players. It also nedds to force more transparency on all players, from upstream gas producers to downstream retailers. From this example, it must also put pressure on Norway and the EU member states to sort out the poor transparency there and to push through proper EU-wide energy liberalisation.
But it must also have a long-term strategy ? the reason the UK generation sector is in such a parlous state is that the 2003 and 2005 energy white papers concentrated solely on setting pier-in-the-sky targets for renewabe energy while barely raising the question of what replacement geeration we needed in he short-term, just assuming gas was always going to be cheap and abundant. Now the focus is solely on nukes, even though there's still no coherent plan on how they will be funded over their whole lifetime within a competeive maret environment. That's a shocking state of affairs.
The British people too, though, must do more. Demand that the utilities make billing standardised so everyon can get the best deal for their situation. Demand that the government gets its finger out and imposes more transparency on the market that is setting the prces. But also oppose the nimbys that are blocking progress on desperately needed gas storage and import facilities. For example, in Canvey Island, there is opposition to converting an LPG import facility into an LNG import facility. Ask anyone with any energy knowledge and they can tell you that LPG is far more dangerous and combustible than LNG. Yet these morons are holding up a project that could make a valuable contribution to ensuring that UK gas prices do not triple again by 2020.
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#102. We have enough nuclear material to see us into the 23rd century at present levels of consumption. We need more power stations for starters so consumption will rise. Sadly uranium is 'burnt' in the reactors to produce plutonium so as well as reprocessing the left over uranium we'd also need to build a new generation of plutonium reactors to make full use of what we have.
Unfortunately a lot of the material awaiting reprocessing can't be used until it cools down so actually owning the stuff isn't a lot of use unless we can actually use it.
However the 'foreign ownership' issue is a red herring. If the French refuse to reprocess the fuel we just take the plant back... at gunpoint if needed. What are they going to do in return? Refuse to buy our beef again?
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115. EnglishFolkfan wrote:
"Why can some Governments spend revenue on Atomic Power developments under the guise of Defence and not link it with domestic power production"
We do. We just don't admit it in public. The reactor at Chapel Cross was a plutonium factory for our bomb programme that coincidentally pumped some electricity into the grid. Where do think much of the Pu238 recovered at Sellafield goes too? We don't burn plutonium in the UK but we have other uses for it.
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I wonder what the figure would be if you translated the nations debt after WW2 into todays' money.
Are we approaching this figure already?
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So whilst the electricity companies have been ripping us off, why wasn't some of the fat profit reinvested in new generation?
And what about gas pricing: recently, gas has been given away for free because there was nowhere to store it.
Why are these suppliers gambling on futures: hasn't anyone learnt the error of their ways yet?
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#84 Peter_Sym wrote:
more efficient batteries
Ah you seek the secret of the universe. It is one of the many huge problems of electrical engineering that battery technology always remains far behind the needed level of power density.
While on the listing of possibilities: what of cold-fusion? My intuition says that it is as probable as more efficient batteries.
Electricity is a real problem to store- for a fairly simple reason and that is that the storage methodologies have a high risk of damaging discharge and this rises as power densities rise. (As seen in explosive lap-top batteries etc.) For that reason I tend to favour a fuel of some sort as a 'solution', rather than stored energy (electrical or otherwise.)
It would be better to install power take off conductors along major roads (a bit like trains) than to have huge power stored in vehicles (just think of it as a monstrous capacitor and imagine the risk of discharge in an accident). Batteries are OK for short distances, but a road based power grid would be needed for long distances if you want to stick with 'clean' Nuclear electricity!
My cold fusion machine seems to be getting hot I think it is time for coffee/green tea!
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so if the gas boys bought on the forward market when prices were high. It must follow that as the recession/depression starts to really bite demand for gas will fall and the forward buyers will be able to get some really good forward buying prices for MUCH cheaper gas next year. Is that how it works? Don't hold your breath!
You could almost blow a fuse reading most of the blogs which make such good sense but are miles away from whats happening.
Why is that then? Our leaders political/commercial/Industrial wouldn't last 5 minutes if they were on REAL performance related pay.
We even pay CEO's who nearly destroyed their last company, a golden hello to head up a new company. When they repeat that process yet again they leave with a golden goodbye.
Good job the average brit is as thick as 4 short planks. You wouldn't get away with this stuff in most other industrial countries. We even sell gas to Europe and then buy it back later at a higher price, how incompetent/stupid is that?.
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Burn more coal and collect the CO2 and turn it into Methanol to fuel our cars..
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its ok we have a competitive market(havnt we?) prices will come down wont they? surely its a question to put to thatcher.
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#18 AqualungCumbria:
'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.'
Looks like Channel 4 has beaten the Beeb to it, on this topic. See Dispatches, 8pm, tonight.
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"19. At 3:50pm on 20 Oct 2008, Peter_Sym wrote:
#102. We have enough nuclear material to see us into the 23rd century at present levels of consumption."
And this is a *TOTAL* fallacy...
"At present levels of consumption".
Unfortunately there seem to be few people who understand simple arithmetic.
The problem is that consumption is NOT constant. It grows. It grows at a percentage per year. A small percentage, maybe. Nevertheless, that small percentage is exponential.
Lets say we really would run out 2300. that means we use 1/300th of the material per year.
Add just 3% growth and now when it will REALLY run out?
Well. The answer is *77* years. NOT 300 years.
At 5% growth it will last only 55 years.
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@ 82
Think it through, #82,
Gas is eventually linked to the price of oil.
Russia doesn't depend on manufacturing or service sector exports, but on primary extractive industry (oil + gas).
The oil reserves are in decline, the price has more than halved in a quarter, gas contracts have much more inertia but will eventually be renegotiated anyway.
The biter bit though, is that IF Russia tries 'gas warfare', they know that the counterparties could (depending on contractual details of course) sue for breach of existing contract, and attempt to make up deficiencies through the Eurasian gas network.
And THEN renegotiate with Russia (much earlier) at a far lower price.
Very little rhetoric has been heard from Moskow recently - this is a surprise now?
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@124
Read 129 and refer back!
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/rant
At the end of the day, this whole fiasco is the fault of the government pandering to their liberal tree-hugging chums !! They have prevented small companies/individuals from generating and selling their surplus energy on "health and safety" grounds whilst allowing the monopolistic energy companies to cream the profits from the energy markets. Then the energy companies can pay their top management bonuses in line with those of the "fat-cat" bankers !!
You do not need a zillion quid to generate energy. A farmer with enough land can build enough wind generators on his land to produce much surplus for sale to the local market. At the same time, he can still farm the land under those generators !! However, currently, if he tried that, the green gestapo will be on top him like a ton of bricks and hound him off his land !!
They would prefer to see a whole load of old folks die of hypothermia than for a few stupid birds to die flying into the whirling blades (and, thereby, improving the gene pool of that bird species) !!
But the worst are the NIMBYs who want "unspoilt landscapes" and still whinge incessantly about the cost of energy !! Did they think that there is some kind of magical cable that comes down directly from heaven to power this whole country ??
Finally, there is the ever increasing and excessive use of energy for "aesthetic" reasons. The number and scale of neon lights and the number of buildings lit up at night just to "look good" is staggeringly ridiculous !!
One solution is to have a tax on wasteful use of energy. If anyone wants to waste energy, they are welcome to pay a punitive price for that right and help subsidise the other users !!
/end rant
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A typical 'rocket and feather' market, just like petrol prices here and in the US. Prices go up like a rocket, and glide back down like a feather...
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#119 "Refuse to buy our beef again?" Nope !! They will refuse to sell us any French designed Made-in-China high fashions and we will have to wear English designed Made-in-China tat !!
#123 Homemade "hand grenades" have been produced from NiMH batteries in the past. Not as good as the real thing but still does a fair amount of damage.
Most people do not seem to realise that *ALL* warfare is based on stored or directly applied energy !! A sword is a means of applying as much energy as possible in as small an area as possible and a shield is to spread and defuse that applied energy to as wide an area as possible !!
Catapults use stored mechanical energy to lob rocks at the enemy. Guns use stored chemical energy to do the same with bullets !! Some birds have been know to use kinetic energy to "bomb" predators with their droppings !!
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'There are just three products, boys and girls, that cannot be privatised.' My economics teacher circa 1982. 'Do you know what they are?' Thirty sets of half interested eyes stared at him blankly. 'They are gas, electricity and water. And do you know why they cannot be privatised?' Blankness. 'Because they are NECESSITIES of life, boys and girls. Necessities. And it would be IMMORAL for any private corporation to profit from a life giving necessity at the expense of any other human being.'
Now I remember.
Get these utilities back into the public sector. We, taxpayers, paid for their infrastructures to be put in place and we've been used as a dripping roast ever since. Now these companies turn up the heat as we collectively turn ours down. They have failed in their duty of care to maintain that infrastructure to satisfactory levels and are using THEIR incompetence as an excuse to keep prices falsely inflated.
REGULATE REGULATE REGULATE.
