Climate policies blamed for rising UK electricity prices

Nothing new there perhaps but, like the boiling frog, the reality of an endless upward ratchet of climate charges on bills may still not have fully sunk in with some of the public yet.

Any doubt that increases in UK electricity prices are the result of energy and climate policies, rather than underlying wholesale energy costs, is firmly set aside by the recent announcement from Opus Energy that it must increase its prices to consumers by 7.5% even to those on Fixed Term contracts because of sharply rising “pass through” costs, namely subsidies to renewables, grid management, and the Capacity Market.

Opus Energy, part of the Drax Group and winner of the British Small Business award for Energy Provider of the Year (2017), has written to customers in the last week announcing a 7.5% increase in electricity supply charges.

A copy of this letter has been shown to me by one such customer, together with a copy of a similar letter sent in March 2017 announcing an increase of 2.9%, a combined increase of just under 11% in the space of year.

Since these substantial increases apply even to those on “fixed term” contracts, Opus has had to explain its reasons, and in doing so it has usefully provided clear evidence that it is government energy and climate policies that are to blame, not underlying energy costs.

In its most recent letter, of 27 March 2018, Opus explains that its charges “reflect the cost of your energy, which we fixed at the beginning of your contract, and non-energy costs, which are variable and outside of our control.”

The customer who wrote to me about this matter admits, ruefully, that he failed to understand the contract properly, and imagined that he had a fixed price deal, when in fact the contract clearly shows that only one element, that flowing from the wholesale price, was fixed.

In what used to be normal circumstances, his mistake would not have mattered much or at all, since until relatively recently it was rises in the conventional energy cost that a consumer might reasonably fear. The current situation is very different, and wholesale costs are of declining importance in the rising retail price. In this new world, all customers should be asking salespeople for black and white clarity as well as checking the wording of any “fixed” contract in order to ensure that it really is attractive as it appears to be. The threat now is from policy costs.

Perhaps realising that their customers will be surprised by the announcement, Opus goes on to put the blame firmly on government. “Non-energy costs”, they write “cover the cost of transporting your energy to you and provide support for Government initiatives and interventions in the energy industry, such as climate change policies”.

Continued here.

via Tallbloke’s Talkshop

April 3, 2018 at 03:42AM

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