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« Fracking in Sussex | Main | AR5: A Progress report - Josh 221 »
Saturday
May112013

Head of SSE on the energy crunch

Ian Marchant, the head of Scottish and Southern Electricity is interviewed on the BBC. The section on the lights going out, on government energy policy, and some diplomatically worded thoughts on renewables starts at 18 minutes.

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Reader Comments (45)

Thanks for posting this link, Bish.

I'm interested to know what he means by "demand-side management". The interviewer let this one go. And carbon-capture and storage? He casually mentions this while at the same time saying we should wait for new developments in nuclear.

May 11, 2013 at 10:09 PM | Unregistered CommenterJack Hughes

I had the same reaction as above.
He talks of demand management after noting that demand is often completely out of step with output from renewables. The inference is; if the wind ain't blowing, some folk will be cut off.
He opines that roughly 40% is a "reasonable share" for renewables while also stating that there is no financial justification or company enthusiasm for building gas plants as back-up. He makes no mention of the major technical problems of integrating ever-rising renewable capacity.
He makes offhand reference to CCS as if it is a done deal when, in reality, it is many years if not decades from realisation. He is equally glib about nuclear.
His background is accountancy and consulting which explains how he can speak in this way, apparently divorced from practical reality. Scary.

May 11, 2013 at 11:01 PM | Unregistered CommenterMikeH

@ Jack Hughes May 11, 2013 at 10:09 PM

"I'm interested to know what he means by "demand-side management". "

Smart meters.

May 11, 2013 at 11:30 PM | Unregistered CommenterJoe Public

@ Jack Hughes May 11, 2013 at 10:09 PM

"I'm interested to know what he means by "demand-side management". "

1. Smart Meters - that allow them to interrupt your electricity supply at their convenience.

2. Smart Meters - that bring the prospect of Maximum Demand Charges to humble domestic users (because they'd be capable of 1/2-hourly measuring).

From WikiP:- Demand charges

Consumers of electricity are split into two categories: half-hourly metered (HH) and non-half-hourly metered (NHH). Customers whose peak demand is sufficiently high are obliged to have a HH meter, which, in effect, takes a meter reading every 30 minutes. The rates at which charges are levied on these customers' electricity suppliers therefore varies 17,520 times a (non-leap-) year.

The TNUoS charges for a HH metered customer are based on their demand during three half hour periods of greatest demand between November and February, known as the Triad. Due to the nature of electricity demand in the UK, the three Triad periods always fall in the early evening, and must be separated by at least ten clear working days. The TNUoS charges for a HH customer are simply their average demand during the triad periods multiplied by the tariff for their zone. Therefore (as of 2007) a customer in London with a 1 MW average demand during the three triad periods would pay £19,430 in TNUoS charges.

TNUoS charges levied on NHH metered customers are much simpler. A supplier is charged for the sum of their total consumption between 16:00 and 19:00 every day over a year, multiplied by the relevant tariff.

[TNUoS = Transmission Network Use of System charges]

-------------
Maximum Demand charges can be phenomenally high. All your electricity commodity charges in a winter month are based upon your maximum 1/2-hourly peak use. e.g. inadvertently switch on an extra 1kW fire at the wrong time, and that increases the cost of everything else you've used for the entire month.

May 11, 2013 at 11:47 PM | Unregistered CommenterJoe Public

Demand-side management = smart meter with remote disconnect.

This 'feature' allows the utility to toggle your power on and off remotely when needed to curtail load.
Of course, it also comes in handy when your payment is 24 hours late.
I'm sure there will be some sort of reimbursement for your troubles.
Maybe a coupon good for a 10% discount on your next multi-hundred pound fine for incorrectly sorting the recyclables from your rubbish.

A 'benefit' of this approach is that customers will have an opportunity to learn first-hand what is meant by 'capacity factor' and renewable generation 'variability.'

Good times ahead.

May 11, 2013 at 11:59 PM | Unregistered Commenterchris y

So would "demand side management" mean that your hot shower may turn cold without warning, or the oven is turned off, ruining the soufflé? Or maybe your clothes didn't get dried before you left for work?

May 12, 2013 at 1:42 AM | Unregistered Commentermichael hart

"Demand Side Management" is that big red off button in the generation centre

May 12, 2013 at 5:37 AM | Registered CommenterAndy Scrase

"Demand Side Management" is also those big circuit breakers near where the proles live.

