Comment on Energy regulator Ofgem announces 13% increase for energy bills

Armand1@lemmy.world ⁨3⁩ ⁨days⁩ ago

• uthredii@programming.dev ⁨3⁩ ⁨days⁩ ago

  • Because of the energy pricing system the price of energy at a given time depends on the price of the most expensive component which is gas. So if any gas gets used at a given time then all of the energy produced at that time is priced at the same rate. The government have said that this system will be changed.
  • Much of our energy is produced in Scotland but consumed in the south east. Expensive infrastructure is needed to move the electricity to where it is needed. What is worse this system won’t get better over time because there is no incentive for industry to set up close to the electricity source.
  • The UK has a few problems in general with building infrastructure making it expensive. These jobs are often contracted out instead of done in house by the government which can inflate costs. Additionally the planning system can be difficult to work with in the UK as residents have more power to stop infrastructure projects than in other countries.

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• BrikoX@lemmy.zip ⁨3⁩ ⁨days⁩ ago

  Funny you should ask that. Because of UK’s marginal pricing system that in almost all cases is being dictated by the most expensive one (fossil fuels).

  …wordpress.com/…/why-are-uk-energy-prices-so-ridi…

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  • Armand1@lemmy.world ⁨3⁩ ⁨days⁩ ago

    Under the Marginal Pricing model, energy suppliers set prices based on the highest-cost energy source used, which in the UK is gas. Even though energy suppliers may buy cheaper renewable sources first, they must also rely on pricier fossil fuels to meet demand. Therefore, the final price paid by consumers reflects the cost of the most expensive source used.

    Feels like we should abolish this system. Not sure why it even exists, as to me the price should be based on the cost. As things stand we are just giving free money to energy companies and worse petrol oligarchs.

    I recognize that we will likely always need some fossil fuel energy in the UK to pick up the slack, but why are the savings of investing in renewables not making their way to the consumer?

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    • Nighed@feddit.uk ⁨3⁩ ⁨days⁩ ago

      It’s an auction of a commodity, you have to keep paying more until you find someone to provide the last bit. Everyone then gets paid close to that.

      The big profits are going to those that invested in renewable energy to be fair though, not to the fossil fuel companies.

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