Cost of living - 2022!

[Chillidoggy]

And whether you live in a medieval building.

[LotusLeftLotusRight]

Correction to my December energy usage. It was £288, so £9.29 per day. I didn’t have the final details. £121 electricity and £167 gas.

Strangely the lowest gas usage day when we were at home was Christmas Day, despite having both gas ovens on all morning and the hob burners for saucepans.

 

[Rambo]

9 hours ago, Bibs said:

December gas - £414 & electricity £174. Just over £600 / month!

You must have a cannabis farm in the garden 🌿

[Bibs]

We'll known for its high gas consumption, clearly! 

[PaulCP]

For Dec 

Gas £102; Electricity £123 including £35 for PHEV car charging

but I am still on the 2 year fixed term contract I signed up to in Aug 2021. I just converted the usage to represent current variable rate caped tariffs and needed a very stiff drink☹️

[oneshot]

December bill for electricity - £718 gas - we are on a tank of LPG that was purchased back in October.

That does of course include the cattery where we had 2 air con units running 24/7 to provide the heating in 4 blocks.

[LotusLeftLotusRight]

Some worrying December energy bills reported on here. The UK Government and Energy Industry have come up with this £2500 per year typical average household bill as basis for their policy. That equates to £208 per month. I think a lot of people are in for a much bigger shock than they realise and will end up paying far more than this during the winter months and then the £67 monthly credit will end from April onwards so keeping bills high. It’s not a cap on bills, just the price per kw/h. I think a lot of people don’t appreciate this.

[Sparky]

I've been hollering this at friends and family for some time.  A lot of people have their heads buried in the sand regarding energy and fixed mortgages.  Pretty sure I'll be bailing out at least one daughter.

[Kimbers]

Currently £360 a month Electric and oil is about £100 a month.

That includes me and Wendy working from home and our offices being heated by electric radiators, plus charging the car.

I upped my kids rent by £50 each so that covered the increase but its hard to see how I can retire early as planned, though the downsizing of the house will help.

 

[andydclements]

I think our oil for a year will be around £1500,  and at the moment electricity is around £120, but will drop back in terms of usage (but not necessarily cost by the time of the next increase), so coming out around £2500 or thereabouts, but that's before the gov't subsidies such as amount to be paid via electricity company for those not on mains gas.

[internets]

It’s ok the gas prices are coming down, honest the energy companies will pass straight it on with no delay much like they did with petrol 🤨

https://www.standard.co.uk/business/gas-prices-back-under-levels-seen-before-russia-s-invasion-of-ukraine-b1050460.html

 

[Bibs]

I'm amazed that the govt hasn't untied gas prices with electricity. Times have moved on, the energy companies profits still seem more important though. 

[LotusLeftLotusRight]

So wholesale gas prices have steadily fallen by 80% since late August and yet we are still being billed at super high prices!

[C8RKH]

14 minutes ago, Bibs said:

I'm amazed that the govt hasn't untied gas prices with electricity. Times have moved on, the energy companies profits still seem more important though. 

In the UK we have a price system that is based on marginality, and where possible we try to use the cheapest forms of generation first, as per this table, going from left to right. However, we do not have enough renewable/nuclear/coal generation capacity so often we rely on Gas Generation to complete the demand satisfaction. Gas therefore sets the price of electricity, because the electricity price in every half hour period is set by the "marginal cost" of the last generation fuel type to be turned off to meet the falling demand, which in the UK in invariably a gas power plant.

The best analogy I have found is: "it's like a penalty shootout in football, every team selects a list of individuals (generation type) in order of preference, with usually the best individuals at penalties selected first (i.e., renewables) but it is usually the individua who steps up last who has the final say, often deciding the fate of the result (so as ever with England it's all down to penalties!).

You could change the wholesale system, but boy, that would be a big job to do and would take years due to the complexities of the various business models, subsidies, fixed costs, stranded assets etc.