May 12, 2013 at 7:07 AM | Registered CommenterPhillip Bratby

Towards the end he specifically mentioned gas as a significant short part of the solution
It is interesting to note that SSE have an agreement with Dart Energy for supply of gas in the Edinburgh area.
http://www.dartenergyscotland.co.uk/assets/pedl133.html

Dart Energy is an Australian gas company specializing in Coal Bed Methane which involves horizontal drilling AND can often involve fracking inside coal seams. Dart are also quietly getting on with exploration drilling in Shale gas deposits in the UK, but they seem to be leaving Caudrilla to take all the flack.

History

Five wells were drilled in the area by the previous PEDL licence holder during the 1990s, which established the presence of natural gas in coal seams. Ten more wells have been drilled by Composite Energy between 2004 and 2011, which demonstrated good production rates of natural gas.

Current operations

Since Dart Energy acquired Composite Energy in 2011 one further well has been drilled, which is now producing gas. Since June 2012, gas is being used to generate electricity which is then exported into the local power network. It is currently delivering sufficient electricity for c. 300 homes.

In August 2011, Dart International and SSE Energy Supply Limited (SSE) entered into a Gas Sales Agreement (GSA) for 5 years commencing April 2013.

Future Plans


Dart Energy has applied for permission for 14 well sites which will produce gas supplying a distribution facility and connection site and provide gas to the national grid.

Wells are drilled in vertical-horizontal pairs to maximise production (no hydraulic fracture stimulation, “fracking”, is employed nor can it be employed on these wells). Further information on the drilling can be found in the CBM Extraction Process section.

Once the gas has been brought to surface it is transported by underground pipeline to the gas gathering facility situated near the existing national gas network pipelines. Water treatment equipment processes any water from the wells before discharging to an outfall agreed with the Scottish Environment Protection Agency

May 12, 2013 at 8:00 AM | Unregistered CommenterNeil Hampshire

A partial transcript of this interview is now available:
https://sites.google.com/site/mytranscriptbox/home/20130511_lq

May 12, 2013 at 8:09 AM | Unregistered CommenterAlex Cull

As Joe Public so well describes, "demand side management" means smart meters and intelligent white goods, all made by people who take up Caroline Lucas' "hundreds of thousands" of "green" jobs. What she doesn't say, or perhaps even realise, is that these "green" jobs will be in the Far East, in factories powered by fossil fuels.

It would be funny if it wasn't so tragic.

BTW - for anybody with the time, the Energy and Climate Change committee is in the process of assessing smart meter roll out.

http://www.parliament.uk/business/committees/committees-a-z/commons-select/energy-and-climate-change-committee/news/smart-meters/

May 12, 2013 at 9:02 AM | Unregistered CommenterIan_UK

I note he has interests in oil as well as in renewables and is convinced that we must reduce "carbon", or does he mean CO2? Covering every eventuality?

"I'm interested to know what he means by "demand-side management". "

Weasel words in the same mode as extreme rendition and collateral damage. In this case, it means supply management, ie, we will cut you off if we haven't enough to go round. The collateral damage will be extreme.

May 12, 2013 at 9:06 AM | Unregistered CommenterMessenger

Can we really take a person seriously who says that we could have 30-40% of our power from renewables. Yes bring on even bigger subsidies!!!!!!

May 12, 2013 at 9:31 AM | Unregistered CommenterConfusedPhoton

ConfudedPhoton: He is serious. SSE is coining in the renewable energy subsidies. It doesn't matter to him whether the renewables will work or not, because SSE will get paid when the wind turbines actually deliver electricity (electricity price plus ROC subsidy) and SSE will get paid even more when there isn't the demand for the electricity and they are switched off (constraint payment). He doesn't care a toss whether the country goes down the pan, because he will have made his millions and will have gone to somewhere with a reliable electricty supply (say France) by the time the fan is covered with it.

May 12, 2013 at 9:55 AM | Unregistered CommenterPhillip Bratby

Phillip, I went to France to escape, and I can assure you that MY electricity supply here is far from reliable...

May 12, 2013 at 10:01 AM | Unregistered CommenterOld Goat

Phillip Bratby

Totally agree with you.

