Energy price cap, domestic and other merged topic

[clv101]

There are some things that can be done. Those crazy energy prices are set at the margin largely by the international gas price. Not a lot the British government can do about that - but they could cap the prices for inframarginal electricity generation technologies. That would in effect, reduce the profitability of renewables like wind and solar plus also legacy nuclear and hydropower. This would significantly lower the *average* cost paid by the retailers and therefore the price paid by consumers.

[BritDownUnder]

It's a case of failure to plan is planning to fail.
These shortages have all been predictable.

On the price rises not happening I think something will give but probably that will involve rolling blackouts, nationalisation (if the government is sufficiently competent to do this - I have my doubts) and large numbers of disconnections.

Sadly the ownership of the electricity production has been moved overseas and the indigenous production has been closed and not replaced.
In the long term it looks like offshore wind and tidal generation and storage will be the only thing that can save the country.

[RevdTess]

There are some things that can be done. Those crazy energy prices are set at the margin largely by the international gas price. Not a lot the British government can do about that - but they could cap the prices for inframarginal electricity generation technologies. That would in effect, reduce the profitability of renewables like wind and solar plus also legacy nuclear and hydropower. This would significantly lower the *average* cost paid by the retailers and therefore the price paid by consumers.

The original intention of the electricity market pricing system was to have all producers receive the same as the most expensive marginal producer. This meant that nuclear power stations could offer their electricity at £0/MWh and ensure they were always called on by the grid operator (because shutting down nuclear power stations is tough) but still got paid the same marginal price as everyone else. It also meant that cheaper forms of electricity would make excess profits leading to further investment in said technologies until the expensive sources of power are priced out.

Unfortunately, the present situation wasn't really envisaged, where the extremely expensive gas simply can't be replaced in any reasonable timescale, whatever its price. So the options seem to be either a windfall tax on cheaper sources of electricity, or cap the prices they can receive from the grid, as you suggest.

Perhaps the only real difference between these two options is ideological. I suspect the former will be more attractive to a Labour govt, while the latter might appeal to the Tories. I wonder how they could decide what level to set a market cap for non-gas electricity production, and whether gas prices would simply go up even more as a result, as electricity becomes more affordable on average.

[Vortex2]

Hey it's Tess ... how are things going?

[RevdTess]

Hey it's Tess ... how are things going?

Over in Kent now, worrying about the cost of heating 800 year old churches with no price cap. And an old rectory which I'm personally responsible for.

Meanwhile still looking for a retirement 'forever home' somewhere in the Scottish highlands and islands with eco credentials and good community!

[Vortex2]

and good community!

TBH my wife & I only see community nowadays either at our church or on the Web with scattered (mostly American) friends.

[RenewableCandy]

There's now talk of setting aside £2,000,000,000 (!) to subsidise people's energy bills. It was on Ch4 News tonight. Even while the shiny new Truss was going on about Free Markets.

[clv101]

Way more than that, total cost closer to £200bn.

[Vortex2]

If the govt pays our electric bills, then the panic will be over.

People will stop being careful with usage, which could lead to shortages or even blackouts over winter.

In the meantime the price of PV, firewood and other useful items will drop back .. so make the most of the price reductions!

The long term effects of the huge debt build up will, I assume, weaken the pound and will lead to a lot of inflation.

We should also expect shortages in the shops, as many factories here and in Europe will close in the face of energy prices and/or shortages.

[UndercoverElephant]

Way more than that, total cost closer to £200bn.

Given the current situation, that looks to me like the first serious risk of sliding towards hyperinflation. Pure "magic money tree" economics.

[UndercoverElephant]

If the govt pays our electric bills, then the panic will be over.

For now. But then it will become apparent that this solution does not actually work, especially if it is widely implemented across the western world. All it will do is further inflate gas prices and fuel even more inflation elsewhere too.

Truss is making absolutely fundamental economic mistakes here. She genuinely believes this is a crisis we can "get through" and that the gargantuan debt she is proposing can be paid off later out of future growth.

[Default0ptions]

We all know that it’s downhill energy wise from here. I think it’s happened too fast for everyone to catch up with and - hyperinflationary though it is - a price freeze is the only possible response from government at this stage.

What a price freeze fails to do though is encourage anyone to cut back on their energy use. In fact it encourages profligacy.

My only practical suggestions are:

1, Warm the person, not the room.
So - radiant heat and more clothes

2, If you don’t want a condensation and mould nightmare in the rooms you leave unheated - crack the windows open a bit and let the house breathe

[UndercoverElephant]

What a price freeze fails to do though is encourage anyone to cut back on their energy use. In fact it encourages profligacy.

Exactly. It is the total, outright denial of the basic principles of free market economics. The message it sends is "fundamental change is not necessary; the magic money tree will always be there."

[Vortex2]

So - radiant heat

Switzerland has banned radiant heaters.

Alos max 19C on the thermostat.

Fines or up to 3 years in jail for offenders.

[mr brightside]

This might sound simplistic, but if i isolate my own gas supply before the meter at the ball valve i still pay the standing charges, don't i? If i don't want to pay any standing charges i have to go a lot further, right?