The profits you mention @Bibs for the energy companies are largely being used to fund the energy transition to renewables (and to reward shareholders which include most of the UK pension providers), including wind, solar and to provide infrastructure to support EV's etc. That "investment" has to come from somewhere and if someone isn't making a profit it needs to come from "profits", otherwise, it's just another hand outstretched with another begging bowl under the leaves of the Governments "money tree".  Yes, you could use a tax on energy profits to fill those begging bowls, but then there is no guarantee that that money will be used to provide long term renewable, and therefore lower cost, energy supply, as opposed to it being diverted to benefits, the NHS, or any one of the other thousands of "needs" that the UK Government needs to find funding for. But yep, harp on about energy company profits as that's just an easy throw away that needs little thought to justify.

20 minutes ago, LotusLeftLotusRight said:

So wholesale gas prices have steadily fallen by 80% since late August and yet we are still being billed at super high prices!

You do of course understand that a lot of energy is "price hedged" forward, sometimes in the case of gas for 2, 3, 4 or even 5 years?  The counter to this was a few years ago E.on (the whole group not just E.on UK) almost going bankrupt and out of business as it had to swallow huge losses from a flawed hedging decision on Russian Gas. The pendulum can swing both ways.  

[TdM]

28 minutes ago, Bibs said:

I'm amazed that the govt hasn't untied gas prices with electricity. Times have moved on, the energy companies profits still seem more important though. 

Agreed considering how much we get from renewables now, these need to be decoupled. I know they were looking at it but not sure they've settled on anything.

The spot price on gas is certainly down, the argument I've seen is that everyone filled their tanks at any price in the summer so cheap prices now aren't passed on because they need to cover the expenditure from summer.

My question with that is that we were told in the UK that we had got rid of all of our gas tanks and storage so we'd have to pay 'live' prices whilst Europe with their tanks would be able to steady the prices if it went up over winter. If that's the case then we should now be getting the cheap rates whilst Europe pays more, no?

[Bibs]

Gas prices are down 80% but we're still paying the charges that were set when it was at it's peak and are staring down the barrel of another increase but it's ok as the energy companies are spending our massively inflated bills on R&D?

6 minutes ago, C8RKH said:

You do of course understand that a lot of energy is "price hedged" forward, sometimes in the case of gas for 2, 3, 4 or even 5 years?

While I appreciate that this is the case, these rises are a result of the Russian invasion and lack of cheap gas/crude from them into Europe, the price rises last year were a knee jerk to this and not offset by hedged futures. Can these paid forward prices be affected by such an exception or are the fixed at the point of contract no matter what comes? 

[andydclements]

11 minutes ago, C8RKH said:

You do of course understand that a lot of energy is "price hedged" forward, sometimes in the case of gas for 2, 3, 4 or even 5 years?  The counter to this was a few years ago E.on (the whole group not just E.on UK) almost going bankrupt and out of business as it had to swallow huge losses from a flawed hedging decision on Russian Gas. The pendulum can swing both ways.  

Completely agree, and to add to that, the mechanism of the price cap means that in a market where long-term prices generally increase, the utility companies don't' make a lot of profit on that electricity which is gas-powered, so unless we want those firms to be financially weak then we need then to re-stock their financial reserves which they can do as the wholesale  prices occasionally fall and we consumers await the retail cap prices to follow on their planned cycle.

[LotusLeftLotusRight]

Yeah funny how I used to make a decision to lock in to a 2 year energy contract which the provider would hedge forward and only leave me at risk of overpaying if prices fell, but now that I have to go with their standard variable rate, I see no drop in unit gas prices, despite wholesale gas prices falling quickly and consistently by 80% over 4 months. That’s the energy provider just having his cake and eating it, as far as I am concerned.

When customer prices were rising exponentially, we were always told by the energy companies that it was the wholesale price’s fault. Now it’s fallen back to pre invasion levels, they’ve gone very quiet about it.

[C8RKH]

1 hour ago, Bibs said:

Gas prices are down 80% but we're still paying the charges that were set when it was at it's peak and are staring down the barrel of another increase but it's ok as the energy companies are spending our massively inflated bills on R&D?

While I appreciate that this is the case, these rises are a result of the Russian invasion and lack of cheap gas/crude from them into Europe, the price rises last year were a knee jerk to this and not offset by hedged futures. Can these paid forward prices be affected by such an exception or are the fixed at the point of contract no matter what comes? 