However, creating that amount of renewables and maintaining a proper level of power to industry and households will be a big juggling act. As renewables nudge above 10% their (highly variable) impact and (subsidised) cost will be more apparent, even with the current hiding of the true costs. The effect of a much higher amount of renewables could well break the camel's back (long before 30% is reached).

May 12, 2013 at 10:10 AM | Unregistered CommenterConfusedPhoton

Demand Side Managrment
Check out the EA Technology website
http://www.eatechnology.com/consulting/newenergytechnologies/demandsidemanagement

A link at the bottom of the webpage takes you to the DEFRA report on the benefits of Smart Appliances

Love this bit "Therefore raising awareness of the
importance of the pattern of energy consumption as well as of the overall amount of
energy consumption is considered to be important. Here, it is believed that
behavioural science and behavioural economics can provide useful tools to ensure
such information can be effectively communicated to consumers."

May 12, 2013 at 10:16 AM | Unregistered CommenterStephen24

Like his soul-mate Chris Huhne, Ian Marchant is ‘close to government’ in ways which suit his business interests (http://www.2020climategroup.org.uk/about-2020/the-2020-story/).

Nothing wrong with spotting the opportunities that government can provide by way of grants and subsidies, but let us be wary of those who set out to lobby for, or at least in Huhne’s case actually create, them.

‘I think my political career is very clearly over, but I think that I have other things to offer, doing other things, and I will,’ he told Channel 4 News in his last public interview, the night before being sent to prison.
He did not elaborate on what those ‘other things’ are. But some seem likely to take place 80 miles to the west of HMP Leyhill, on an industrial estate just outside Swansea.
It is there, in the space of four years, that little-known company Nationwide Energy Services has grown from four to 600 employers, making millions of pounds by helping clients access generous Government grants to make their homes ‘greener’. And Huhne, who devoted much of his political career to establishing these grants, recently became its most high-profile employee.
In November, as he awaited trial (still professing his innocence), the former Energy Secretary was hired to ‘provide advice on business strategy and policy’. His wage? A staggering £437 an hour.
He negotiated a signing-on fee of £10,000 along with a monthly £3,500 retainer for his services. In return, according to his entry the Register of Members Interests, he was required to do eight hours work each month.

Source: http://www.dailymail.co.uk/news/article-2322854/From-porridge-snout-trough-Chris-Huhne-cashing-green-energy-industry-funded-minister-released-prison.html (h/t bh3x2)

Huhne is close to being released from prison (h/t bh3X2 on Unthreaded at 9:28 AM), and is reported as intending to pursue green business interests. Now ‘green’ when not being used to refer to colour, used to denote ‘gullible’, ‘juvenile’, ‘poorly-informed’, and such like. I wonder if that useage will become more common again if a more critical examination of MPs on eco-topics in general, and of government servants in the energy and environmental sectors in particular becomes commonplace? Or will it come to denote the compound concept of 'stupid and malevolent'?

The Daily Mail article about Huhne linked to by bh3x2 makes no mention of the SSE, but I suspect headhunters may already have their sights on that possible pairing. Another piece of common-ground between them is that both SSE and Huhne's company have been criticised for their sales practices:

Huhne: 'In early March, Huhne’s employer found itself ‘named and shamed’ as one of the most prolific sources of unsolicited phone calls to homes in the country. Research revealed sales staff had made 1.6 million attempts to reach British households in the previous 12 months.' (source: Daily Mail loc cit)

Marchant: 'Energy giant SSE fined £10.5m for ripping of 1m customers (but the man in charge will leave with a £400,000-a-year pension pot)'

Source: hhttp://www.dailymail.co.uk/news/article-2303257/SSE-mis-selling-Fury-energy-giant-ripped-1million-customers-MPs-fraud-investigation-watchdog-fines-SSE-10-5m.html

May 12, 2013 at 10:48 AM | Registered CommenterJohn Shade

Demand side management is all about smart meters and the lights going off.

The Executive Director of the Chartered Institution of Water & Environmental Management,a learned society turned green activist charity, did a recent piece in their propaganda journal in which he describes the importance of not going for shale gas and looks to a future where power generation is whatever the 'renewables' can produce at that moment and demand is constrained such levels by switching the power off for many, often most, of us. This is, to such people, an aspiration on the way to a green communist future.