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All that this does is make the case for nuclear all the more essential. If there were alternatives to the current set up prices would come down. Indeed they would not have gone up quite so much in the first place.
The problem has been no energy policy worthy of the name since the dash for gas by the last Tory government. That never made much sense to me but it helped sustain the New Labour illusion for a bit longer: just think of all those lovely windmills!
In crude market economics I quite understand where the energy companies are coming from. They are in a position to make some nice money and see no reason why they should not. They will be clobbered by the regulator at some future time but while the sun shines better make some hay.
Once again it has been the political class who have screwed the country by failing to plan and failing to organise.
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133 ishkandar
from what I gather the figures look like:
One kg of petrol holds around 45MJ of energy. One kg of NiMH batteries hold around 0.25MJ, a factor of almost 200 less. A lead-acid battery holds half that. (source: slashdot.com) MJ = Mega Joule)
So a Molotov Cocktail of equal weight is 200 times more powerful that your NiMH 'weapon'!
Now, can you design a car powered by dicki-bird do-do and if so how many direct hits per second would you need to do 30 mph carrying yourself and Auntie Mabel!
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The 'market' was supposed to sort out our energy policy. How well it has. Sky high prices and held to ransom by Europe.
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Doubtless, this line will be official Government policy in a couple days. Instead of that, how about an update on what happened to the Lehman CDS auction, which was supposedly holding the world to ransom 10 days ago? Or when are Lloyds Shareholders actually going to vote on the HBOS merger? Can even this government speed up spending on schols and hospitals - as opposed to staff salaries - quickly enough to counter recession. Wouldn't investment into renewable energy & transport give a better return and if we had done that earlier, would we be in such a pickle now?
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I am not convinced, or at least don't understand, Robert's explanation re gas prices. Could someone kindly explain the lack of convergence between the US mainland natural gas price and that in the UK. As of today the Henry Hub spot price is $6.75/MMBTU whereas on 11th July it was $12. I seem to recall it peaked at a higher figure earlier in the year. I had thought the advent of LNG would bring some degree of convergence. Is the answer simply the lack of LNG tanker capacity and/or port facility.
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They wouldn't re nationalise the energy companies would they ?
They haven't started nationalising the Builders yet !
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85 Peter_Sym et al
"Not much Uranium mining in Britain."
There are viable deposits of Uranium on the Orkney Isles.
The locals are vehemently opposed to mining it of course. That has never stopped anything though!
Once the lights start going out then it will be every Orcadian's duty to get a spade and start digging..
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bookhimdano you have got it spot on..As for those of you who are thinking of voting for David Chameleon just remember you are paying high fuel prices due to the last Tory Government.It was called privatisation when they sold off everything to give you a penny in the pound off income tax.Lemmings
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In a vertically structured market where the production of energy is controlled by a few suppliers able to switch allocated cost and profit centers across national boundaries an analysis of top to bottom margins is the only way to get a handle on what is happening. Is there a nasty smell as Robert hints at? Logic would say so. Unfortunately with a weak and unfocused government the energy companies are taking advantage of what they see as a power vacuum. The role of the regulator also beggars belief in the current situation - one wonders why we bother paying the money. This may become the biggest scandal of the recession. Shameful.
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#133. ishkandar
"*ALL* warfare is based on stored or directly applied energy"
Essentially I agree with you on this BUT you have to be very careful about using such all embracing statements.
How about Denial Of Service attacks for instance?
AFAICS these might well use infrastructure but not necessarily stored energy.
And of course DOS attacks could be just as devastating. We may not be able to access the BBC website for instance!
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Why aren't energy prices falling? Same reason why petrol takes 2 days to go up and 6 weeks to come down. All Robert's reasons plus one more - racketeering.
Makes you think Class War and your average Trotsky revolutionary do have a point after all.
As for decoupled, it makes you wonder what all the fuss about the energy crisis in the 1970s was all about. They should have just ignored it like our markets do now.
Anyone else very, very angry or is it just me?
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Mr. Peston,
You are supposed to be a journalist, not a purveyor of PR slogans. Exactly what is meant by the following:?
"All the power companies will do what they can for those on lowest incomes."
Are poor people going to get cheaper power than rich people? are power companies going to sell at a loss? What actual event should the reader look for to validate the truth of this particular statement?
Why not do your job and tell the people some truth - Like maybe the staggering capital cost of nuclear, that pretty much every nuclear plant everywhere has been late and over budget, that no private enterprise firm will ever stand behind all of the risks and that some form of state support is required.
Why not revisit the moratorium imposed by your mates in the Govt. and maybe a short discourse on the regulatory engineered price collapse in 2003 that meant no private firm would go near the UK.
You could also enlighten the population as to the bill of goods they´ve been sold with regard to renewables. Maybe people want renewables - but they´re going to have to pay a big price.
Why not tell the people how once we had gas on gas competition until the advent of the Zeebrugge interconnector - and now all we´ve got is gas prices linked to oil and a realisation that the interconnector does not enhance security of supply - for the simple reason that there is no price the Europeans will accept if the quid pro quo is freezing their indigenous populations.
Why not mention that fuel costs are only part of the picture - capital costs need repaying as well. If prices are not high enough for both CAPEX and OPEX to be recovered then no-one will build new capacity.
You could mention that the Govt. has taken things so close to the wire that the UK is odds on favourite to replicate the joyful experiences of California.
But I suppose all of that might involve some work - much more convivial to speak to the PR gurus inside the energy companies. They´re bound to tell the truth aren´t they?
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several years ago a little college in the uk developed a way of producing cheap power it was called the hot rocks project but it disapeared suddenly partly i know due to lack of funding, but with the profits generated by energy companies they should be forced to invest in cleaner,renewable forms of energy.
ah what am i saying most of these companies are overseas owned and there profits go to benefit there own countries.
this government has played lip service to the energy companies for years not realy doing anything to aid the people of this country.
would a new government do better?
i think not becouse the next government will be made up from existing members of parliment and so far none there seems to have a clue or the will to make honest changes to benefit the people.
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Explain why coal prices have nearly doubled in the UK in the past few years then? I was told because 'they are linked to the price of oil' OK that has come down and the coal wholesalers price has also dropped by around 30% in the last few weeks...but are the retailers passing this on? No Sir! Even the price of locally grown wood around here has gone up in price recently 'just because...' Everyone's trying to rip everyone else off!
And just what exactly are the power compan ies doing to help the poorest consumers? Very little I suspect.
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can we not simply heat the country on government hot air? we pay enough for that already..
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Sorry to mention Channel 4 but I've just seen one of the most depressing programmes on the gas and electricity industries.
No storage facilities beyond two weeks so if there is a breakdown we could have power cuts.
Not much chance of prices going down more llikely they will rise again next year.
For one of the so called richest countries in the world I feel more like we're heading for third world status.
What a waste of time this government has been to ignore the most fundamental needs for our survival.
They must have known this was coming and like everything else they've had their heads in the sand.
This is absolutely unforgiveable and on top of all of this to borrow and waste more money on unnecessary schemes when they should have been building new storage facilities for our gas is beyond belief.
There is absolutely no longer any alternative than to open up our coal mines
to ensure we have fuel supplies into the near future.
We do not have time for technology to catch up.
It seems so wrong that these politicians can make such a mess of things and just walk away from it when they feel like it.
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The Money Pump has Run Dry
A great deal is written about "pumping more money into the economic system".
In order to understand what this means perhaps we should first of all consider what money actually is.
One good definition of money is that it is a measure of work that has been done. It is a medium of bartering one persons work for that of another.
As nearly all work done today, by individuals or corporations, is, in most cases ,multiplied many times by the use of fossil energy, then money can rreasonably be seen as a measure of that energy.
We can then understand why the amount of money in circulation was able to increase as the amount of fossil energy extracted from the earth increased. This could happen with no ill effect as the amount of money was related to the amount of energy available.
However when the amount of money in circulation was increased at a greater rate than the increase in energy available, to be represented by that money, there was only one possible outcome.The amount of energy represented by each unit of money became less. It was therefore devalued. This is of course what has been going on.
We now return to the governments of the world "pumping" money into the economy. If, of course, money is energy; then printing more paper will do nothing unless we extract more energy from poor old mother earth to back it up.
Here is the problem, we have reached the point where we are finding less fossil energy than we are extracting and our ability extract more energy to give our paper money value is diminishing.
Thus we can see that "pumping" more money will be of no use unless we can pump more energy. At present this seems to be beyond us.
This means that, until we can find another sort of energy with which to endow our paper money, we will have to forgo the growth we have become used to, and no amount of pumping money will have any effect.
Do we know how to do that?
This is of course a simplistic explanation; to evolve the theory fully one would have to include the energy imparted to the earth via the sun which is largely constant. One would have to allow for the ingenuity of man making the energy he has go further and so on, but as a base explanation it works.
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#138: "Instead of that, how about an update on what happened to the Lehman CDS auction, which was supposedly holding the world to ransom 10 days ago?"
