ENERGY companies have been accused of overcharging customers by more than £1 billion by exploiting changes in gas and electricity prices.
Millions of households are paying an estimated £200 a year over the odds for fuel because firms are quick to pass on price increases when their wholesale costs rise but slow to cut prices when costs fall.
Last week Npower, Britain’s fourth largest supplier with 6m customers, raised the price of gas by 17.2% and electricity by 12.7%, blaming the sustained rise in wholesale energy costs since September. All the other big suppliers, including British Gas, the market leader, are expected to follow suit with increases of 10% to 15%.
However, when wholesale prices started falling in January 2006 it took the energy firms more than a year to start cutting customers’ tariffs - and, according to analysts, they did not reduce bills by as much as they ought to have done.
Joe Malinowski, of price comparison website TheEnergy Shop.com, said: “This industry has never passed on the full benefits of the falls in 2006, but has been very quick to pass on the latest increases.”
Analysts at another price comparison website, Energyhelpline.com, said consumers should have benefited from an additional 10% price fall last year, before tariffs started to increase again.
They calculated that household gas bills ought to have fallen by 30% in 2006, while electricity rates should have been cut by about 8%. In fact, gas bills went down by an average of 12.3%, while electricity costs fell by 3.8%.
Mark Todd, of Energyhelpline.com, said: “With the suppliers having failed to pass on the price drops from the wholesale market in 2006, the latest increases are not justifiable. Consumers are already paying at least £1 billion more than they should be.”
The disclosure comes as John Hutton, the energy secretary, said consumers faced the prospect of long-term rises in power bills as a result of measures to curb climate change emissions and improve energy security.
“A lot of what we are proposing will depend on the European emissions trading scheme, under which power generators will pay a price for emitting CO2,” said Hutton. “If the price is high enough then that will change the economics of nuclear power. There are likely to be long-term increases, but our power prices are among the lowest in Europe.”
Prices in Britain have, however, been rising much more rapidly than in the rest of Europe and Energywatch, the consumer watchdog, said comparisons between price levels in different countries were notoriously difficult.
The comparison firm uSwitch says suppliers withheld £177 in price cuts from every household in Britain last year. Npower, whose average dual-fuel bill now costs more than £1,000 a year, did not start cutting tariffs until April 2007 – a year after wholesale prices started falling.
The cut itself was announced in February 2007, so it took the firm almost 10 weeks to pass on the savings. The latest price rise - announced on Friday - came into effect a day later.
Malinowski points out that Centrica, the parent company of British Gas, announced a £533m operating profit in the first six months of 2007 and was making a 15% mark-up on wholesale and supply costs.
“This is an extraordinary margin which suggests it kept a large chunk of the wholesale market falls for itself,” he said.
A spokesperson for the Energy Retail Association said: “Britain’s energy suppliers buy their stock of electricity and gas years and months ahead of the day that they sell it to people’s homes.
“This is the reason that we have a time lag before changes in the wholesale price are fed through to customers. Let’s remember there was a substantial delay before energy suppliers passed on the rises which started four years ago.”
Ali Hussain and Jonathan Leake
full article
Wednesday, 9 January 2008
Gas giants find new way to push up prices
A round of punishing gas and electricity price rises has been set in motion, but reports of a 15% rise across the country do not tell the whole story. Some consumers will pay much more purely because of where they live.
Npower was the first supplier to raise prices, but the remaining members of the 'big six' – British Gas, Scottish & Southern Energy, Scottish Power, Powergen, and EDF Energy – are expected soon to follow suit.
The headlines were grabbed by Npower's 17.2% increase for gas and 12.7% increase for electricity, but hidden within the new pricing structure were regional variations that mean some regions will pay much more.
Users in London will pay an extra 21.7% for combined gas and electricity, while those in the North West will pay 20.8% more. Other regions, including the Midlands and Yorkshire, will pay less than the reported increase.
The discrepancies in price are due to suppliers applying, for the first time, regional variations in gas prices. Npower joined Scottish Power and Scottish & Southern Energy, who were each charging more to customer in the North West and less to those in Scotland.
Suppliers have justified the change by arguing that it costs more to deliver gas to some regions than to others. The distance the gas needs to be piped and the state of the pipes that carry the gas accounts for the differences.
However, consumer groups - who point out that changing suppliers does not mean a change in the gas that flows through the pipes - suggest that new pricing strategy is more to do with exploiting regions where customers have shown themselves to be reluctant to switch supplier. Suppliers see they can charge more in these regions with a lower risk that customers will seek a cheaper alternative.
Energywatch, the independent consumer watchdog for the energy industry said that the Npower move would create confusion. A spokesman said: 'Npower's move is likely to mean the development of regional gas markets with consumers having different unit costs for gas depending on where they live. This means more confusion for consumers in an already complex marketplace.