Wind and solar generation are subject to such intermitency as to mean that generation by these means combined does drop to vitually zero at a considerable number of times each month, sometimes for days at a time. Renewable capacity is rarely above about 4 gigawatts and these sources, even doubled as government policy (if that is what it could be called), will not change this intermitency problem.

One hopes that industry, hospitals, etc will be given priority, but the future is, regretfully, a very dark shade of green.

The bright side of the 'low carbon future' will be that hospitals have (fossil fuel driven) standby generation and industry will die or move to other countries. Nonetheless, blackouts are certain to happen several times a week for ordinary households, and may be for longish periods. This also impacts gas and oil central heating for those able to pay the bills. The generation costs of renewables will probably mean that even those considered fairly prosperous will be unable to use enough power for their essential needs.

The stark facts are that we consume between about 30 - 50 gigawatts. Nuclear provides about 8 gigawatts of this and Gas and Coal currently provide (reliably) the rest. Wind/solar, etc. typically produce between about 6 gigawatts and 0.05 gigawatts when the weather dictates, We import the odd gigawatt or so (literally).

Coal currently provides about 15 gigawatts so, if eliminated, gas capacity would need to move from about 120 -15 gigawatts to at least 40 gigawatts to keep the lights on.

The best thing to do is install battery backup for your gas and oli heating controls and basic lighting, and get used to eating cold meals.

As Peter Lilley MP recently suggested we are in the hands of the greens, and many of our professional bodies, civil service, etc. and are riddled with and controlled by those who would wish to lead us to the third world and control us in every way..

May 12, 2013 at 11:58 AM | Unregistered CommenterWilliam Sinclair

Can I suggest a national campaign to boycot "smart" meters?

Some sort of catchy name like "moron meters", "spy meters" or similar will do for starters.

May 12, 2013 at 12:34 PM | Unregistered CommenterDon Keiller

@ Don Keiller May 12, 2013 at 12:34 PM

"Smart Meter"

The very naming of the device clearly illustrates the deviousness of the industry.

A 'meter' measures; a 'switch' switches.

But the public wouldn't be fooled into wholesale acceptance of having a "Remote Switching-off Meter".

May 12, 2013 at 1:19 PM | Unregistered CommenterJoe Public

Don Keiller says "Can I suggest a national campaign to boycott "smart" meters?"

If given the option refuse to have one.
If compulsory then find several excuses why its inconvenient for them to install one, since they need entry to your home.
If this was a national campaign it could be quite effective

May 12, 2013 at 1:41 PM | Unregistered CommenterBryan

Just installing a pellet burner in the lounge and an ethanol burner in the kitchen to back up my nuclear electric heating. Only 18 months to go to retirement. I wonder if I will make it before the power cuts start. (Oh...did I not mention that my new home is going to be in France...I'm outta here!)


Ivor Ward

May 12, 2013 at 2:23 PM | Unregistered CommenterDisko Troop

"Electricity load has gone down four years in a row." That IS a surprise, isn't it? Prices have gone through the roof and the economy is flat-lining. I wonder if that's anything to do with it.

May 12, 2013 at 2:38 PM | Unregistered Commentermike fowle

Here's a blog article which lays out how a campaign to roll out smart meters across the UK is being framed, by (amongst others) E.ON, "consumer engagement" being the watchword (also note the appropriately wedge-shaped graphics on this page) :
http://millicentmedia.com/2013/02/06/making-dumb-european-rollouts-smart-three-golden-rules-of-consumer-engagement/

Compulsory smart meters in the Netherlands were opposed successfully in 2009 by consumer groups, who were able to make the case that smart meters would be a violation of the European Convention of Human Rights.:
http://vorige.nrc.nl/international/article2207260.ece/Smart_energy_meter_will_not_be_compulsory

May 12, 2013 at 2:56 PM | Unregistered CommenterAlex Cull

Thank Alex. I fully intend to be a "customer backlash" :-)

May 12, 2013 at 3:56 PM | Unregistered CommenterDon Keiller

Compulsory smart meters in the Netherlands were opposed successfully in 2009 by consumer groups, who were able to make the case that smart meters would be a violation of the European Convention of Human Rights.
Yet one more reason why this government is keen to withdraw from the ECHR, perhaps?

