The Energy Crisis

[-DL-]

https://www.google.com/amp/s/amp.thegua ... rgy-crisis

I'm a Bulb customer and the latest whispers in the news are that the government may nationalise them or bail them out as they're the largest provider that's in trouble.

I'm dreading to think how much our bills are going to increase if they do go under and we get shifted over to another provider so from a personal point of view, I would have no objection to government stepping in on this one.

So really, why is this happening? I see the loudest word (again) being shouted is Brexit, but like the driver shortage, is it really, or is it just an easy excuse to blame Brexit for something else again?

I'm genuinely interested, as I've not really seen much news the past week, and the discussion I am seeing all seems to be blaming Brexit, but it's the cry wolf syndrome now - I switch my brain off whenever Brexit gets shouted!

[EvilC]

Brexit is a non-issue (at present) but will have longer-term ramifications.

This thread is a tremendous primer:

Bulb are basically done. Your bill will go up. Nationalising Bulb won't stop that.

I'd suggest looking at a fixed tariff, be prepared to leave (and pay an exit fee, if necessary) if the arse falls out of the price.

[SammyLeeWasOffside]

I'd suggest looking at a fixed tariff, be prepared to leave (and pay an exit fee, if necessary) if the arse falls out of the price.

Might be miles off but isn't it fixed rates that's dooming these companies now the prices are rocketing? If so is there a case for ditching them, I guess this would make bills very volatile though.

[OFT]

Maybe it's just privatisation. Maybe, nationalised utilities weren't such a bad thing after all. Maybe 'big government' in control of the nations destiny is better than 'letting the market decide'

[Greatest Cockney Rip Off]

We're with Bulb too which is a bit worrying.

As for Brexit, wouldn't the current EU laws prevent any bail outs from the government if we were still a member ?

[EvilC]

Might be miles off but isn't it fixed rates that's dooming these companies now the prices are rocketing? If so is there a case for ditching them, I guess this would make bills very volatile though.

No, what is dooming them is that (a) they are all uncapitalised (b) it is incredibly competitive and making money is essentially impossible (c) it is very technically complex, hedging accurately is basically impossible (d) a lot of them struggled to hedge as people won't take their credit risk. Fixed prices are necessary to operate this business IMO.

Maybe it's just privatisation. Maybe, nationalised utilities weren't such a bad thing after all. Maybe 'big government' in control of the nations destiny is better than 'letting the market decide'

All the large utilities are likely to be fine, and we are in uncharted territory. Effective regulation would be better IMO.

We're with Bulb too which is a bit worrying.

As for Brexit, wouldn't the current EU laws prevent any bail outs from the government if we were still a member ?

To be clear, any credit balance you have with any supplier is protected.

Italy has just subsidised its industry, so I can't imagine EU rules would prevent anything. We nationalised the banks as an EU member.

[Tenbury]

Maybe it's just privatisation. Maybe, nationalised utilities weren't such a bad thing after all. Maybe 'big government' in control of the nations destiny is better than 'letting the market decide'

Due to the constraints that Evil C has explained so well, 'the market' was never going to decide because free market conditions don't exist. The alternative to nationalisation is control of one of the necessities of life in the hands of a few ultra powerful transnational behomoths answerable to no one.

[Johnny Byrne's Boots]

Can anybody tell me exactly who has put up the price of gas out of the ground? Actually name names?

[The Old Man of Storr]

If someone offered me odds of 100/1 on it being the Ukraine's fault I'd put £20 on them ....each way .

[EvilC]

Can anybody tell me exactly who has put up the price of gas out of the ground? Actually name names?

Everyone. It is a commodity - prices are dictated by the market. It isn't like Gazprom will sell it to you for £1/therm whilst Equinor sells it for £1.50.

[Johnny Byrne's Boots]

What was the trigger for the sudden jump in prices? As you say, gas is a commodity and its price should be driven by standard supply and demand economics should it not? Was there a sudden and dramatic rise in demand or an equally dramatic fall in supply? What particular situation is present this month that wasn't during the last one?

