Electricity Price

[JohnW2]

Am I being dim, naive or what?

As I understand it, the problem underlying the current 'fuel cost crisis' is a massive increase in the wholesale price of gas/oil.

However, gas is only responsible for about one-third of electricity generation, so one would expect that the impact of this would mean, even 'overall', that the increase in price of electricity should not be much more than about one-third of the increase in gas prices - and for those suppliers who boast that much (maybe even 'all' in some cases?) of the electricity 'they buy' comes from 'renewable' sources, the increase in electricity prices ought to be considerably less than even that.

What am I missing?

Kind Regards, John

 

[ktuludays]

We get screwed over by the rich constantly. They hike the prices because they can.

 

[EFLImpudence]

https://www.theguardian.com/business/2022/jan/14/france-edf-cap-household-energy-bills

 

[JohnW2]

We get screwed over by the rich constantly. They hike the prices because they can.

That's just a throwaway 'rubber stamp' political comment, which can be wheeled out in relation to almost anything.

The price rise we're seeing is unprecedented. No matter how rich 'they' may be, they must realise that it was going to come under considerably scrutiny, so must believe that they can justify it - it's just that I am missing what that justification could be. The profits of many/most of the suppliers are falling rapidly, not rising, so they will not be so rich for long!

Kind Regards, John

 

[JohnW2]

https://www.theguardian.com/business/2022/jan/14/france-edf-cap-household-energy-bills

That still does not explain why an increase in gas prices results in a massive increase in electricity prices, particularly in a country like France where high proportion of the electricity comes from nuclear generation, does it?

Kind Regards, John

 

[EFLImpudence]

That still does not explain why an increase in gas prices results in a massive increase in electricity prices,

Unless you have the actual figures, it must be difficult to calculate.

How much is a massive increase?

particularly in a country like France where high proportion of the electricity comes from nuclear generation, does it?

Isn't that the point? EDF would have charged the "going rate" even though their costs might be the same.

 

[Munroast]

Am I being dim, naive or what?

As I understand it, the problem underlying the current 'fuel cost crisis' is a massive increase in the wholesale price of gas/oil.

However, gas is only responsible for about one-third of electricity generation, so one would expect that the impact of this would mean, even 'overall', that the increase in price of electricity should not be much more than about one-third of the increase in gas prices - and for those suppliers who boast that much (maybe even 'all' in some cases?) of the electricity 'they buy' comes from 'renewable' sources, the increase in electricity prices ought to be considerably less than even that.

What am I missing?

Kind Regards, John

The new price caps are up on the ofgen page
https://www.ofgem.gov.uk/informatio...seholds/check-if-energy-price-cap-affects-you

Gas up 75% from 4 to 7p
Electric up 33% from 21 to 28p

Gas Standing Charge up 4% from 26 to 27p
Electric Standing charge up 80% from 25 to 45p

so yes, as it should be, electric is going up proportionally with the gas used in its production - however the electric standing charge is either a misprint or ?

 

[plugwash]

Afaict

The price paid for natural gas imported to Europe is roughly quadruple what it was a year ago https://ycharts.com/indicators/europe_natural_gas_price

Now of course the cost of the raw fuel imported to Europe is only part of the final cost of gas delivered to a customer or power generated by a gas-fired power plant but still a quadrupling in price is a big deal.

Market prices are driven by marginal production, so the wholesale market price will be driven largely by the cost of gas based generation which most of the time forms the marginal generation.

Having said that, most renewables were subsidized and apparently in at least some cases it's not a fixed subsidy, but a "contract for differences". if the wholesale price is below the "strike price" (which is was until recently) the renewable generator gets paid extra by the "suppliers" but if the wholesale price is above the strike price then they have to pay the "suppliers" back so this may bring costs to the suppliers down a little.

I agree there is something dubious about the "green" suppliers. My guess is that it comes down to who subsidizes renewable generation being disconnected from who "buys" the renewable energy. So suppliers can "buy" and resell renewable electricity without having to pay more than the normal level of renewable energy subsidies.

I'm no expert on the French electricity market, but from what I can tell while there is some limited competition EDF are still the dominant supplier and are still state owned and vertically integrated. So if the french order EDF to sell electricity to french households at below market rates rather than selling it on the wider European market at the going rate then EDF can still survive.

 

[JohnW2]

The new price caps are up on the ofgen page
https://www.ofgem.gov.uk/informatio...seholds/check-if-energy-price-cap-affects-you
Gas up 75% from 4 to 7p
Electric up 33% from 21 to 28p
.... so yes, as it should be, electric is going up proportionally with the gas used in its production - however the electric standing charge is either a misprint or ?

Very many thanks. That completely answers my question - or, rather, indicates that my question was based on a false premise, and therefore didn't need asking in the first place!

I hadn't bothered to look at the actual figures, and was going only by what I had heard in the media, which seemed (at least, to me) to imply that both gas and electricity caps' (hence, in practice, prices) were going to rise by about 50%.

However, it's clear that such is not the case and that, as you say, the electricity/gas differential (in price rises) is actually very close to 'as it should be'.

This will, of course, at least temporarily substantially reduce the differential between gas and electricity prices (as sources of energy) that some people always seem to be going on about!

Thanks again.

I withdraw my question

Kind Regards, John