May 12, 2013 at 4:04 PM | Registered CommenterMike Jackson

'Mad Alex' Salmond lied to me about wind farm and I'm going to sue! Donald Trump attacks 'insane' Scots leader for ruining tycoon's golf course... and no, he WON'T keep his hair on!
Next week, I have instructed my lawyers to launch an all-out challenge at the Scottish Supreme Court to ‘Mad Alex’, as I believe history will some day call Alex Salmond.

The First Minister’s obsession with turning his nation into the Saudi Arabia of ‘renewables’, as he refers to his plans for thousands of industrial windfarms, is a disgrace.

Windfarms are not only hideous, they kill birds and sea mammals, they destroy housing values, they are a danger to our health and tranquillity – and it is an absolute scam to claim that they save energy.

http://www.dailymail.co.uk/news/article-2323143

May 12, 2013 at 4:49 PM | Unregistered CommenterMartyn

Alex Cull @ 2:56

You see exactly where these people are heading ...

But Dutch economy minister Maria van der Hoeven, a Christian Democrat, wanted to take it [EU directive] one step further: she wanted to make smart meters compulsory, and a refusal to install them punishable with a fine of up to 17.000 euros or six months in prison.

If anyone else out there is getting really tired of the "Green Taliban" and their taxpayer funded fantasy then just speak up.

William Sinclair @ 11:58

It can't carry on indefinitely though. At some point the declining economy can no longer afford to support The Green Squid. Without public funding they may all have to go out and get real jobs and pensions. Taxpayer supported NGO's, QUANGO's and the rest can only continue while there are taxes to be had because zero interest rates can't continue for much longer so borrowing to support them is out.

May 12, 2013 at 6:31 PM | Registered Commenterbh3x2

It seems to me, in the old days, electricity was generated in order to meet demand.

This bloke, who reminds me of an over-excited old English sheepdog, bounces around on his chair while happily announcing that the whole system has broken down. We no longer expect that we can generate the electricity required to meet demand. The solution is "demand-side management". In other words, we'll prevent the problem of the lights going out, by turning out the lights.

This is explained to us, with a smile, while at the same time telling us that one of the great problems is that there has been a fall in demand.

Demand has gone down and prices have gone up. The supplier is trying to get the consumer to use even less.

Someone here must be on some fairly powerful hallucinogenic drugs. Is it me?

May 12, 2013 at 6:43 PM | Unregistered CommenterJames Evans

Something evil this way has arrived: Big Brother is here.

Demand side management a euphemism for control - of YOU.

Next.....it's only a short step away:

Energy rationing.

All domestic consumers, you will be given a certain amount of energy credits.

If you use up your allocation - get used to darkened rooms, or buy extra credits on the 'black' market.
Citizens who do not conform, those who break the laws - will not receive credits and serial offenders will be cast out.
Highly respected and important members of society and citizen spies who inform on aberrant citizens abusing their energy credits - will receive extra allowances.
All government and local government workers, those working for the EU [quangos] to receive bonus credits.
MPs and those in the senior executive - no restriction.

Manage your side on demand, or be punished.

In todays' Sunday Times - self drive cars maybe a matter of five years away [then try breaking the speed limit], pregnant women to be tested for smoking and if found out - to be given 'instruction'. Company offers 27 million customers iphone data to government [the Police].

Surveillance state and soon they TPTB will be able to monitor and control your domestic energy usage and supply.

Short and curlies and hanging by the - comes to mind.

May 12, 2013 at 7:27 PM | Unregistered CommenterAthelstan.

There was something on Radio 4 on Friday as I was driving somewhere, to the effect that the introduction of smart meters has been delayed for a year (to 2015? 2016?) because the technology isn't developed yet. Plenty of time for Peter Lilley to reverse this insanity or for us to organise an e-petition to stop the takeover of our freedoms - they remind me of ID cards - an invasion of our privacy.

May 12, 2013 at 7:45 PM | Unregistered CommenterGrumpy

This might cheer some of you up.

http://www.cnbc.com/id/100722910

May 12, 2013 at 7:48 PM | Unregistered CommenterEntropic Man

For those that have access ....

A classic

http://blogs.ft.com/nick-butler/2013/05/09/is-electricity-market-reform-doomed#comment-4443192

May 12, 2013 at 7:55 PM | Registered Commenterbh3x2

Phillip, I went to France to escape, and I can assure you that MY electricity supply here is far from reliable...

