British Gas, the UK’s largest gas supplier, has ’slashed’ it’s gas prices for it’s standard customer by 7%. The price change will save it’s customers a mere £55 a year, but in the world of energy pricing tactics, will allow British Gas to name itself as the “cheapest supplier of standard gas and electricity right across Britain” on average.
February 3, 2010
Ofgem warns: Householders face unaffordable energy bills
A fresh report from Ofgem today lays out the future of the UK energy market, with the bleak conclusion that householders and small business may find energy costs unaffordable in the future.
The worst position is that home owner will manage self-inflicted ‘zero-energy-usage’ policies, potentially placing lives at risk. On top of homeowners feeling these rising costs, small business will also bear the brunt and ultimately feel the need to pass on these rising costs within the end price they in turn charge the customer, creating a double whammy of cost increases. Something that many households will find extremely hard to cope with.
Now is the time for the Government, and that includes Ofgem, and take action. Which means rather than merely reporting on the potential consequences of what may or may not happen, they should be taking action and executing aggressive, wide ranging policies to ensure that all consumers are in some way protected, with added emphasis place upon currently vulnerable customer and those considered as a ‘high risk’ of becoming vulnerable.
January 10, 2010
Boiler scrappage scheme causes a stir
In the past week, the announcement of the Governments Boiler Scrappage Scheme has caused a bit of a stir, and at the very least had a lot of people jumping onto good old Google to figure out what’s going on. So in summary:
Who’s managing the scheme?: The Energy Saving Trust (EST)
Is it available UK wide?: No. It’s only available in England
Can every English household scrap their boiler and get a new one?: No. The scheme is first come first served, open to the first 125,000 households.
What else makes a household eligible?: Your boiler need to have the energy efficiency grade of G. Acoording to teh EST, they can quite easily be identified as boiler with a permanently ignited pilot light.
What’s it worth to me?: £400 towards a new boiler
How much does a new boiler cost?: The boiler itself could be anything from £800 up to £3000 – with a average cost of around £1200. Then you need to consider the install.
How much is the total boiler and install cost?: Upwards of £1500 – with an average of £2000.
That’s still quite a bit of extra money. How do I know if I’m getting a good deal?: Well you need to shop around. Some boiler installers will be providing further incentives to install these new boilers, but you need to compare and shop around
Do you have a recommendation?: Yes. I’d recommend getting a price from British Gas, Homeserve and a local proovider, trying using My Builder to get a competitive quote. Make sure they offer you a price for a couple of boilers and you get the same boiler quoted from each supplier.
January 9, 2010
Gas shortages a temporary blip
It’s good to see that despite the masisve cold snap the UK has been expereincing, gas suppliers, the National Grid and indsurty in general is capable of throttling the supply and tempering demand.
Whilst this might have subtle effects on certain manufactures, notably Vauxhall, Jaguar Land Rover and Cain, the Liverpool brewer (the latter being very risk looking to deprive Liverpudlians of a pint of beer), it seems to have maintained wholesale gas prices at a reasonable level. Meaning that it’s unlikely we’ll have the usual stampede of suppliers threatening future price increases because it’s been a little bit colder for longer than usual.
What remains is whether the Government is going to force future investment into more gas storage facilities. As these extreme winter event become more common, the government and the energy industry need to assess the viability of creating additional supply to counter these temporary blips in gas shortages,
November 16, 2009
Gas usage reduced: is it down to efficiency or climate change?
In the recent reports on British Gas’ profits, there were pointers towards it’s ‘wins’ in energy efficiency.
However (and this is a debate which will probably be better answered once the Met Office publishes better data) despite the cold snap the UK saw in January 2009, temperatures on average are up. It’s generally warmer meaning the home owners will use less energy to heat their homes.
So the question is, has there been a real reduction in the usage of gas by consumers based on energy efficiency measure? My hesitant answer would be ‘No’.
In Q1 (Jan-Mar) 2009 usage was only down 2.6% compare to the previous year, whereas in Q2 (Apr-Jun) 2009 usage was down 12.9%. But if you add up the total domestic gas usage over that period Q1 makes up 72% of it, over two thirds. A reduction of 12.9%, which is not consistently maintained quarter on quarter suggests some other variables impacting consumers usage habits.
For energy efficiency to demonstrate it’s working, usage must come down when householders are actually using a lot of it!
November 16, 2009
British Gas labelled villains by UK media following profit announcement
Last week, British Gas failed to have another performance announcement go by without taking a fair old kicking from the UK press, provoking headline of:
British Gas are seemingly being labelled the villains again in the eye of the UK public – it is pantomime season after all!
It’s unsurprising that there are profits and that profits are up. Wholesale energy costs have stabilised massively in the marketplace in 2009, meaning that customers have seen some price reductions but nowhere near to the extent that wholesale prices have come down.
Justifiable – I think so.
