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Utilities & Environmental

Energy Prices and Delusion

By 13th March 2013February 15th, 2022No Comments



Posted by: Tim Halfhead

On Saturday I met a Conservative MP whose primary message was that things in our teetering economy are improving. The media just choose not to report them. As evidence, he cited the February new cars sales increase (7% year on year) and falling unemployment figures. When asked what the Government was doing to help the consumer, he made much of the commitment to hold down energy prices for households (there was no mention of business).

Yesterday gas prices hit a 13 month high. 5 coal fired power stations are being closed in the next few months to satisfy EEC environmental regulations, taking about 17% of the capacity out of the National Grid. The head of Ofgem has said that these will have to be replaced by gas fired stations over the next few years because any increase in nuclear capacity is at least 7 years away.

Wind farms are costing us, not saving us and as we all know only contribute when the wind blows.

Add the falling value of the pound, the necessity to import increasing amounts of gas as North Sea supplies dwindle, the unlikelihood of fracking contributing anything to national supplies in the foreseeable future, if ever, and the rising green taxes imposed by politicians and what we have is a scenario where I find it impossible to predict anything other than prices rising strongly for years.

If the government really thinks it can hold back prices for domestic customers, the only way this could be done is through subsidisation. By whom? The consumers themselves, as taxpayers? Business? Certainly not the energy industry as that would bring the urgently needed investment in new power generation and infrastructure to an instant halt.

So what is a business or organisation to do in these circumstances? My advice is to engage an expert such as an Auditel consultant to do two things for you.

Firstly to secure the best possible deal for you out there dependent on your circumstances. We know where to find these and following analysis of your needs and consumption patterns we are able to advise on length of contact and other issues. For instance, last week I negotiated a gas price of 3.802 pence per kWh for a 12 month contract for a client. He was inclined to take it until I pointed out that a 2 year contract at 3.845 pence, just 1.12% more than the one year price, was a screaming bargain as long as you believe that gas prices will rise by more than 0.75% a year.

The second thing an expert will do for you will be to assess how to reduce your energy consumption and whether you can generate energy for yourself. Some of this can be really simple and inexpensive while other actions will require investment but all are designed to achieve payback within your specified time frame.

Gas prices in the US have fallen by 40% over the last few years as a result of the extraordinary contribution made by fracking, delighting consumers and massively enhancing the competitiveness of their manufacturing sector. That ain’t going to happen here but someone who knows their stuff can make a massive difference to your prospects by securing you best value in the energy market and helping you to use significantly less of the stuff in the future.