May 12, 2013 at 10:01 AM | Unregistered CommenterOld Goat

"Went" does that mean no more there. I am there, have been for some time. Electricity supply is reliable but infrastructure in the country isn't but infrastructure in the coutry in england wasn't reliable either when I lived there. There are many good things about both countries but one thing very important is different. The french paysan et paysanne are 1000 times more politically aware than the english. Yes they can fit smart meters but once they start turning off power there will be revolution. It's their constitutional duty. In the UK the sheeples will shrug their shoulders and accept it. The political elite know it.

May 12, 2013 at 9:11 PM | Unregistered CommenterStephen Richards

@ Grumpy, the BBC also report it here:
http://www.bbc.co.uk/news/business-22480068

According to the Beeb, the project will now start in the autumn of 2015 and end in 2020, when they expect all UK homes to be fitted with a smart meter, at a cost to us of over £11 billion.

May 12, 2013 at 10:06 PM | Unregistered CommenterAlex Cull

I think it's useful to get some provenance on Mister Merchant.

Mr. Ian Derek Marchant has been the Chief Executive Officer of SSE plc (alternative name Scottish & Southern Energy PLC) since October 2002. Mr. Marchant served as Finance Director of Scottish & Southern Energy PLC from 1998 to October 2002. He joined Southern Electric in 1992 as Head of Corporate Financial Planning. He worked for Coopers & Lybrand (now PwC), including a two year secondment to the Department of Energy working on electricity privatization. He serves as the Chairman of the United Kingdom Business Council for Sustainable Energy. He serves as Chairman of the Climate Change Business Policy Group in Scotland. He has been an Executive Director of Scottish & Southern Energy PLC since 1996. Mr. Marchant has been a Non-Executive Director at John Wood Group PLC since May 19, 2006 and serves as its Senior Independent Director. Mr. Marchant serves as a Director of E.On Climate & Renewables North America Inc., and SSE Renewables Holdings Limited. Mr. Marchant serves as a Non-Executive Director of Maggie's Cancer Centers. He serves as a Member of the Forum for Renewable Energy Development in Scotland and Ofgem's Environmental Advisory Group and the Energy Research Partnership. (Nicked from here)

So, an accountant ... up to his armpits in climate change and renewables.

Perhaps it's time to concentrate on his customers?

After all, you're free to change supplier aren't you?

The utilities are starting to make the banks look good , well, maybe less bad, erm nope - this doesn't look like it's going to end well at all.

Shades of Enron

May 13, 2013 at 12:06 AM | Registered Commentertomo

Tomo - brilliant.
Do we wait for the dripping tap to eventually wear the bastards down, or is there some way to get all this priceless information published at Bishop Hill into the minds of Joe Public. (sorry Joe).
Forget the science of CAGW and renewables, attack the clear conflict of interests that runs through the whole debacle.
Maybe a compendium with links of all those conflicted which can be forwarded to MPs and MSM plus facebook and twitter.

May 13, 2013 at 12:48 AM | Unregistered CommenterG.Watkins

Most WWII ration books were torn up nearly 70 years ago.
Basics such as food, clothing, coal and petrol became available again and brought about the death of the black market and the gradual rise in economic recovery.
Two generations later and rationing is now government policy but without the coupons!
House got too many rooms_ get out an downsize
Food too dear - tighten your belt
Can't afford the poll tax - move or go to jail
Clothing bills a wee bit pricey- don't panic - most our high streets are chockablock with charity shops
Unemployed - tberes oodles of Green jobs out there just waiting for you.
Need transport- Public transport has never been cheaper and as plentiful. Take the tube.
Want a car- there's plenty of cheap and economical electric cars on the market, even hybrids like the Prius afford exceptional value.
Energy bills- soon government strategy will result in this vital commodity being cheaper than the dirty fossil fuels of the past thanks to our wise investments with renewable, free energy and the imminent arrival of smart meters that will save you energy and put pounds back In your pocket!
A wise political once said :
"You've never had it so good"
We of the Three-Minds-Think-As party endorse those very words.
A party Political message from the MCC (Miliband-cameron-clegg)
;
l

May 13, 2013 at 3:42 AM | Unregistered CommenterRoyFOMR

He doesn't seem to be bothered about turning off our electricity or mis-selling to his customers either.

http://www.telegraph.co.uk/finance/newsbysector/energy/10052564/SSE-mis-selling-not-as-bad-as-banks-chief-executive-Ian-Marchant-claims.html

May 13, 2013 at 6:22 AM | Unregistered Commentergeronimo

House got too many rooms_ get out and downsize
or commit suicide, allegedly.

