[Andy65]

Originally Posted by geoffers

presumably it will be positive if it results in cheaper energy prices 👍

Too many have been on too much of a good thing since the invasion of Ukraine. The perceived shortage of gas has never materialised but prices have remained excessively high. I wouldn't trust Ed Miliband to run a bath, so do I think zonal pricing would be beneficial to me, no.

[meldrewreborn]

@Andy65

some countries have been forced out of buying gas because of the price - there’s been less supply on the market and demand has reduced.

Experts though are now predicting a glut of gas in a few years which should lower prices - we’ll see.

[geoffers]

Very interesting & balanced explanation of why our electricity prices are so high in the UK, with marginal wholesale costs based on price of gas, even though we're now using cheaper renewables.

Savings from local pricing get a mention at around 10"45'

[meldrewreborn]

@geoffers

its been recognised for years that the way electricity prices are set with the most expensive offer price accepted setting the rate for all suppliers doesn’t work to consumers benefit. But while it’s been looked at, no effective adjustments have been put in place While renewable energy generation is unable to meet daytime demand in full, and even worse in periods of low wind, gas generation plant is required. And if that plant operates for only part of the day the fixed cost from when it is idle have to be recovered when it is actually called upon.

Some of the generators are making excess profits, and the windfall taxes take much of that profit. While that’s good for the government, essentially that taxation comes from electricity customers paying high prices.
Those who complain about unfairness in all this are absolutely correct.

[meldrewreborn]

An alternative to paying extortionate gas generation prices would be to refuse to pay, announcing to the public what the generators are doing , warning of random power cuts and so expose the culprits to public ridicule and scorn. Nationalisation, or better still public control per Scunthorpe steel works could also work.

I don’t agree with all the points in the video which was very one sided with details being exaggerated for emphasis, the general thrust was correct. Not much attention to green levies, or social programmes being financed from energy companies - but paid for by all customers.

[wizzo227]

Consumers who look into this are presently disgusted by the inability of the present electricity market to pass through the very low CfD price paid to mainstream renewables as a correspondingly low price for electricity at times when the renewables are available, particularly the local ones. It seems that some invisible middleman or broker has a desk job getting renewables to sign up for a lowish CfD price and then pockets the gas-defined high price-as-cleared. Except for one big wind farm who found a loophole in their CfD contract, renewables don't usually get the high wholesale market price when it goes high. Then consumers don't usually get a low electricity price when wholesale prices go low. Where does all that money end up? If that document on zonal pricing looks complicated, it might be because someone doesn't want to say where all that money ends up.

[meldrewreborn]

@wizzo227

My understanding of the CfD arrangement is that generators pay back if the earn more than the strike price, and get paid if they earn less than the strike price. Fair enough so far, but who is the other side of the deal? If it’s the government, are they pocketing funds from high electricity prices? At our expense.

[meldrewreborn]

So, the other side is the Low carbon contracts company owned by the DENZ. From what I can make out CfD payments or credits are financed via levies (positive or negative) on the other generators, adjusted quarterly.

I think (assume?) that the CfD prices are generally higher than the half hourly strike prices and so payments are made under CfD. These are then recovered by the levy on the other generators, but the contra also applies.

so in general terms the answer to the question posed above the variable prices paid to wind generators are included in our overall bills. Whether they’re low or high is a matter perhaps of opinion.
@wizzo227. I hope that helps just a little.

[wizzo227]

Originally Posted by meldrewreborn

So, the other side is the Low carbon contracts company owned by the DENZ.

That gets interesting, because that would mean that for two years straight the MP's in office were echoing the grumbles of the hard hit everyday customer about cost of living and how unaffordable electricity bills had tripled. Now if at the same time a DENZ desk were being the middleman who bought renewable electricity at the various CfD prices to which they'd signed up the renewables, and immediately sold that same electricity at the market rate defined by gas price during the start of the Ukraine troubles, defining the perpetually high 'wholesale' price which goes into electricity bills. What then, are our elected representatives for if they can't even dispute how a commodity price had been commanded by a Whitehall desk? All they did was to get a "price cap" at about double what electricity had previously cost, and then gone on the news bragging about their generosity to help out the public with a price cap.

All this time the politicians of a certain colour were pontificating about market prices whilst sitting on considerable profits where they collected markup by buying electricity at CfD price and selling the same at market price. That is even worse than a command economy. I heard a useful phrase from someone disreputable. "kleptocracy"; rule by those who steal from the plebs.

[meldrewreborn]

@wizzo227. I don’t read it the same way. The CfD arrangements guarantee prices for the suppliers, financed by the consumer. The idea is to guarantee new renewable energy each year which probably wouldn’t be commissioned without that guaranteed return on long term investment decisions.

Therefore the only involvement by government was the Truss inspired Energy price guarantee which operated for 9 months.

the price cap was originally introduced to prevent the customers who don’t switch supplier or tariffs from being ripped off - they were being effectively punished by suppliers for their loyalty. The price cap was a tariff to avoid until the energy crisis completely stopped competition between suppliers. Now competition is returning to the market with fix price contracts up to 15% below the April price cap apparently available now.

I think the idea that government could wave a magic wand and reduce our energy prices is pure fantasy. And even if they did, where do Governments get their money from?