Tooter
Well-Known Member
So I just went to check my latest electric bill and was unable to access my suppliers website...turns out it's down. Then I checked my email and they have only gone under. Eek!
Makes for pretty grim reading, I had no idea the UK energy market was in such a mess!! Has anyone noticed a significant raise in prices recently?
'Pressures will continue to rise in the market as wholesale energy prices have soared to record levels from what has been a 99 percentile move off the back of an increase in extreme weather conditions leading to a global gas supply shortage, inability to provide timely and necessary generator maintenance causing multiple sites to be taken offline simultaneously, lower exports from Russia and rising demand.
To put this in some perspective, prices in the UK have recently hit over 157 pence per therm compared to less than 30 pence per therm one year ago. Power prices closely follow the gas price and have climbed to an unprecedented level of over £540 per MwH. This is more than four times their normal level over the past decade. This has meant that National Grid have asked coal-fired power stations to switch on to help manage demand.
Indeed, it may be worth noting that testing of the Norwegian electricity interconnector continued last week, exporting power out of the UK, even though the UK power market was experiencing a tight system and prices well over £3000 per MWh!
Graph 1 – (Month Ahead Prices. Daily view 14/09/20 - 01/10/21) below, clearly shows the rise in wholesale power over the past year reaching highs of over £145 per MWh just last week however, this has now spiked further to over £540 per MWh as previously discussed.
You may be aware last year OFGEM announced that all suppliers where required to offer extended payment terms and be more lenient with the collection of debt due to the pandemic, something they are asking to continue into this winter. Utility Point has always supported all its members and understands the variability of vulnerability and that it is not static, supporting many of our members through hard and uncertain times. Unfortunately, this extra support has meant an increase in debt and deficit.
On top of all this the price cap on default tariffs which was introduced to limit the amount suppliers can charge customers has not been covering the costs of supplying energy which means that every supplier is undercharging for energy and that the fair cost for energy that OFGEM was trying to encourage is actually well under the value at which it costs to supply. Although the rise in the level of the price cap is set to increase by £139 from October to reflect rising wholesale costs, bringing the average dual fuel bill to £1,277, this is still over £200 below the cost to supply the energy and it has been impossible to hedge in line with the way the price cap is calculated making the whole market unsustainable to operate in. Indeed, in most cases the only reason that suppliers end up charging more for energy than it costs is to offset the cost of debt and the collection of debt which is a major issue in the industry and one that requires a rethink as those that can, and do pay, end up paying for those that don’t pay.
This toxic mix of circumstances and lack of commercial understanding from the certain powers has made it impossible to continue, indeed the only real outcome for consumers, which will be felt in the coming year, is that prices will rise for the very people that they are trying to protect.
Thus, it is due to this perfect storm and with great sadness we close our doors.'
Makes for pretty grim reading, I had no idea the UK energy market was in such a mess!! Has anyone noticed a significant raise in prices recently?
'Pressures will continue to rise in the market as wholesale energy prices have soared to record levels from what has been a 99 percentile move off the back of an increase in extreme weather conditions leading to a global gas supply shortage, inability to provide timely and necessary generator maintenance causing multiple sites to be taken offline simultaneously, lower exports from Russia and rising demand.
To put this in some perspective, prices in the UK have recently hit over 157 pence per therm compared to less than 30 pence per therm one year ago. Power prices closely follow the gas price and have climbed to an unprecedented level of over £540 per MwH. This is more than four times their normal level over the past decade. This has meant that National Grid have asked coal-fired power stations to switch on to help manage demand.
Indeed, it may be worth noting that testing of the Norwegian electricity interconnector continued last week, exporting power out of the UK, even though the UK power market was experiencing a tight system and prices well over £3000 per MWh!
Graph 1 – (Month Ahead Prices. Daily view 14/09/20 - 01/10/21) below, clearly shows the rise in wholesale power over the past year reaching highs of over £145 per MWh just last week however, this has now spiked further to over £540 per MWh as previously discussed.
You may be aware last year OFGEM announced that all suppliers where required to offer extended payment terms and be more lenient with the collection of debt due to the pandemic, something they are asking to continue into this winter. Utility Point has always supported all its members and understands the variability of vulnerability and that it is not static, supporting many of our members through hard and uncertain times. Unfortunately, this extra support has meant an increase in debt and deficit.
On top of all this the price cap on default tariffs which was introduced to limit the amount suppliers can charge customers has not been covering the costs of supplying energy which means that every supplier is undercharging for energy and that the fair cost for energy that OFGEM was trying to encourage is actually well under the value at which it costs to supply. Although the rise in the level of the price cap is set to increase by £139 from October to reflect rising wholesale costs, bringing the average dual fuel bill to £1,277, this is still over £200 below the cost to supply the energy and it has been impossible to hedge in line with the way the price cap is calculated making the whole market unsustainable to operate in. Indeed, in most cases the only reason that suppliers end up charging more for energy than it costs is to offset the cost of debt and the collection of debt which is a major issue in the industry and one that requires a rethink as those that can, and do pay, end up paying for those that don’t pay.
This toxic mix of circumstances and lack of commercial understanding from the certain powers has made it impossible to continue, indeed the only real outcome for consumers, which will be felt in the coming year, is that prices will rise for the very people that they are trying to protect.
Thus, it is due to this perfect storm and with great sadness we close our doors.'