'To get a better deal, it is vital that they use postcode-based internet comparison sites to be certain they're getting advice specific to their location. Consumers should use the price comparison sites accredited by the energywatch Confidence Code.
Whatever the reasons for the differences the industry regulator, Ofgem, is reluctant to step in to prevent potential inequities in the system.
A spokesman for Ofgem said: 'We are not in the business of dictating how suppliers should set prices. If they become uncompetitive in a region they stand to lose customers.'
The increases applied by Npower will only affect its 6m customers, but customers of other suppliers could see similar regional variations if they apply the same logic when raising prices.
Ed Monk
full article
Npower was the first supplier to raise prices, but the remaining members of the 'big six' – British Gas, Scottish & Southern Energy, Scottish Power, Powergen, and EDF Energy – are expected soon to follow suit.
The headlines were grabbed by Npower's 17.2% increase for gas and 12.7% increase for electricity, but hidden within the new pricing structure were regional variations that mean some regions will pay much more.
Users in London will pay an extra 21.7% for combined gas and electricity, while those in the North West will pay 20.8% more. Other regions, including the Midlands and Yorkshire, will pay less than the reported increase.
The discrepancies in price are due to suppliers applying, for the first time, regional variations in gas prices. Npower joined Scottish Power and Scottish & Southern Energy, who were each charging more to customer in the North West and less to those in Scotland.
Suppliers have justified the change by arguing that it costs more to deliver gas to some regions than to others. The distance the gas needs to be piped and the state of the pipes that carry the gas accounts for the differences.
However, consumer groups - who point out that changing suppliers does not mean a change in the gas that flows through the pipes - suggest that new pricing strategy is more to do with exploiting regions where customers have shown themselves to be reluctant to switch supplier. Suppliers see they can charge more in these regions with a lower risk that customers will seek a cheaper alternative.
Energywatch, the independent consumer watchdog for the energy industry said that the Npower move would create confusion. A spokesman said: 'Npower's move is likely to mean the development of regional gas markets with consumers having different unit costs for gas depending on where they live. This means more confusion for consumers in an already complex marketplace.
'To get a better deal, it is vital that they use postcode-based internet comparison sites to be certain they're getting advice specific to their location. Consumers should use the price comparison sites accredited by the energywatch Confidence Code.
Whatever the reasons for the differences the industry regulator, Ofgem, is reluctant to step in to prevent potential inequities in the system.
A spokesman for Ofgem said: 'We are not in the business of dictating how suppliers should set prices. If they become uncompetitive in a region they stand to lose customers.'
The increases applied by Npower will only affect its 6m customers, but customers of other suppliers could see similar regional variations if they apply the same logic when raising prices.
Ed Monk
full article
Ten myths about nuclear power
The UK government is expected to announce tomorrow that it will give the green light to the building of new nuclear power stations in the UK - the first since the Sizewell ‘B’ station was completed in 1995. These are urgently needed to make up the shortfall in power supply as older nuclear stations are closed over the next few years.
Yet the decision is bound to be controversial - not helped by widespread misinformation about nuclear power. Greens opposing nuclear power muddle every issue from terrorism to uranium supplies, in order to besmirch the only proven safe and cost-effective way to generate large amounts of electricity that won’t produce large amounts of greenhouse gas emissions. One would think that greens don’t want a world with abundant energy and a stable climate!
These are some of the myths we are likely to hear from greens debating nuclear power over the next few weeks:
2) Nuclear is not a low-carbon option
Anti-nuclear campaigners claim that nuclear power contains ‘hidden emissions’ of greenhouse gases (GHGs) from uranium mining and reactor construction. But so do wind turbines, built from huge amounts of concrete, steel and plastic.
The OECD analysed the total lifetime releases of GHG from energy technologies and concluded that, taking into account mining of building materials, construction and energy production, nuclear is still a ‘lower carbon’ option than wind, solar or hydroelectric generation. For example, during its whole life cycle, nuclear power releases three to six grams of carbon per kiloWatthour (GC kWh) of electricity produced, compared with three to 10 GC/kWh for wind turbines, 105 GC/kWh for natural gas and 228 GC/kWh for lignite (‘dirty’ coal) (6).
Greens, exemplified by the Sustainable Development Commission, place their trust in ‘carbon capture and storage’ (CCS) to reduce the GHG emissions from coal and gas plants (7). But carbon capture is, at present, a myth. There is no functioning power station with CCS in the world – not even a demonstration plant – and if it did work, it would still greatly reduce the energy efficiency of any power station where it is installed.