For no other reason than the fact that a supplier like British Gas, or even players like it’s parent Centrica, need to make profits. They need to make profits to have a strong and stable business, that can be confident to invest in the UK energy market, from the infrastructure used to pipe and distribute gas and electricity to home owners and small business, right to the need to invest some significant sums into new generation methods, renewable, nuclear and gas (perhaps even a little clean coal).
If Centrica can demonstrate it can invest in the generation and then supply it to an end consumer, on a massive scale, with a strong return, then they’ll get backing from investors. If they can’t demonstrate this, then they probably won’t have the confident to invest.
It’s pretty simple, it’s just a shame that some consumers suffer under excruciatingly high bills.
November 10, 2009
Russians blamed for more UK energy price increases
It hasn’t happened yet, but Ofgem are predicting that due to insufficient investment into Russian gas project, the UK is likely to feel of shortage of gas supply – or at the very least, a tightening in supply, a steady demand, which will force prices up.
The stark truth is that nothing can be done. Investment in gas projects is massive, and slow to take impact – rather like the oil tanker analogy: it will get there in the end, but it might just take a little longer and if you want to speed it up or change direction, the effect takes a while to kick in.
So the UK, is yet again (and it’s not like this supply issue hasn’t raised it’s ugly head before) beholden to supply issues within Europe and Russia.
It’s another signal that seismic shifts are required to bolster the security of energy supply in the UK, with a bigger push towards investment in renewable generation and nuclear, and a very watchful eye placed upon those consumers who just cannot afford to pay anymore for their gas and electricity.
The government really needs to grab this one and run with it.
November 8, 2009
Fixing energy prices: EDF Energy’s nuclear debate
EDF Energy wants the government to introduce, what can be best described as, pricing controls to help ensure the long term viability of new nuclear build.
The debate is remarkably simple. For new nuclear generation to be competitive, other generation sources which use fossil fuels such as coal and gas, need to become sufficiently expensive, and in some cases prohibitively expensive, that the price a energy retailer pays for gas, coal or nuclear based generation is comparable.
This means that when EDF Energy plough £20 billion into new nuclear build for the UK market, it can be safely described as a sound investment. The way the government could achieve this price fixing is to insert a pricing floor to the price of carbon. So for the generation methods that use carbon generating fuels, you create inflationary prices, placing the overall cost of using coal and gas to generate energy on a par with nuclear generation.
Some would argue that price fixing is inappropriate as it will force aggressive increases on consumer and small businesses energy bills. The flip side is, without suitable incentives and investment vehicles in place, consumers could see massive increases in bills anyway, harder to predict but pretty certain to happen, due to higher global competition for the naturally produced fossil fuels – and therefore potentially see situations of physical shortages of supply.
Pragmatically, this shouldn’t be a debate for consumers, environmental groups or even competing political parties. This decision should be made based on detailed long term planning of energy supplies, focussing on security of supply, a reducing impact on climate change, and a fair price that the end consumer must pay. Not an easy decision for any government to make in their year on year political gaming – but importantly, this is a decision that must be made for the good of the UK.
October 29, 2009
EDF Energy: not British and not Green, allegedly
EDF Energy has managed to escape the ban which could have been imposed by the ASA on following it’s ‘Green Britain Day’ campaign.
It seemed that the ASA concluded that EDF Energy was not making substantive claims that it is either British or Green. Being British, EDF Energy has amongst the largest number of electricity customers in the country, and all of it’s operations reside in the UK – save for the fact that EDF, Électricité de France, is French owned and run.
Being Green, well it seems you can make and claim that just about anything is green if you try hard enough. Nuclear generation is green, gas fired generation is greener than coal fired, and a carbon sequestration coal plant facility is greener than a coal plant without.
Ultimately, encouraging Brits to go green is a must – so thumbs up! And as EDF have the Olympics under their belt, then we can probably expect a lot more green and British campaigning before we get to 2012.
October 19, 2009
Online energy bills in free fall
The news that online energy bills in the UK are £249 cheaper, and falling faster than standard plans should not come as a surprise to anyone who’s been observing the UK energy market for a number of years.
UK energy suppliers will work their marketing extremely intelligently to ensure they are seen to be a competitive player in the online space. This may of course contradict the performance of their standard products, which, in price decrease terms may not have dropped very far, whilst their online equivalents have been in free fall.
What does it all mean for consumers?
There are two observations.
One is that there are some excellent deals to be had, and using services like uSwitch and EnergyChoices will ensure consumers find the current cheapest deal.
Two this is a short lived fun fair ride. And just like a fun fair ride, price drops will come to an end. More importantly, as more and more customers go online moving away from the higher margin standard product, the more suppliers will have to seek to extract the margin from those who are now online.
The online margin will be thin – suppliers are likely to be hoping longer term that they can increase the lifetime value of these customers, and providing them with goods and services that will ultimately keep their own shareholders happy.
In the meantime, the call from the UK’s comparison services is absolutely right. Get online and get switching!