Payday is tomorrow. I expect it will pass without a hitch and we will not be told much.
AIG fell a month ago, received an $85bn bailout. It burned all of that in the last five weeks. Now it has received another $37.8bn. It may also tap $10bn through an emergency commercial paper program. It did a lot of CDS business. Then there is the $70bn fund set up by the primary brokers to deal with Lehman fallout. I reckon this problem is already covered with that $200bn, most of it contributed by the American taxpayer. We will find out soon, won't we?
But if it happens again, consider what a $3bn per day cash burn rate would do to scope for infrastructure investment. If the CDS monster is as bad as some analysts say, those setting public spending priorities will have to choose between credit derivatives and heat and light. Brown's 'New Deal 2' might never see the light of day.
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#151 Wellcaught
I agree that energy is the stuff of life.
However we live in the Oil Age.
Oil alone amongst energy sources gives us high energy density as well as convenience. It can be readily stored and transported. It is abundant at present.
Together with its associated product Natural Gas it has transformed farming. Fertilizer is now readilly available without having to excavate and submerge guano covered islands.
Other industries such as plastics have been similarly transformed.
Energy from other sources such as Coal and Nuclear can be converted so as to form fertilizers and plastics. Not very conveniently though.
Solar and other renewables are a drop in the ocean.
Oil is king.
Long live the king.
For all our sakes.
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The money pump has far from run dry. The explanation about money being a measure of work being done assumes all money is exchanged in return for work. The UK benefits system bill for the 2007/8 fiscal year was £137b which actually takes money away from those who do work. If money can also be viewed as a measure of energy used, then there must be a huge number of idle people who use energy for nothing. Things were so much clearer when the amount of money in the system was directly related to the nations gold reserves. Now that we have not an ounce, confetti cash is being printed as ?government borrowing? putting a greater burden of tax on the few who are still lucky enough to have a job
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Losing your touch Robert? I thought you revealed scoops? All of what you ascertained by speaking with those that run our gas companies could have been discovered by any research analyst. Must do better.
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Excuses. excuses. I agree entirely with 'guycroft'.
If this Government cannot re-Nationalize these industries then the very least they should do is to follow the lead of France and Germany and CAP the % increases on all public utility services.
France and Germany are still making profits after purchasing supplies from sorce but their consumers pays a lot less, so why are the Brits being forced to pay these outrageous prices?
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Now this is almost a very good article. As a person who works in the Industry it is a delight to see a fairly objective, almost truthful view without the sensationalist rubbish usually contained in it. A few comments:
1. Why didn't UK electricity companies get windfall taxed, as called for. Answer - because the Govt desperately needs them to invest in Generation assets.
2. Those of you calling for the building of renewables, who pays for it? The answer is YOU, so yes fine we will build lots of renewables however your electricity bill will quadruple - despite the fact you are on here already complaining!
3. Those of you calling for renationalization - Its a joke, neither the Government or the taxpayer could afford to run the Industry (oh yes and the tax payer is YOU again)
4. The Govt are also responsible for much of the price rise and generation squeeze through green taxes and such blunt ill thought-out policies as the Large Carbon Plant Directive etc
There is one answer to the margin squeeze, price rises and Security of Supply Issues and its simple - build a cheap and efficient generation mix (most renewables are neither cheap, efficient or can provide reliable baseload) - Its an answer that again people do not want to hear and it is Nuclear power.
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#123. The reason mobile phones have got so much smaller over the past decade is more efficent battery technology. Ditto ipod nano's and shuffles. They use rechargeable batteries the size of watch batteries that give the same performance as a couple of cheap AA's.
After 50 years of cold-fusion research costing billions we've got nowhere. Batteries however are getting far cheaper, smaller and more powerful. You CAN buy an electric car that runs on batteries in 2008. You won't be buying one with a cold fusion reactor under the bonnet anytime soon.
Regarding safety I've never seen a battery explode in my life, but I've seen plenty of petrol fires. It seems that tragically a family of 5 burnt to death in their car on the A6 last night. Noting is 'safe' but batteries compare very well to petrol tanks.
#128 Read my whole post before attacking the opening sentence. I also point out that as we will need much more nuclear power our current fuel stocks won't last us a fraction as long as the previous poster suggested.
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We need more capacity, nuclear and renewable, but both will take a long time.
In the meantime, hundreds of people are going to die from hypothermia this winter, and millions will be impoverished by paying extortionate prices for gas.
If the energy companies refuse to reduce prices back to last year's levels in favour of vast profits and dividends, then the sleepy indolent British direct debit payer will eventually wake up and demand change, on the streets if necessary. No government can refuse this kind of demand. We are talking poll-tax riots here, not a bunch of stop-the-war hippies.
If swingeing cuts are not made to gas prices before winter bites, mass action will take place, and the government will be forced to take drastic action- first taxing the energy companies out of profitability, followed by Railtrack-style nationalisation.
How the French and German governments will react to this is uncertain, but faced with a choice of widespread public disorder at home and upsetting Johnny F. I'd say that GB will go for the latter- it's sure to be more popular with voters.
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Big business still does not get it - the country has bailed out the Banks and they still think that it is OK to carry on as usual with their arrogant attitudes to the poor, when it is this same poor that have bailed them out!
Anyone seen that LloydsTSB will still be paying its (senior) staff their usual bonuses. (Guardian and the Daily Mail)
Let us have a blog about this please Robert!!
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There used to be a cap on fuel price increases, it was limited, IIRC to no more than 5% per year.
For some reason, Labour removed it. Might have had something to do with VAT revenues, perhaps?
Also... part of the problem as to why we are so exposed to the volatility of the fuel markets is lack of storage for oil and gas. I recall seeing an article where this subject was raised and in comparison to other countries where there were 40-50 days worth of storage or more, the UK's is about 2 weeks. Historically, as we were a net exporter of gas, the infrastucture wasnt built or invested in. Now we're a net importer, the tables have turned.
Whilst I appreciate what RP is saying, he is only giving the energy producers side of the story that they want us to hear. If all that is said is true, how come in the home countries of the large producers, the likes of EON, Npower, etc that their customers have been shielded from the kind of rises that we have been battered with? Costs of fuel in France and Germany have gone up only in single figures. Why?
Because we have become a soft touch and have a spineless Government who are incapable of doing anything about it and our politicians, regardless of political colour are only concerned about saving their own electoral skins every 5 years.
Aint nothing going to change until we start poking these guys in the chest demanding answers and reminding them that they are accountable to the electorate. They've had it too damned easy for too damned long.
So, in 2010...... Guy Croft for PM!!!!
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#157 - spot on!
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I am a race engine builder by profession and an engineer by background. Some letters on the subject of energy I wrote over the last 4 years that may be of interest.
15 Aug. 04
Rt. Hon. Tony Blair MP
Prime Minister
10 Downing St.
London
Dear Prime Minister
I am writing to bring to draw to your attention the critical and urgent need for top-level research and development into non-hydrocarbon fuel for power plants.
Oil is far too precious as a lubricant to be burned as a fuel, the pollution and global warming effects are well understood, and in a few years the major supplies may well be shut off or become so expensive that we are held to ransom to get them.
A massive investment and incentive regime is needed in order to develop the use of hydrogen - the only obvious and powerful alternative to fossil fuel. The environmental benefits are many, whilst the only real difficulties are those of manufacture and storage, and engines strong enough to withstand the combustion pressures. If the technology does not exist it must be found.
We have neither shortage of the raw material, water, nor lack of renewable energy sources to drive the extraction processes and the commercial benefits to our country being the first to overcome the difficulties would be incalculable. Power and fuel industries are far too preoccupied by commercial and shareholder pressure to be expected embark on this change alone, Her Majesty?s Government must show the lead.
I have no vested interest in this, which is why I have written to you personally. I cannot underestimate the importance of supporting it. Remember that your success will be measured by generations to come.
Rt. Hon. Tony Blair MP
Prime Minister
10 Downing St.
London
Dear Prime Minister
I wrote to you in August of 2004 regarding the critical urgency of developing non-hydrocarbon fuels for power plants (engines, power stations etc).
You must know, I am sure, for it has been widely publicised in the last two years (by those scientists not afraid of ridicule) that the planet is set on a course for irreversible and accelerating warming caused by carbon emissions (principally, but not exclusively ground based). I am writing once again to plead with you to use your authority as Prime Minister to set things in train before it is too late. This cannot be left to ?the people?; only world leaders like you have the power and remit to act on this. If you disagree please ask yourself: ?Who else is going to do it??
People never like change but change must come and you must drive it, even by the end of your current term it may be too late. The prospect of the planet burning up and its entire species too is a most awfully sad indictment of the selfish greed of the human race.
If you did not see my last letter - I wrote:
?Oil is far too precious as a lubricant to be burned as a fuel, the pollution and global warming effects are well understood, and in a few years the major supplies may well be shut off or become so expensive that we are held to ransom to get them.
