Are we getting screwed?

[casapinos]

I have just changed my energy supplier (as I do most years!)and i noted that the cheapest option for my estimated consumption levels charges 25p per day standing charge for both gas and electricity, but gas 2.3 p per KWH and elec 12.6. How can it be more than 5 TIMES as expensive to buy a KWH of electricity than gas?
Given that the electricity mix includes oil, coal and renewables, but I believe gas is the largest how can this be ? are we being screwed by renewables subsidy , or the cost of "smart meters" , taxation or greed/
As usual when I am puzzled by life I will do some research but would welcome informed responses to aspects of this problem I am liable to miss, any offers?

[tea42]

A typical power station is only 40% efficient in converting fuel into electricity. There are transmission losses through the grid. Then there is the massive cost of the power station to amortise plus the running and maintenance costs. Demand varies massively during a year, week and day but the amortisation running and maintenance costs are there all the time forcing the average cost up. We import electricity via cables from abroad, this is more expensive than home generated. The grid itself with all a the transmission lines transformers carries a higher amortisation and maintenance cost than the gas network. There is also the 'green energy' subsidy we all have to pay for those solar panels and windmills.

These add up to make electricity genuinely more expensive than gas.

It's not quite as simple as one might think. Whether we are being ripped off I doubt because it is a regulated highly competitive business.

[dspp]

As tea says the main issue is that you are comparing a high value-added product (electricity) with a low value product (gas). Roughly two-thirds of the gas burnt in the power stations is 'wasted' from an energy perspective in turning it into electricity.

Add in that the electricity must be available for simultaneous use & generation, i.e. damn nearly 'made-on-demand' 24 x 7 x 365 versus 'fire & forget' for gas (they just stick it in the pipe at one end, but by playing around with pipeline pressures a bit you don't have to take it simultaneously) and you can see that the gas system is far cheaper to run.

The renewables actually are bringing down the electricity prices, not increasing them. This is because the merit-order effect is now greater than the renewables subsidies (have a google around).

Where we are all getting screwed is on the standing charge. The last set of reforms aimed to simplify tariffs so that the dumbo in the street could understand them. The result was that there are not allowed to be any zero standing charge tariffs. That disadvantages people like me who hardly import any electricity. I think my standing charge is now bigger than my variable tariff. Hey ho. In my opinion the utilities are colluding oligopolistically to shove as much as they can in the standing charge.

regards, dspp

[gryffron]

In my opinion the utilities are colluding oligopolistically to shove as much as they can in the standing charge.

Although, as you both point out, this probably aligns more closely with their actual costs. Which are mostly fixed infrastructure costs. 100% so for renewables, where there are no fuel costs.

Look how telecoms has gone. Most people now pay fixed costs regardless of usage.

Gryff

[didds]

Look how telecoms has gone. Most people now pay fixed costs regardless of usage.

Gryff

meanwhile water is going to metered... look at Ireland...

didds

[Satsuma]

Where we are all getting screwed is on the standing charge. The last set of reforms aimed to simplify tariffs so that the dumbo in the street could understand them. The result was that there are not allowed to be any zero standing charge tariffs. That disadvantages people like me who hardly import any electricity. I think my standing charge is now bigger than my variable tariff. Hey ho. In my opinion the utilities are colluding oligopolistically to shove as much as they can in the standing charge.

regards, dspp

Well I'm on the Ebico Zero Standing Charge rate, so you may be mistaken. I was with Ebico, billed via SSE. But they recently ended that partnership and now I am [still] with Ebico but they are working with a not for profit co (there are various news articles on their site which detail the spat). I can dig out the unit charges tomorrow if you are interested.


https://ebico.org.uk/energy-plans/

Sats

[dspp]

Sats,
That would be helpful, if only to understand how it exists. I am now with GoodEnergy and in my case price is not my primary determinant at a personal level in this area. But I'd be very happy to look.
regards,
dspp

[Satsuma]

Hi dspp

Here's the info:

Tariff is called Ebico Zero, and is provided by Ebico and Robin Hood Energy
I pay by monthly DD and there is no standing charge.
Electricity unit price is 16.328p per kWh; and gas is 4.914p per kWh (projected annual costs £311.87 and £223.64 respectively).
There is no contract tie in or exit fee.

Like you price is not a huge factor, although of course a consideration (and I found when I was on dual price tariffs that I would never 'use up' enough fuel at the higher rate that would then step down to the lower rate, IYSWIM?)

HTH
Sats

[BusyBumbleBee]

Well I'm on the Ebico Zero Standing Charge rate, so you may be mistaken. I was with Ebico, billed via SSE. But they recently ended that partnership and now I am [still] with Ebico but they are working with a not for profit co (there are various news articles on their site which detail the spat). I can dig out the unit charges tomorrow if you are interested.

Ebico stands for Ethical Business Co - and that they are. For many years they were my electricity supplier but they were considerably more expensive for me as I am a big user of electricity so I had really to switch away from them to save about £1,000 per year.

They are ideal for low energy users and people who are on pay as you go type meters - and for rented property when there is the possibility of a void

They themselves are a social enterprise with any excess 'profits' going out by way of grants to help alleviate fuel poverty.

However, I decided that the £1,000 extra I was paying could be better deployed by me - and get the Gift Aid added to my and my wife's donations.

A highly recommended company - see correspondence on the FOOL - if you still can

[Satsuma]

Ebico stands for Ethical Business Co - and that they are. For many years they were my electricity supplier but they were considerably more expensive for me as I am a big user of electricity so I had really to switch away from them to save about £1,000 per year.

They are ideal for low energy users and people who are on pay as you go type meters - and for rented property when there is the possibility of a void

Thanks for the explanation of the name Busy, I had idly wondered in the past!

I initially started with them because I liked their company ethos. They had a thing where they didn't penalise prepayment users and similar for not paying by DD (I can't remember exactly now). But anyway I liked that they didn't stiff people who could afford it least - it felt like a small thing I could do to help people less financially fortunate than me. They also seemed less incompetent than the big providers if I need to contact them.

I also like/d the simplicity of the tariff - no messing about with standing charges and variable stepped rates. Just PAYG.

Sats

[Satsuma]

In a disappointing turn of events, I have today had a most unsatisfactory experience with ebico - it is a real shame when a company you previously held in decent esteem lets themselves down like this.

I got a letter which implied that I had not paid my bill. All couched in nicey-nicey "your bank has told us there is a problem with your DD payments" language, but the underlying meaning was quite clear. I checked, and sure enough there was this month's DD payment paid like every other month has been for years, paid shortly before they printed the letter.

So I called (and went on hold of course). I was eventually connected to one of the rudest, surliest CS reps I have come across for a long time.
The entire conversation was difficult and one-sided and her attitude was just abysmal. It eventually transpired that there had been an error between ebico and the previous billing company in forwarding my bank details for ebico to take over the DD - nothing to do with me whatsoever (I had been told everything was done and dusted already). In fact the whole premise of the letter is inaccurate given the error has nothing to do with me or my bank at all!

So I have emailed them with an account of today's experiences and will be interested to see how they respond to it...