[EvilC]

What was the trigger for the sudden jump in prices? As you say, gas is a commodity and its price should be driven by standard supply and demand economics should it not? Was there a sudden and dramatic rise in demand or an equally dramatic fall in supply? What particular situation is present this month that wasn't during the last one?

The price rice has been ongoing for a few months, it just went nuts recently.

There are lots of reasons. Europe had a long, cold winter, so storage was more depleted than usual and hasn't refilled as much as normal (c. 78% full vs 90% plus, which doesn't sound like a lot, but it is). Russian gas flows are lower than normal and there has been a lot of supply curtailments due to technical issues. There has also been little wind throughout Europe, so renewables are generating less than you would like. Asia has also sucked up a lot of LNG - demand has rebounded, supply there has been tight and governments have pursued pro-LNG policy.

It hasn't really had much impact so far (gas prices here and in Europe are about the same) but a few years ago Rough (the UK's main gas storage facility) closed permanently. It had run beyond its anticipated life. We knew about this a decade ago and did nothing. This may come back to haunt us.

Nord Stream might make a difference, but basically everyone needs to pray for a mild winter. It has been really mild in September generally, if that hadn't been the case then things could be a whole lot worse.

Wind has picked up in the UK today, which is good.

As a general rule I'd be careful about what you read on this subject from people on the internet because a lot of them don't know their arse from their elbow. Stick to good-quality news outlets and people that are clearly from within the sector. This also probably means you should take what someone like me (who has half an idea) says with a pinch of salt.

[Johnny Byrne's Boots]

Thanks for the most rational explanation I've seen Mr. C. It sounds to my layman's ears like a number of situations have occurred simultaneously which on their own would have at worst a minor effect on prices, but when they happen together the recyclable waste matter hits the wind turbine

[EvilC]

Thanks for the most rational explanation I've seen Mr. C. It sounds to my layman's ears like a number of situations have occurred simultaneously which on their own would have at worst a minor effect on prices, but when they happen together the recyclable waste matter hits the wind turbine

Exactly. It is a perfect storm. There is other stuff like the interconnector for electricity between here and France deciding that an energy crisis was the appropriate time for it to stop working wasn't helpful from a UK perspective, albeit it doesn't really impact the macro factors.

Our lack of gas storage is a concern for me in the medium term.

Also, outages here or on the continent are a genuine threat. General sentiment is that gas market could really go either way from here - if it gets cold for a sustained period before Christmas for a sustained period then it could be horrific (and it is already horrific).

[delbert]

I asked on another thread about the effect the new Norway electrical link will have on things and it was given a stiff ignoring.
Will the new link with Norway have much effect on our electrical supply?

Also, petrol prices. Gone past the stupid and now entering the realms of the ridiculous......

[EvilC]

I asked on another thread about the effect the new Norway electrical link will have on things and it was given a stiff ignoring.
Will the new link with Norway have much effect on our electrical supply?

Also, petrol prices. Gone past the stupid and now entering the realms of the ridiculous......

Not significantly. It is smaller than the France>UK one, which isn't working at present. It is a good thing to have with us being an island and the Nordpool's access to lots of renewables, but it isn't going to make a difference here. This crisis really centres around the gas market.

There is a belief amongst some that may see gas price increases translate into oil (and therefore petrol) price increases as there may be switching away from gas to oil generation for those that have it.

[3times]

Another Bulb customer here, along with dear ole mum. Been agonising over changing for ages, may have missed the boat now.

[EvilC]

Another Bulb customer here, along with dear ole mum. Been agonising over changing for ages, may have missed the boat now.

Bulb isn't done yet - I'd do what Martin Lewis suggests - download your latest bill, take a meter reading, screenshot your credit balance. Whether you should switch now or not is harder to say.

[sendô]

The concept of having to "change energy provider" and your bills going up is peak capitalism.

The cable going into your house remains the same, as does the grid system and the power station generating the electricity. Our current system is nothing more than investors gambling on the best price they can get for a unit of electricity.

The government should 100% be held to account for this shambles and should be picking up the bill for any increased cost to any consumers.

Go back to the days when we had electricity boards.

[EvilC]

This is fine. Tangental to the energy crisis, but still fine, obviously.