It really depends @Bibs - in the E.on case of a few years back I quoted the issue was that E.on bought and hedged on a 5 year (iirc) rising gas price, and after year 1 the price dropped dramatically but they were forced under the contract to pay the higher price for the gas. It's probably similar to your business in that if you quote for a drone survey, and provide a price guarantee, then that, as the supplier, is the price you would expect to be paid.  A contract is a contract is it not? I believe in E.on's case they had to negotiate an exit fee to break free.

[C8RKH]

1 hour ago, LotusLeftLotusRight said:

That’s the energy provider just having his cake and eating it, as far as I am concerned.

So who are you calling the energy provider, who has the cake and who is eating it?

 

Energy companies extract the gas and sell it wholesale.

Energy generators take the raw product and use it to make electricity.

Gas transmission companies take a fee for transporting the gas to/from storage to the place of consumption 

Energy providers are basically retailers. They take wholesale gas/electricity and then they sell it on, often for a profit.

The former (energy companies, energy generstors, transmission/distribution companies) are making billions.

The latter (energy providers or retailers) have been forced to sell you energy at a LOWER price than the market due to the Governments price tariff restrictions. So they've been, on the whole, making and racking up huge losses. Hmmm, so given that, I can see their reluctance to quickly lower their tariffs as their own savings accounts are empty and have been drained, and they need to replenish them in order to restore cash flow and stay in business.  Taking the piss is when they take too long to lower and therefore profit grossly unfairly. They're not there, yet!

Taken from OFGEM, the last full year figures (below) are for 2021, it got a lot worse for everyone in 2022, so it will be interesting to see how the losses continued... The aggregate pre-tax profit for the large suppliers was negative 2.55%. How long would you run a business for that delivered that sort of pre-tax loss?  How much would you invest in that business for the future, given the loss, and where would you get the money from to invest?

Next you'll all be bleating about how "foreign" companies own our energy retailers. Well, it's a probably a good job as otherwise they may all have gone bust right now! For years, E.on, RWE, Iberdrola etc syphoned off millions in dividends from their UK operations. Now though, the jobs are being "saved" by stronger foreign parent companies who are dipping into their reserves and profits from elsewhere.

Energy retailers, damned if they do. Damned if they don't. Personally, I'd be happy to see every energy retailer in the UK go bust. The UK govt step in as provider of last resort and we have 1 tariff for everyone in the UK. No subsidies. And those in energy poverty covered by the benefits system.

Not sure how the thousands of people who would lose their jobs, careers, livelihoods etc would react to that. But hey, they're all heartless scumbags according to many so who cares, right?

Yup, let's bash the utilities. All of this is obviously their fault, and theirs alone. Nothing to do with people living on cheap credit, buying cars and fashion and tech as opposed to insulating and upgrading their homes etc. I mean, an Audi on the drive, on lease or credit, shows everyone you've made it far more than a well maintained, insulated home ever would. 

 

 

[oneshot]

Just had 1700 litres of LPG delivered - £803

[Bibs]

Shell are on course to announce £83bn in annual profits on a £295bn turnover. 28% margin, plenty of businesses would like to see that!  

Nice to see they're on our side!

https://www.theguardian.com/business/2023/jan/29/shell-and-bp-face-tough-job-of-keeping-customers-and-investors-happy-as-profits-roll-in

[jep]

Devil's advocate - I don't recall Shell asking for taxpayer money when oil was minus $37 a barrel in 2020 due to the global glut. 

Oil is an expensive and risky business.

I don't have the answers but the discussion is more complicated than they appear at first sight. 

Justin 

 

[C8RKH]

It's the politics of envy. You need strong companies, but then everyone hates to see companies make profits.  Unless of course it is their own company.

The energy transition can be paid for in one of two ways - by Governments which will come of taxation (of people an businesses) or by the profits of energy businesses. Let me know which you'd prepare as no matter what someone needs to pay.

It's like BP everyone hates them making a profit until they realise a big chunk of that is probably tied up in their pension!

[MJON]

More profit means more tax revenue even when your name is Nadim 😳