A massive investment and incentive regime is needed in order to develop the use of hydrogen - the only obvious and powerful alternative to fossil fuel. The environmental benefits are many, whilst the only real difficulties are those of manufacture and storage, and engines strong enough to withstand the combustion pressures. If the technology does not exist it must be found.
We have neither shortage of the raw material, water, nor lack of renewable energy sources to drive the extraction processes and the commercial benefits to our country being the first to overcome the difficulties would be incalculable. Power and fuel industries are far too preoccupied by commercial and shareholder pressure to be expected embark on this change alone, Her Majesty?s Government must show the lead.
I have no vested interest in this, which is why I have written to you personally. I cannot underestimate the importance of supporting it. Remember that your success will be measured by generations to come.?
Leaving aside whether or not you choose to impose a series of draconian legislations to control carbon emission, which you could and it would be your greatest legacy, (eg: ban motorsport & ban commercial air travel) I should tell you as an engineer that since we have the capacity to upset the global balance it follows that we must also possess the means to restore it, and if the world continues to follow the contemporary philosophy of economic development growth this will be the ONLY way the future of mankind can be secured into the future.
There is a very simple method of cleaning the atmosphere of carbon. This should be explored on a gigantic scale without delay. Sodium hydroxide (NaOH) naturally absorbs carbon from the atmosphere, turning into the useful, stable and harmless chemical sodium carbonate + water. Sodium hydroxide (NaOH) can be easily produced from an aqueous solution of sodium chloride (ie: seawater) by solar, wave or wind powered electrolysis ? NaOH is produced along with hydrogen, the brilliant fuel I wrote to you about two years ago. Any chemical engineer will confirm that this is possible. All it takes is the will to back it, tomorrow, not on a timescale of ?in 5 years time?.
Since the world is warming up we have an increasing supply of solar energy, we have no shortage of seawater and coast on which to build the first plant, Scotland is ideal and the construction will create jobs faster than the oil industry loses them - we can export the technology - and even the fresh water too. Think how competitive this business would become, ?saving the planet? would become a reality, not a slogan on a shopping bag.
During the Second World War Winston Churchill proposed sailing two large ships into Calais, one loaded with hydrogen and one loaded with oxygen, in order to ignite them and blow up the port. The objections were many, the first being that no-one had the capacity to make so much of either. So, undeterred, Churchill instructed a member of his staff to contact the British Oxygen Company. Their reply, was ?how soon did Mr Churchill require it to be delivered??
The capacity of our industry to embrace this initiative is unlimited, and can you picture the headlines? Every country in the world would applaud and follow you.
I do hope that this makes an impression on you.
Rt. Hon. Tony Blair MP
Prime Minister
10 Downing St.
London
Dear Prime Minister
I wrote to you in August of 2004 regarding the critical urgency of developing non-hydrocarbon fuels for power plants (engines, power stations etc) and again on and 13 June 2006. Upon receiving my last letter you offered to forward to two Government departments for consideration. This led to no more than information being sent to me by one, about existing initiatives for carbon reduction. I also wrote to your chief scientist, one of his staff replied that they did not have the resources to consider my proposal. I was deeply shocked by the complacency. Many assert that the climate went past the ?tipping point? many years ago.
In case you did not see my last letters personally I am copying the text below.
It is utterly critical that you treat this situation as a war right now ? drop everything and act with all the vigour and leadership you can muster in the time we have left. Nothing short of full scale war on carbon emission will work now. The atmosphere has to be controlled by us. We polluted it, de facto, we can clean it up. I imagine you know this but are afraid to do what is necessary, ie: not simply reduce the thing but actively fight it. It is comparatively easy to embark on armed conflict for whatever reason good or bad. This is far harder because the action it needs will turn our world upside down, socially and economically. But - much like the war on evil, it MUST be fought. I implore you not to leave this to others or expect others to be able to provide the impetus funding or resources/brains to do it. Massive government backing on an unprecedented scale is needed and you need to stand up and tell the British people ? and the world ? why you are taking the lead.
You must know, I am sure, for it has been widely publicised in the last two years (by those scientists not afraid of ridicule) that the planet is set on a course for irreversible and accelerating warming caused by carbon emissions (principally, but not exclusively ground based). I am writing once again to plead with you to use your authority as Prime Minister to set things in train before it is too late. This cannot be left to ?the people?; only world leaders like you have the power and remit to act on this. If you disagree please ask yourself: ?Who else is going to do it??
People never like change but change must come and you must drive it, even by the end of your current term it may be too late. The prospect of the planet burning up and its entire species too is a most awfully sad indictment of the selfish greed of the human race.
?Oil is far too precious as a lubricant to be burned as a fuel, the pollution and global warming effects are well understood, and in a few years the major supplies may well be shut off or become so expensive that we are held to ransom to get them.
A massive investment and incentive regime is needed in order to develop the use of hydrogen - the only obvious and powerful alternative to fossil fuel. The environmental benefits are many, whilst the only real difficulties are those of manufacture and storage, and engines strong enough to withstand the combustion pressures. If the technology does not exist it must be found.
We have neither shortage of the raw material, water, nor lack of renewable energy sources to drive the extraction processes and the commercial benefits to our country being the first to overcome the difficulties would be incalculable. Power and fuel industries are far too preoccupied by commercial and shareholder pressure to be expected embark on this change alone, Her Majesty?s Government must show the lead.
I have no vested interest in this, which is why I have written to you personally. I cannot underestimate the importance of supporting it. Remember that your success will be measured by generations to come.?
Leaving aside whether or not you choose to impose a series of draconian legislations to control carbon emission, which you could and it would be your greatest legacy, (eg: ban motorsport & ban commercial air travel) I should tell you as an engineer that since we have the capacity to upset the global balance it follows that we must also possess the means to restore it, and if the world continues to follow the contemporary philosophy of economic development growth this will be the ONLY way the future of mankind can be secured into the future.
There is a very simple method of cleaning the atmosphere of carbon. This should be explored on a gigantic scale without delay. Sodium hydroxide (NaOH) naturally absorbs carbon from the atmosphere, turning into the useful, stable and harmless chemical sodium carbonate + water. Sodium hydroxide (NaOH) can be easily produced from an aqueous solution of sodium chloride (ie: seawater) by solar, wave or wind powered electrolysis ? NaOH is produced along with hydrogen, the brilliant fuel I wrote to you about two years ago. Any chemical engineer will confirm that this is possible. All it takes is the will to back it, tomorrow, not on a timescale of ?in 5 years time?.
Since the world is warming up we have an increasing supply of solar energy, we have no shortage of seawater and coast on which to build the first plant, Scotland is ideal and the construction will create jobs faster than the oil industry loses them - we can export the technology - and even the fresh water too. Think how competitive this business would become, ?saving the planet? would become a reality, not a slogan on a shopping bag.
During the Second World War Winston Churchill proposed sailing two large ships into Calais, one loaded with hydrogen and one loaded with oxygen, in order to ignite them and blow up the port. The objections were many, the first being that no-one had the capacity to make so much of either. So, undeterred, Churchill instructed a member of his staff to contact the British Oxygen Company. Their reply, was ?how soon did Mr Churchill require it to be delivered??
The capacity of our industry to embrace this initiative is unlimited, and can you picture the headlines? Every country in the world would applaud and follow you.
You need to set up a ?war cabinet? immediately and get cracking. I hope that this makes an impression on you, because the last chance to even try will pass in our lifetimes, not in that of our children.
Yours faithfully,
Capt Guy Croft (Retd) BSc
The last letter finally got an acknowledgement and that which I had said was fwd to the Govt Chief Scientist Sir David King. A letter from one of his staff indicated that 'they did not have the resources to examine this at that time'.
Bereft of imagination and dazzling foresight, just the same old dull, plodding, neo-leftist approach to innovation and technology as ever. Good job Brown and his team weren't around when we needed 'bouncing bombs' and 'chain home low' radar.
Nuff said.
GC
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A very disappointing piece of journalism, where even the key assertions are wrong and have been lamely accepted from the PR machines of the big six suppliers. These are multi-billion pound businesses and they take their 'spin' seriously. The BBC should be more rigorous in examining assertions about wholesale price movements.
For a published graph of historical prices on the wholesale markets in consistent units which relate to consumers' bills (ie pence per kWh) see SSH Associates web page. These graphs are based on published Commodity Exchange Data. Even a cursory examination of the published historical data would lead to the conclusion that prices will either fall during the winter or profits for the big 6 suppliers will be huge.
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#157 Neverpublished31
1. Why didn't UK electricity companies get windfall taxed, as called for. Answer - because the Govt desperately needs them to invest in Generation assets.
Explain this article then?..?Shell pull out of Thames Estuary Mega Wind Farm Project?
http://news.bbc.co.uk/1/hi/business/7377164.stm
It?s the point of this debate that the power providers have not invested in our power-gen infrastructure since privatisation. I accept that the government are mainly to blame for this.
When the lights go out this winter there won?t be such 'delightful objectivity'.