4) Reactors produce too much waste
Contrary to environmentalists’ claims, Britain is not overwhelmed with radioactive waste and has no radioactive waste ‘problem’.
By 2040 there will be a total of 2,000 cubic metres of the most radioactive high-level waste (9), which would fit in a 13 x 13 x 13 metre hole – about the size of the foundations for one small wind turbine. Much of this high-level waste is actually a leftover from Britain’s atomic weapons programme. All of the UK’s intermediate and high-level radioactive waste for the past 50 years and the next 30 years would fit in just one Royal Albert Hall, an entertainment venue in London that holds 6,000 people (and which seems, for some reason, to have become the standard unit of measurement in debates about any kind of waste in the UK) (10).
The largest volume of waste from the nuclear power programme is low-level waste – concrete from outbuildings, car parks, construction materials, soil from the surroundings and so on. By 2100, there will be 473,000 cubic metres of such waste from decommissioned plants – enough to fill five Albert Halls (11).
Production of all the electricity consumed in a four-bedroom house for 70 years leaves about one teacup of high-level waste (12), and new nuclear build will not make any significant contribution to existing radioactive waste levels for 20-40 years.
Rob Johnston
full article
Yet the decision is bound to be controversial - not helped by widespread misinformation about nuclear power. Greens opposing nuclear power muddle every issue from terrorism to uranium supplies, in order to besmirch the only proven safe and cost-effective way to generate large amounts of electricity that won’t produce large amounts of greenhouse gas emissions. One would think that greens don’t want a world with abundant energy and a stable climate!
These are some of the myths we are likely to hear from greens debating nuclear power over the next few weeks:
2) Nuclear is not a low-carbon option
Anti-nuclear campaigners claim that nuclear power contains ‘hidden emissions’ of greenhouse gases (GHGs) from uranium mining and reactor construction. But so do wind turbines, built from huge amounts of concrete, steel and plastic.
The OECD analysed the total lifetime releases of GHG from energy technologies and concluded that, taking into account mining of building materials, construction and energy production, nuclear is still a ‘lower carbon’ option than wind, solar or hydroelectric generation. For example, during its whole life cycle, nuclear power releases three to six grams of carbon per kiloWatthour (GC kWh) of electricity produced, compared with three to 10 GC/kWh for wind turbines, 105 GC/kWh for natural gas and 228 GC/kWh for lignite (‘dirty’ coal) (6).
Greens, exemplified by the Sustainable Development Commission, place their trust in ‘carbon capture and storage’ (CCS) to reduce the GHG emissions from coal and gas plants (7). But carbon capture is, at present, a myth. There is no functioning power station with CCS in the world – not even a demonstration plant – and if it did work, it would still greatly reduce the energy efficiency of any power station where it is installed.
4) Reactors produce too much waste
Contrary to environmentalists’ claims, Britain is not overwhelmed with radioactive waste and has no radioactive waste ‘problem’.
By 2040 there will be a total of 2,000 cubic metres of the most radioactive high-level waste (9), which would fit in a 13 x 13 x 13 metre hole – about the size of the foundations for one small wind turbine. Much of this high-level waste is actually a leftover from Britain’s atomic weapons programme. All of the UK’s intermediate and high-level radioactive waste for the past 50 years and the next 30 years would fit in just one Royal Albert Hall, an entertainment venue in London that holds 6,000 people (and which seems, for some reason, to have become the standard unit of measurement in debates about any kind of waste in the UK) (10).
The largest volume of waste from the nuclear power programme is low-level waste – concrete from outbuildings, car parks, construction materials, soil from the surroundings and so on. By 2100, there will be 473,000 cubic metres of such waste from decommissioned plants – enough to fill five Albert Halls (11).
Production of all the electricity consumed in a four-bedroom house for 70 years leaves about one teacup of high-level waste (12), and new nuclear build will not make any significant contribution to existing radioactive waste levels for 20-40 years.
Rob Johnston
full article
Sunday, 6 January 2008
An energy saving bulb has gone - evacuate the room now!
Energy-saving light bulbs are so dangerous that everyone must leave the room for at least 15 minutes if one falls to the floor and breaks, a Government department warned yesterday.
The startling alert came as health experts also warned that toxic mercury inside the bulbs can aggravate a range of problems including migraines and dizziness.
And a leading dermatologist said tens of thousands of people with skin complaints will find it hard to tolerate being near the bulbs as they cause conditions such as eczema to flare up.
The Department for Environment warned shards of glass from broken bulbs should not be vacuumed up but instead swept away by someone wearing rubber gloves to protect them from the bulb's mercury content.
In addition, it said care should be taken not to inhale any dust and the broken pieces should be put in a sealed plastic bag for disposal at a council dump – not a normal household bin.
By MARTIN DELGADO
full article
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