May 13, 2013 at 8:46 AM | Registered CommenterMike Jackson

As regards electricity price, probably his most important comment was that the price of supply was only 50% of the bill total.

He was not very precise on what is encompassed in the other 50% that the customer pays, and was not pressed on it. That siad, he gave the impression that 25% pertains to the costs of green energy and 25% covers government incentives/policies.

As noted, he was not pressed to elaborate on this so it is not clear whether the 25% that covers the costs of green energy/renewables covers merely the costs of building windfarms etc and coupling to the grid and/or converting coal generation to bio-mass etc, or whether it additionally includes the costs relating to the higher per unit price that has to be paid to those who supply green energy (wind farms are guaranteed a higher price) and/or the higher feed in tariff price that the power company has to pay consumers who supply the grid with surplus electricity from their solar arrays etc. The latter 2 items could, of course, be included in the costs of supply.

He said that the government policy/incentives costs (which represents 25% of your bill total) covers schemes for insulating homes and addressing fuel povery. as most readers will know there are plans aloft to fit double glazing, loft insulation, cavity wall insulation etc at subsidised rates to homes/consumers who qualify. Of course, the comapny does not bear this expense from its profits. It passes this expense on to consumers who can afford to pay (notionally all consumers). Hence, the average consumer is paying to upgrade someone elses home.

Fuel poverty is of course a growing problem and one that is largely self inflicted. Some element of the bill paid by consumers who can afford to pay their bills goes to cover fuel poverty incentives for the less well off. This element may also cover bad debts, eg., bills unpaid by poor consumers, those on benefits, or the minimum wage who simply cannot afford to pay and the prospects of recovering the debt small.

The upshot is that of the current electicity bill, consumers in the UK already pay 50% of their bill to large cover the green agenda. 50% of the bill has nothing to do with the base cost of electricity and its distribution. If the average electricity bill is say £800 per year (it will be more for those who use electricity for heating) then already £400 of the bill covers the government's green agenda. The government is therefore being very disengenuous when it suggests that only a nominal amount (around £75) covers green measures.

I have often suggested that consumers in the UK are probably paying more than they think for green policies. My comments were based upon my Spanish electricity bill which clearly states that the costs of electricity supply (including distribution) is between 47.5% to 48% of the bill total (slight variation no doubt due to market price) and about 52% to 52.5% is taxes and subsidies. I have thought that there is no reason why the position in the UK would be materially different.

It follows that if there was political will the costs of the electricity bill could be approximately halved. The high taxes and subsidies is self induced expenditure by government policy and has nothing to do with the retail price of energy. Indeed, if government policy was that energy should primarily be produced by coal with no CCS then the costs of supply (which makes up only 50% of the bill) would fall further since coal powered generation is the cheapest form of energy production.

No doubt fuel povery would be substantially reduced by a 40 to 50% cut in bill costs and that would mean that less money would need to be set aside to help those who cannot afford to pay their bills.

Why the government does not adopt policies that would enable energy to be supplied at cheap a price as possible is a mystery. It certainly is not good government since it hampers industry and the consumer. It makes industry less competitive and it restricts the consumer's spending power which in turn restricts high street spending. A good policy for growth would be a policy that would cut electricity bills by 30 to 40% and this could easily be achieved in short time if only there were political will.

May 13, 2013 at 9:02 AM | Unregistered Commenterrichard verney

"demand-side management"

= supply-side management.

The demand in our house is managed by things called 'switches'.

May 13, 2013 at 9:27 AM | Registered Commenterjamesp

How will demand side management cope with a week of no wind? - and nights without sun, of course... Remember the last week of February, c.f. http://www.eirgrid.com/media/All-Island_Wind_and_Fuel_Mix_Report_February_2013.pdf

May 13, 2013 at 11:59 AM | Registered CommenterAlbert Stienstra

"How will demand side management cope with ... nights without sun"

I believe the Spanish government found that some solar panels were remarkably effective at producing electricity at midnight, as long as the subsidies were higher than the cost of diesel fuel.

May 14, 2013 at 5:46 AM | Unregistered CommenterAlex Heyworth

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