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So the companies hedge their forward exposure but then charge us as the price goes up, so a double profit, they also screw us on the way down when prices fall. Something's not right here.
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#163 guycroft
Your comments about hydrogen are I am sure well meaning.
Do an energy balance on it though.
Infrastructure as well as production.
Then check out who is doing research on its use as a fuel.
It would appear that everyman and his dog are involved in it on both sides of the Atlantic and the channel too.
There is loads and loads of public money being spent. And a fair bit of private capital too.
All wasted.
The bottom line is that if you go to the trouble and expense of making electrical energy why waste it on hydrogen? Use it directly.
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Robert,
The gas market neither rational nor efficient? Next you'll be telling me that the banks operate a cartel to prevent the benefit of falling interest rates being passed on to borrowers...
The trouble with light touch regulation and laissez-faire government is that businesses take advantage of it to the disadvantage of customers. Meanwhile, government apparently stands aside and mutters about the future benefits (which never come) of falling prices.
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#63 "but funnily enough you never hear about "green" import tariffs on goods from countries like China that pollute with complete disregard."
Since China produces 25% of the pollution per capita compared to the US and 33% of the pollution compared to UK, Britain will have to cut its pollution by more than 66% before any "green" tariffs can be levied against Chinese goods. Thus sayeth the WTO !!
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#141 I had always wondered why some Scots glowed in the dark but was told that it was the whiskey that they consumed so liberally !!
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#167
the point about it is that you can transport hydrogen - you can't transport electricity.
And no-one is actually working on this on a commercial scale to the best of my knowledge, not by the means I described.
FWIW, and regarding your remarks on energy balance I do not need to do them because cleverer people than me already have, most notably experiments undertaken as early as 1987 in Soviet Military research facilities by the brilliant Russian scientist Professor Phillipp Kanarev (and in subsequent extensive and groundbreaking workmuch of which has been presented in Europe) have proved beyond all doubt that cost-effective means exist for production of hydrogen by low current plasma electrolysis do exist.
To quote Prof Kanarev:
"Modern industrial installations require 4 kWh for production of 1 cubic meter of hydrogen from water. When this hydrogen is burnt, 3.6 kWh of energy is released. If the energy expenses for production of hydrogen from water are reduced by twofold or threefold, it becomes a competitive energy carrier. If it is possible to reduce these expenses of hydrogen tenfold, it will become the cheapest energy carrier. In this case, coal, oil and natural gas fail to compete with it.
Our investigations have shown that there are some plasma electrolytic devices and modes of their operation, which reduce energy expenses for obtaining one cubic meter of hydrogen up to 0.40 kWh. In this case, more than 1000% of additional energy is obtained"
The point is that is is something Britain could explore, but will not, on 'cost grounds'. Much cheaper to get 'foreigners' to do the 'hard graft' - then we just buy energy from them. I don't know if you're British, I certainly am, and to me there is certainly something very 'un-British' about not pushing the frontiers of what is possible. Don't call me cynical, this is reality. When you're backs are to the wall, you need the brightest and best brains and solutions and we just don't get them anymore. All we get is 'how are you going to pay for it' while at the same time millions, nay, billions are made 'magically' available and squandered on things that few need nor want.
Here is an example from 2002 during the tenure of this govt that exemplifies just that, from the then Particle Physics and Astronomy Research Council (PParc, now part of the Science and Technology Facilities Council):
"The vast majority of PParc's funding for particle physics, about £66m, goes to the European Centre for Nuclear Research (Cern) in Geneva. This leaves about £33 million for other research."
PParc were told by Govt to CUT their budgets by 12% over 3 years.
Put that in context. The allocated budget 6 months ago for the London Olympics is 9.3 billion. An amount of money from UK fiscal sources GREATER than the GDP of 103 countries AND 281 TIMES the (then) leftover budget OF PParc. I shall spare you my views on over-weening athletes and 'tourism knock-on benefits - I know where I'd want that money put.
Even the reformed Science and Facilities Technology Council combining the Particle Physics & Astronomy Research Council and the Council for the Central Laboratory of the Research Councils and engaged in scientic work of the most important kind with direct relevance to energy sources has budget on only £500 million.
Energy dependence will dominate developed countries increasingly in the years to come in the same way that the need_for_water will dominate many others and there will be wars over it, yes.
GC
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#165
I can explain this quite easily: Shell are not an electricity supply company or one of the Big 6, which is who the windfall tax proposal was aimed at. As far as I am aware they are not big on building generation assets either. Their business is mainly oil, some gas but not electricity generation. Eon (one of the Big 6) express their dissapointment in this article.
That is part of the point - on one side of the fence you have Ofgem & the Govt backed by the press and a disgruntled population expressing concerns about the market Oligolopolies and vertically intergrated companies (both generation and supply assets i.e. how they manage to offer cheaper prices) whilst issues such as Security of Supply are ignored.
On the other side the fence the fact that the Govt need these companies to build these assets and to make profit to plough into it. All tangled up with the green agenda and Global Warming targets. The planning laws and Govt decisions required for any major build of assets are immense whilst the Govt pussy foot around balancing the impact of their possible decisions on their voting public. Thats why investment has not been forthcoming!!
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171 "the point about it is that you can transport hydrogen - you can't transport electricity"
Never heard of batteries? I'm transporting electricity inside my mobile phone in my hip pocket as I write this.
#163. re attacking Calais with hydrogen & oxygen Churchill came up with many stupid ideas. The reason we won is that unlike the nazis our generals weren't forced to follow the lunatic plans of our leaders. The idea that two tankers could both enter calais at the same time in order to release their gases at the right combination and right location while under fire would never happen.
A single ship full of ammonium nitrate (simple fertiliser) would have done far more harm (see Halifax nova scotia 1917) and an LPG gas tanker even more damage. Both those sail the high seas daily quite safely. Of course thats before we start considering the wisdom of blowing up a town full of civillians who were allegedly our allies or how the crews of the ships were meant to even theoretically escape from the blast
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#173
I merely used the anacedote to illustrate that British industry can get things done on grand scale, given the chance. Yes, batteries, oddly enough I heard of them. If you're into energy balance - examine the efficiency losses in the charging /discharge/transfer of the power.
As for your treatise on blowing things up I am a former Royal Engineer so I know a bit about things like that. FWIW the energy/mass of gaseous hydrogen is 27 times that of TNT which itself is twice as powerful as pure ammonium nitrate. Not an easy thing to test back-to-back but it's been done. Now, BOC had plenty of capacity to produce hydrogen but ammonium nitrate was needed for other more pressing purposes.
It is the power of hydrogen that has captured the car manufacturers' imagination not the way it is produced which is what I have been talking about.
Again, FWIW the Chiefs of Staff were quite naturally aghast at the idea and thus it was quickly dropped. However the speed with which everyone reacted when Churchill spoke might typically be a good model for this government who were still chatting about what to do (at the same old speed) as the internet took the world into recession (at light-speed).
GC
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#36 Peter Sym - Hydrogen is actually very cheap to produce. Electrolysis of water can attain efficiencies of up to 97%. In addition to which Underground Coal Gasification would also give us an abundance of Town Gas and Hydrogen by dissociation. Hydrogen is only expensive when compressing it to use in vehicles, (because noone will drive around with a giant balloon strapped to the roof) Fuel Cells actually work better at normal gas mains pressures and the losses are far less, which is why they should be installed in houses not cars. Diesel Hybrid vehicles with solar panelled roofs will be the transport fuel of the future as diesel can be sourced from renewables.
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#174. The energy loss of charging a battery looks pretty good compared to that of electrolysing hydrogen then cryogenically storing it. GeeWizz's are crummy cars but they do work and you can buy them now.
Hydrogen plus Oxygen is explosive, but not that explosive under real world conditions and to get max blast you need to mix them very carefully. Note how many people on the ground next to the Hindenberg were killed. The idea of two tankers full of the stuff exploding is fanciful and HAD it worked as planned it would have effectively nuked Calais which wouldn't have exactly encouraged the French to help any of our downed airmen... or even stay on our side.
Incidentally I was in a support troop attached to a Scimitar squadron so also have explosives experience, although the biggest thing I ever dropped was a small bridge, not a French port!
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# 176, for goodness sake, move on. It is neither here nor there as to whether you agree with me on the subject of energy, as I do know what I'm talking about, you haven't got a clue.
In trying to win the argument you are missing the point. The hydrogen thing was Churchill's idea, I suggest you discuss it when you meet!
GC
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Well reading "guycroft" I don't know wether or not to jump in the river Seine, or off the Eiffel Tower?
However upon reflection I do not think that I could take such a negative position as he does. In then end the investments being made world wide in the banking (sorry latter day spivs) including the controls envisaged, will pull through, and the investments being proposed in Public Works (France,Germany,Spain etc) will not only bring money into the economy but produce taxes.
Please do not lose sight of the fact that this international problem not just a UK one.
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Now is the time economically psychologically and politically to establish a new regiment the Royal Eco warriors task creation of electricit from renewable sources using the framework of the M.O.D. the arms manufacturers and their export contacts their hi tech capabilities to produce wind turbines and solar panels on a massive scale the power companies to export and establish green electricity throughout the world . The world will recover from the coming recession but it might not recover from catastrophic climate change which some predict. Better safe than sorry and fossil fuels won't last for ever anyway so that in this times when we have learnt to accept drastic measures and when aworkforce is about to be made idle we have the oppurtunity to build the foundations for sustainable prosperity in future for with clean electricity, electric transport can also become truly clean, electicity is the key.
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#177. On the contrary. I've a degree in chemistry. I know precisely how much electricity we need to liberate hydrogen from water and when we're talking about a shortfall in domestic production we sure as hell don't have any excess to start making gas. Water is one of the most stable molecules in the universe (mainly due to the power of the hydrogen bonds) and takes an eye watering amount of energy to liberate it. Thats precisely why it generates so much power when it explodes.
If I do run into Churchill I'll be sure to ask him what the hell he was thinking too...
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Peter_sym,
if you hold a degree in chemistry, you'd be better putting your skills to use in this field, because irrespective of cost issues hydrogen is the only non-nuclear source of energy that potentially bestows independence in the energy market, and mercifully, people not trapped in the old methodologies are taking this very seriously indeed.
Cue:
[Unsuitable URL PPT file removed by Moderator]
and:
https://www.hfpeurope.org/hfp/hfp_home
You, if you bother, will find all the top names deeply engaged at a European level in the second link. You will not, however, find much appetite in the British Government for anything to do with hydrogen, probably 'on cost grounds'.
Unlike you I do consider it important to campaign for things as a matter of principle.
GC
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Peter_sym
my last was moderated for having links I guess, but suffice to say that if you have a chemistry degree you'd be better off putting it to use in support of the hydrogen initiatives that are gathering pace in the EU backed by some of Europe's top firms. Hydrogen power is the only non-nuclear (and yes, I see you are strong supporter of nuclear) option that is capable of developing energy independence and the time to production and startup costs are way lower than nuclear.
GC
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#182. Perhaps you can direct me to a source of atomic hydrogen closer to the UK than the sun? Coal is a fuel- you can put a match to it and release its energy. Uranium is a fuel- put it in a reactor and it gives you more energy back than it took to mine & purify it. Hydrogen is at best a storable form of energy, not a fuel. It does not guarantee energy independence as it needs MORE energy to release it from water than burning it obtains.
Put in VERY simple terms you need a nuclear plant to release the hydrogen to go in your car. In principle you could use hydro (but we've run our of suitabke sites pretty much) or wind (if you want the entire countryside covered in turbines) but you need to put more energy into the hydrogen plant than you'll get out.
Much better to either make ethanol from waste plant material (half a dozen buses in my town run on ethanol generated from offcuts and sawdust from finnish lumber mills) or to use GM technology to grow oil seed rape in land thats unfit for food growth. You can either burn the alcohol the way petrol is burnt or better still put in fuel cells and generate electricity.
Given that the accountants have refused to sign the EU budgets off for ten years in a row I wouldn't accept anything they endorse as being economically viable. The EU paid our farmers for years NOT to grow crops that could have been turned into fuel for gods sake!
My chemistry degree is better spent making cancer vaccines. They at least work some of the time.
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Your link has returned: in among the wads of euro-quango nonsense I actually found one small paragraph stating where the damn hydrogen is expected to come from:
"The study examined the different ways in which hydrogen can be produced and found differing attitudes across the EU. All countries represented chose the production of hydrogen from natural gas, biomass and wind energy. Nuclear energy was seen as an option in France, Finland, Spain, Poland and the United Kingdom, whereas the use of coal was excluded in Finland, France and Norway"
Basically we are going to burn gas (methane) releasing carbon dioxide to produce less gas (hydrogen) which when when burnt will produce less energy than was released by burning the methane. Alternatively we waste our ageing nuclear and inadequate wind generation systems instead and presumably sit in the dark as we have virtually no surplus generation capacity.
Its the energy policy of the mad house!
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#184Peter_Sym
I am with you on this one.
Some folk will never be told.
They believe in fairy stories and conspiracy theories.
Check out the European Fuel Cell Forum.
Physics not philosophy!
http://www.efcf.com/reports/
I do not think they have been contaminated by grant culture yet.
An interesting fact to quote on this subject:
There are more hydrogen atoms in a litre of gasoline than in a litre of liquid hydrogen.
I didn't believe it at first so I checked it out from first principles. It is close, real close but true..
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Believe me,
I know Euro-nonsense when I see it, I stood for UKIP in the last election and you need to study plenty of it to take questions going door to door.
I also know other forms of nonsense, such conclusions after reading (selectively) a few lines to support your particular field of interest.
HFP is categorically NOT a quango, nothing like. Why are you disposed to insult them? It is a significant forum where Europe's biggest industrial companies share information. It has a stated aim to accelerate the development of critically important technologies and it IS doing just that.
This is the calibre of work they are supporting. Straight from HFP- "The Hydrogen Internal Combustion Engine) has officially finished its 3-years work with a final event on 27 February 2007 in Munich/Germany. HyICE, which was promoted by the EU Commission, has resulted in a combustion engine fuelled by hydrogen that offers clear advantages over current generation engines and promise to compete with other propulsion systems in terms of performance and cost"
Don't ever make the mistake of thinking that because we in 'Little England' don't hear about EU initiatives - they aren't worthwhile and 'happening'. They are.
Britain is poorly represented at HFP because of the abysmal state of UK manufacturing, lack of initiative and lack of Govt research funding. And if you think for one moment that the UK is going to achieve independence or anything like it by opting for nuclear, which is quite simply the most expensive start-up regime of any means of power generation, well, 'best of British, mate'.
And - before you get on your high horse again, my letter was to the PM. How many lobbying letters have you written? I'd be pleased to read them.
GC
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#186. I wrote one lobbying letter to Gordon Brown demanding that the RNLI be excempt from paying duty on their fuel. A few months later it happened.
As regards my particular field of interest. A large biotech company is paying us to start phase II clinical trials of our vaccines. Maybe it will work, maybe it won't such is medicine. However a vaccine for cervical cancer has been approved and is being injected into schoolgirls across the nation now. You can dismiss my entire field of research if you like. You'll just look like a fool.
What I DO think that you're missing is the whole concept of WHERE THE HYDROGEN COMES FROM. It doesn't matter how amazing the hydrogen combustion engine is IF THEIR IS NO FUEL TO RUN IT.
You keep knocking nuclear yet apparently are so scientifically naive you don't realise that we need electricity to make the hydrogen and that unless you can defy the basic laws of physics that will mean burning more power than we get back.
Please answer these two questions:
WHERE DO YOU PROPOSE WE GET THE HYDROGEN FROM FOR YOUR HYDROGEN ECONOMY FROM?
if you propose electricty.
WHERE DOES THAT COME FROM?
We're not fuel (gas, oil, coal, nuclear) independent yet. Burning more russian gas to make hydrogen makes us less fuel independent not more. Understand?
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#185 Ulf Bossel's (not a little Englanders name either) paper is pretty hard to argue with. It won't stop some people trying though.
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"wrote one lobbying letter to Gordon Brown demanding that the RNLI be excempt from paying duty on their fuel. A few months later it happened"
I think you're getting a bit beyond yourself here, not to mention way off topic. The Royal National Lifeboat Institution rightly gets 100 percent fuel duty relief, as has been the case since 6th Council Directive 77/388/EEC. I think you may be confusing the way input tax is handled.
GC
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It is disgusting that energy companies aren't able to take advantage of the low wholesale prices of gas (£0.00 one day last week) on our behalf, especially with the vast profits they are making.
The government should give them the choice of investing heavily in storage (even at the expense of dividends for the next two years) or have a windfall tax, the money to be used by the government solely to build storage facilities.
When the price of oil increases the price of gas and electricity increases in line with this, when oil price decreases, gas and electricity price stays high, No wonder this is called 'Rip-Off Britain'.
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#190 eskimo48
We are consumers in a service economy now. The red party and the blue party before them reckoned on the City bringing in enough wealth that high energy prices would not make any impact on us.
Why bother investing in infrastructure when there is so much money to be made in the markets?
How wrong can they get..
Short-termisim all the way.
If the government was serious about keeping us warm etc then they should either ensure competition by starting up new companies or take the existing companies into public hands. Whatever happens new publicly owned infrastructure needs building.
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#189. Nope. I'm a member of the RNLI and our newsletter demanded that we petition brown (when he was in no 11) to scrap duty on lifeboat fuel. It is still being charged on fuel used for training and on lifesaving equipment such as boots and waterproofs.
Quite how I'm 'getting beyond myself' when you petitioned the PM to stop us burning all hydrocarbon fuels I don't know.
However as you haven't answered the simple question of where the hydrogen for the hydrogen economy comes from I presume that that point has come across clearly at last.
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#191 Eskimo48 quote:
If the government was serious about keeping us warm etc then they should either ensure competition by starting up new companies or take the existing companies into public hands. Whatever happens new publicly owned infrastructure needs building
I don't think you quite understand it. You either pay the current company prices and they invest in generation infrastructure - or you get taxed and pay for the Government to do it. Either way - YOU WILL PAY MORE.
Try seeing another side of it:
Agreed you need fuel and light to live - you also need food to live. Any calls for a windfall tax on Tescos or Sainsburys?
Oh and another point on competition - the sheer size of the larger companies (that are socalled "ripping you off") ensures the prices you pay for electricity and gas are actually lower - its called basic economics.
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A fascinating discussion on hydrogen above. Thankyou, I am clearer now on the arguments.
Back to gas and electricity prices.
How many people are aware that npower are selling gas as low as 2.612 p/kWh whilst Scottish Power's cheapest is 3.613 p/kWh?
These are not familiar prices to you? If they were would there still be any Scottish Power customers left?
But we all compare prices at the petrol pumps and would give garages with such a big difference a very wide margin. Why are people prepared to be so ripped off? Is it the opacity of prices?
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#193 Neverpublished31
Cutting to the quick:
You reckon that the market economy knows best and left to its own devices will produce cheaper energy for us. It will use some of the profits it is making and invest in order to reduce prices and ensure fuel availability for us all. In addition it will cost us all less done that way.
I plain don't believe it.
The existing companies are doing very nicely thankyou. They are running their companies for the benefit of their shareholders. If they weren't then the boards would get kicked out. Their whole purpose is to maximise profits.
The only question open for them to discuss is timescale. They need short term profits. They will pay lip service to infrastructure until the government forces them to do something about it. For which the government will pay. Tax credits etc.
We will end up paying over the odds. We will pay for expensive energy and also expensively for the infrastructure. The infrastructure will be built at a profit. The energy company shareholders will make handsome returns. And there will still be a monopoly milking us.
My conjecture is that if we need to create storage and capacity infrastructure then it would be cheaper done via public companies.
Arguably there may be waste due to companies not being driven by the competition motive. But there would not be a need for shareholders to be paid. Also it would get done. Can we wait for free market forces to eventually invest in infrastructure?
Arguably free market forces would ensure shortages in order to maximize profits for the shareholders.
Turkeys won't willingly vote for Xmas..
Tescos and Sainsburys are doing very well but they are also facing competition from the likes of Aldi, Lidl etc.
The energy market is different. We cannot just plug into a cheaper lower quality competitor.
It's like it or lump it.
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#194 sshassoc
"A fascinating discussion on hydrogen above. Thankyou, I am clearer now on the arguments."
I hope you are clear that generating hydrogen in order for it to be used as a fuel is a complete and utter waste of energy.
No argument!!
Gas prices:
"Why are people prepared to be so ripped off? Is it the opacity of prices?"
Most folk just plain don't believe that their gas supplier of 30 or so years is now a penny pinching money grabbing company that just delights in having a subservient customer base.
Ditto for electricity suppliers.
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#193 Prudeboy
If it is market economy v Government ownership/decisions I know which one I would vote for. I find your (slightly blind) faith in their leadship a bit worrying given the fact the industry was privitized a.) because the couldn't afford to run it b.) Couldn't afford to invest in it.
History shows a few thing: British Energy for example, cracks in reactors, most of their assets offline for months.. etc Profit/investment IS needed. Lets hope EDF (of significant expertise with nuclear power in the French market) can improve the situation.
As for short term profits v investment if you understood the market you would realize that Infrastructure/Generation failure is FAR more penal financially for all market players than investment. In other words investment WILL be made, it is in companies interest.
As for "monopoly milking" it is simply untrue. Oligolopy is more accurate if you want to try to suggest anything. This is hyped by the fact that the Govenrment/Regulator are still unsure if they actually like the market they have created!! Even if the Government does invest YOU will still pay through YOUR taxes. Put simply you either pay a large company or the Government through tax. Personally I would rather have everyone paying a large company than the likely unfair taxes targeted at only a percentage of the population as we have seen recently!
Storage/Generation and Infrastructure: You will find this is already moving quite quickly (although some may argue too late) The area where this is currently "stuck" is planning permission and suitable sites. Read the news: Protesters at new sites, The Government agreeing in court with "climate change protestors etc....." The public want to see investment but not in their back garden and the Government unfortunately must manage this. It is not as simple as you suggest.
Yes companies can be likened to Tescos and Sainsburys. e.g. both buy bread in large quantities from a bakery and sell it to customers. Infact some have branched out and bake their own! Substitiute the word Bread for Electricity and Gas and you have exactly what an Electricity/Gas supplier does.....
Finally you do not have to like it or lump it. You have a range of Suppliers you can chose from with a range of prices. It is called switching and you are free to do it. Ofgem ensure this to protect your rights. There are 30+ companies currently. The "lower quality" option is there in terms of customer service etc Personally as electricity is the same regardless of Supplier I would suggest that price is the only key decider.... but I guess we are back to a bread analgy!
Look at the advertising campaigns in newpapers etc there is fierce competition. Think Websites such as Uswitch etc
The last thing you have to do is "like it and lump it!!"
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#197 Neverpublished31
You obviously have not thought things through.
You are saying that is better to have EDF rather than a state owned company running Britain's nukes.
Check out who owns EDF.
Also check out the French nuke spills this summer.
And other years..
You keep saying that there is a valid analogy between the energy companies and the supermarkets.
If one supermarket runs out of a particular staple then you get it from another.
If your electricity or gas runs out then you cannot think "Ah. I am OK, I am so glad my supplier is XYZ Plc they never run out."
When the lights go out, the lights go out.
Like it or lump it.
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Erm I know who runs EDF. The French - This is a country that has a serious amount of spare generation - incidently quite a lot of which is sold very profitably over the UK interconnector to us.
Check French nuke safety history v UK...
Anyway my analagy is perfectly valid. If you are refering to The transmission system running out of electricity (incidently owned and operated by National Grid and not your Supplier) this would be caused by lack of generation. Oh and this actually would not happen like you seem to expect. Dig out a government document called the Fuel Security Code - it will enlighten you.
To liken that back to may analagy it is the eqivalent of your bread delivery trucks breaking down so the bread does not arrive at the supermarket or your bread factory being burnt down.
What you need to understand is the Market and how it works instead of just pointing fingers at Suppliers. For a start it would NOT be your Electricity Supplier that "runs out" of Electricity. They would have bought contracts to cover your consumption way into the future.........
Quite simply if your lights aren't on they aren't exactly making huge gross profits are they??! Just like tescos wouldn't be making its mark up on its bread ;-)
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#199 Neverpublished31
You don't happen to work for EDF do you?
You have missed my point about ownership; probably deliberately.
EDF is 70% owned by the French Government. That's right; it is owned by a state. The very type of organization that you reckon is untrustworthy and disaster prone.
Or are you saying that it is only British state owned organizations that are useless?
Are you a French national perhaps?
French nuke safety history v UK.
Touché. But of course they are both bad. Check:
http://www.guardian.co.uk/environment/2008/jul/25/nuclear.industry.france
Reporting of accidents is pathetic on both sides of the channel. Who to trust.. Should we trust the French media who do not report open secrets about their senior politician's dalliances? Or should we trust British media that cannot be bothered to leave London?
I cannot quite get my head around this:
All customers have meters fitted. They used to be regularly read. Costs used to be the same UK wide. Customers now have to be signed up to supply companies, some of which also generate power. The cost per KWh will vary depending on who you sign up to. Business customers have to be very careful or else they will get expensive "out of contract" rates imposed on them that they cannot get out of for a year. The market that the government has created splits generation, transmission and final delivery. And energy brokers.
Yet it is all still the same power..
Has this system been set up deliberately inefficiently in order to stealth tax the hapless consumer?
If the generators run short then the National Grid cannot magic any more out of thin air (except of course from the trans channel link).
If the shortfall lasts beyond the dropped frequency stage then the likes of Tescos have their cheap rate supply cut off; after that we are into rolling blackouts.
The system is crying out for overall central control. It is far too important to be left to imperfect market forces.
Nothing makes sense.
What I do know however is that there is nothing that can be done about it.
It is like it or lump it.
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No I don't work for EDF! Lets just say I "independently understand the Industry shall we." I am also not French. Regarding the question and Government ownership and who is the most sensible lets just say: The French have plenty of relatively cheap power, some of which they export profitably to other European countries. We on the otherhand relied heavily on dwindling North Sea gas and now have a tight margin. I know who had the best policies in my mind!
The market is in no doubt complicated. This is caused by competition. The centralised system that you hanker after dearly was simple but I am afraid quite inefficient and expensive - why the Government broke it up and sold it. (plus they knew what was happening in the North Sea and that the era of cheap power was over!)
To explain:
You have generators ( The bread factory)
You have national grid (transmission system) (The motorway network)
Then you have Distribution Network operators. (the smaller local road network)
At the end you have suppliers that sell the Electricity (or bread i.e. Tescos)
(you also have meter operators etc that are responsible for data from each meter)
All of these parts of the Industry were opened up to competition so it is possible to have a different company performing each of these functions during the electricity's journey to your door... A supplier has to pay each and every one of these companies for their service or using their system. Differentation and better prices can be offered by those who may own a generation asset(s) and retail business (Supplier) as explained above.
Yes it is complicated and annoying as the general public do not understand the market (how could they!) and tend to blame only the Supplier as it is the only part of this chain that they ever see or have contact with. Add the Government pressure, green taxes and politicians who do not understand the market either but like to use it as a political tool........
It is the same power physically yes but someone, somewhere has paid for it! (much like water in pipes). A rolling black-out (on a large scale) is unlikely. National Grid use Demand Side control i.e. switch big users (factories etc) off to redress system balance etc.
What you need to try to understand is that your consumer rights are protected by the fact that you can change Supplier and get cheaper rates. It is competition that protects you.
I am sure that if the whole system went back into government control you would be just as upset at the price you would have to pay for your bills. Even under Government control:
1.Gas and Coal prices would still be high (i.e. to produce electricity)
2. The Infrastructure would still need investment (infact a legacy from old!)
3. You would have higher taxes and bills
4. I am sure socially a % of the population would get free Electricity - i.e. the aged, those on benefits etc. (The rest of you would pay for this through your bill - think of it as a social service support)
and guess what? You wouldn't be able to change Suppliers to get a cheaper deal....ooops!
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#192,
lobbying the PM over research into alternatives to hydrocarbon fuel has everything to do with energy costs, unlike lobbying the PM about the RNLI which has nothing to do with energy cost.
Hydrogen power is coming, mercifully whether you like it or not. As as for presuming - whatever!
GC
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When your neighbour loses their job, there is a recession. When you, lose your job, you are in a depression.
Thus goes the old expression.
When does the recession that we are already in, turn into a depression ?
No doubt an echo of the 1930's.
Every cloud has a silver lining, what was wisdom, now becomes not the way to do things. During periods like this there is often great innovation. Previous winners will now be losers, previous losers will now be winners.
Everything turned on its head.
Life does and must go on. Just as it did in the 1930's.
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#201 Neverpublished31
OK lets get this right. You understand the energy industry and who owns EDF. EDF are your heroes.
You reckon state ownership is bad.
But you did not know that EDF was owned by the French state!
Nor presumably that there are currently demonstrations against the nuke industry in France.
Furthermore you have determined that competition in the UK energy market is well served by confusing punters into thinking they have got a good deal. When they realise they have been worked over then all is well since they can move to someone else!
But to cap it all you reckon that the nuclear energy produced by EDF is cheap. And who pray is going to pay for the decommissioning of the French nukes?
The state of course. Not EDF. Oh no it will be the taxpayers.
Not for a while though so I suppose everything is all right by you.
Short-termism?
I won't be drawn into your silly bread / supermarket / electricity analogies. There is no analogy.
The electricity industry is about as simple as you can get. Energy is generated in bulk at large powerstations. There it is connected to the national grid and distributed to where it is used.
If we were to wean ourselves off soap operas then there would be no need for pumped storage to provide practically instant extra energy when the credits roll.
Wind and other renewables make for good copy but don't make much power or sense.
Electricity and other energy supply industries do not make good bedfellows with mixed economies. Energy is real; tangible. Market economies rely on smoke and mirrors to obfuscate issues and get folk to spend money.
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#202 guycroft
Iceland is unwittingly about to determine the worth of hydrogen power. The Icelanders have been promoting hydrogen as a fuel. There is geothermal energy which can be used to manufacture the gas.
You would think that now that they are strapped for cash they will be able to cash in on their hydrogen economy. Alas I reckon real economics and real physics are about to pour rain on their grand ideas.
How long before their hydrogen busses are off the road?
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#204 Prudeboy.
In response to your comments I can see that an objective view from somebody who actually knows what they are talking about cannot enlighten a closed mind and never will. I have said neither view is right I have merely corrected your knowledge gap and played devils advocate.
1. EDF are far from my Heros. (and quite a childish comment)
2. I have always known EDF are PART state owned although I believe you will find their UK business is ring fenced.
3. Decommissioning costs have not historically been included in nuke per MWh prices - however the Government is looking to do this in the future.
4. Fine your refusal to understand the analogy is up to you. I was only trying to explain your "smoke and mirror" issues that you state confuse you.
5. You mention smoke and mirrors but claim the Industry is simple. I am confused.
6. I am not sure what point you are making about renewables or pumped storage.
Quite simply you appear happier to pay the Government which is fine - I however prefer economics and merely sought to correct some of you inaccuracies and preconceptions by explaining how the market actually works.....
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I can't resist another post! Why is it so surprising to people that consumers should pay for their transportation costs? Electricity is mostly generated in the Midlands and the North. To transport it south along expensive pylons that waste a high percentage in 'losses' means the energy received in London and Cornwall costs more.
Why is it so surprising to people that they should be charged more? This is why wind farms in Cornwall are making so much money - they receive extra money because National Grid do not have to transmit the electricity so far or re-inforce the network so much.
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British Gas buys its gas from Parent Centrica. Centrica buy cheap in summer store in off shore N.Sea wells then using very sophisticated computer program that tracks global pricing sell the gas to BG. Lst year they picked up £230Million doing this yet still push up consumer prices and smile. This needs exposing and someone needs to stop this type of blatant profiteering
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#206 Edd456
You appear to be confusing the energy industry and the energy market.
The energy industry is simple.
The energy market has been deliberately made complicated in order to extract money from the consumers.
EDF haven't always been 70% owned by the French government. Until a few years ago they were 100% state owned.
If you knew the differences between the UK market and all other markets you would know why Britain alone has pumped storage ready to smooth out spikes in demand.
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#207 sshassoc
Wind farms in Cornwall have zero effect on the network capabilities.
Consider what happens on a freezing cold windless day. There is no input from the wind farms.
Ditto when it is so windy that the wind generators have to be shut down.
More worryingly is what is happening in some US cities where the peak demand for electricity is now in the summer due to air conditioning.
There, the electrical switchgear etc has full load when it is hot anyway. Not good.
Transmission losses are a small price to be paid compared with the alternative; more inefficient power stations built all over the country.
Big is best as far as power generation goes.
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Prudeboy
Pumped storage:
Small generation output - When you refer to smoothing out demand I think you mean peak shaving. Yes it is used for this - mainly located in the far North: when most energy is needed in the South of the country. I am still not sure what point you are making? It isn't and will never be a substitute for larger generation assets such as a Coal fired power stations or Nukes based on export capacity alone.
Oh and most hydro units are purely commercial anyway - i.e. they pump water back to the top of the hill at night when electricity prices are low - then when the prices are high they sell their power into the market. Surely this doesn't fit with your plan?? Howzat for making money!?
I don't think I am confusing the Electricity Industry and the market - It is a market and has been since it was opened up to full competition nearly 10 years ago.
This blog was explaining high prices - which is related to Generation and the Energy Market.
I can see that you have a fear of all things foreign including investment and that's fine but you need to face reality we are an Island and one with a Government that has already sold on our North Sea resources some time ago, closed our coal mines, and pushed a green agenda to tax people (therefore never likely to reopen them.)
Oh and UK prices are not particularly high compared to other European countries infact in many cases much lower. The Issue is that we (or you) have been used to very cheap power supplied from the North Sea (look up the term Dash for gas) Now these supplies are dwindling, the system has been sold off, most major investors have pulled out of the North Sea the Electricity Supply Companies are a useful Scapegoat for the Government to blame its failings on and consequently the high prices - although they won't shout too much as they actually need them to invest.
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#211 Edd456
I actually agree with most of your last post!
I see things from the engineering side. From the efficiency standpoint.
I have an intense dislike of artificial factors getting in the way of delivering energy efficiently to consumers. Whether it be wacky green issues or Enron style accounting practices. I hate them both.
My reasoning being that artificiality, if there is such a word, generally leads to somebody getting something for nothing. Which is my real pet hate..
And the bit I don't agree with?
Your assertion that the market has been opened up to full competition.
Try telling that to small business customers who initially signed their contracts during the winter months.
Years ago.
Now they find that they are locked into signing 12 month contracts with prices fixed at the high winter rate.
They cannot migrate to summer switch overs.
The market can hardly be described as "open" when there are such obvious arbitrary penalties being applied.
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If you have hard evidence of Suppliers refusing to offer 6 monthly or 18 monthly contracts to small businesses then you should send it to Ofgem who are cracking down on this kind of behaviour.
As for Cornish wind farms I was merely stating the fact that generators in Cornwall receive money from the National Grid and that many would say not enough money, if you do proper calculations of energy losses (qv BSC Losses Mods).
Electricity costs a lot of money to transport. Therefore people shouldn't be surprised that they have to pay for not having a massive power station in their back yard.
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