Energy Prices next year for those in the middle?
Discussion
https://www.bbc.co.uk/news/business-64352962
"People struggling could get lower prices"
Presumably the rich will have been busily installing solar panels, batteries, even wind turbines or water mills (there was a guy on here doing it!). As well as throwing money at insulating everything in sight. I can't see many of them continuing to pay £1000 per month bills, but instead using a decreasing amount of energy from the utility firms, if not becoming entirely self-sufficient.
While the poor will get lower prices - and from the sounds of it energy firms won't have any sanction if the bills are simply not paid (much as water companies currently cannot cut anyone off)
That implies that it will only be those in the middle left to pay for the bulk of the utility company's costs. Which in turn implies a massive increase incoming - as it won't just be to cover the increased cost of energy but also the loss of the most profitable customers (the rich) and the need to subsidise the poorer customers.
How bad is this likely to be? Quadruple prices?
"People struggling could get lower prices"
Presumably the rich will have been busily installing solar panels, batteries, even wind turbines or water mills (there was a guy on here doing it!). As well as throwing money at insulating everything in sight. I can't see many of them continuing to pay £1000 per month bills, but instead using a decreasing amount of energy from the utility firms, if not becoming entirely self-sufficient.
While the poor will get lower prices - and from the sounds of it energy firms won't have any sanction if the bills are simply not paid (much as water companies currently cannot cut anyone off)
That implies that it will only be those in the middle left to pay for the bulk of the utility company's costs. Which in turn implies a massive increase incoming - as it won't just be to cover the increased cost of energy but also the loss of the most profitable customers (the rich) and the need to subsidise the poorer customers.
How bad is this likely to be? Quadruple prices?
Flooble said:
https://www.bbc.co.uk/news/business-64352962
Presumably the rich will have been busily installing solar panels, batteries, even wind turbines or water mills (there was a guy on here doing it!). As well as throwing money at insulating everything in sight. I can't see many of them continuing to pay £1000 per month bills, but instead using a decreasing amount of energy from the utility firms, if not becoming entirely self-sufficient.
It's very Sam Vimes' Boots theoryPresumably the rich will have been busily installing solar panels, batteries, even wind turbines or water mills (there was a guy on here doing it!). As well as throwing money at insulating everything in sight. I can't see many of them continuing to pay £1000 per month bills, but instead using a decreasing amount of energy from the utility firms, if not becoming entirely self-sufficient.
https://en.wikipedia.org/wiki/Boots_theory
Flooble said:
https://www.bbc.co.uk/news/business-64352962
"People struggling could get lower prices"
Presumably the rich will have been busily installing solar panels, batteries, even wind turbines or water mills (there was a guy on here doing it!). As well as throwing money at insulating everything in sight. I can't see many of them continuing to pay £1000 per month bills, but instead using a decreasing amount of energy from the utility firms, if not becoming entirely self-sufficient.
While the poor will get lower prices - and from the sounds of it energy firms won't have any sanction if the bills are simply not paid (much as water companies currently cannot cut anyone off)
That implies that it will only be those in the middle left to pay for the bulk of the utility company's costs. Which in turn implies a massive increase incoming - as it won't just be to cover the increased cost of energy but also the loss of the most profitable customers (the rich) and the need to subsidise the poorer customers.
How bad is this likely to be? Quadruple prices?
If anything, it’s probably more likely to be businesses, especially ones that have high & irreducible energy demands (thinking places like bakeries, steel works, anywhere that needs to heat a lot of things) that will bear the brunt rather than domestic customers. In saying that, it could still be pretty brutal if you’ve got a house that’s hard to improve but you’re not poor enough to qualify for government support."People struggling could get lower prices"
Presumably the rich will have been busily installing solar panels, batteries, even wind turbines or water mills (there was a guy on here doing it!). As well as throwing money at insulating everything in sight. I can't see many of them continuing to pay £1000 per month bills, but instead using a decreasing amount of energy from the utility firms, if not becoming entirely self-sufficient.
While the poor will get lower prices - and from the sounds of it energy firms won't have any sanction if the bills are simply not paid (much as water companies currently cannot cut anyone off)
That implies that it will only be those in the middle left to pay for the bulk of the utility company's costs. Which in turn implies a massive increase incoming - as it won't just be to cover the increased cost of energy but also the loss of the most profitable customers (the rich) and the need to subsidise the poorer customers.
How bad is this likely to be? Quadruple prices?
Jim the Sunderer said:
It's very Sam Vimes' Boots theory
https://en.wikipedia.org/wiki/Boots_theory
Yes, double-glazing, insulation, more efficient boilers, as well as solar/batteries etc. is investment often beyond those who would most reap the benefit.https://en.wikipedia.org/wiki/Boots_theory
I've long thought that councils should be assisted/required to install solar on the roofs of certain social housing tenants (perhaps those on certain benefits). The tenant(s) could benefit from whatever power it produces, and the export income could be returned to the local authority. Possibly it could be that export could be directly offset from power consumption on the rest of the LA estate.
Gareth79 said:
Jim the Sunderer said:
It's very Sam Vimes' Boots theory
https://en.wikipedia.org/wiki/Boots_theory
Yes, double-glazing, insulation, more efficient boilers, as well as solar/batteries etc. is investment often beyond those who would most reap the benefit.https://en.wikipedia.org/wiki/Boots_theory
I've long thought that councils should be assisted/required to install solar on the roofs of certain social housing tenants (perhaps those on certain benefits). The tenant(s) could benefit from whatever power it produces, and the export income could be returned to the local authority. Possibly it could be that export could be directly offset from power consumption on the rest of the LA estate.
I know that round here there was also a scheme to put solar panels on the roofs of homes still owned by the LA - it was very obvious walking around some estates which houses had been sold off as they were the ones without panels. I will try to find a news article or similar.
My parochial concern is much as Leroys - how much is it going to hurt those of us who are stuck in the middle and cannot afford to pay for £50K of improvements, nor have them funded by the taxpayer (and/or get cheap rates because we are on low income/benefits).
I'm not looking to start a left/right fight, but to gain some insight into whether I need to be thinking about 20p/kWh for gas, or 30p, or 40p. At a certain point it would become cost effective to get a loan to pay for the insulation etc.
DeejRC said:
So you can afford a loan to pay for additional insulation but you don’t want to, providing others pay to help subsidise the overal energy cost to you?
I’m not entirely sure that’s the way to think about it.
What? How did you draw that conclusion? I’m not entirely sure that’s the way to think about it.
If it costs me £1000 per year to heat my house, and insulation to reduce that to £500 will cost me £50K, then it's not a sensible thing to do - I should spend the limited funds I have on the heating.
If it is going to cost me £5000 per year to heat my house, and the insulation will reduce that to £2.5K, then it becomes more logical to spend the money on insulation provided I think I will live for another 20 years.
If it will cost me £10000 per year to heat my house, and the insulation reduces that to £5000, then I only have to live another 10 years.
It is quite literally Vimes boots, as per another poster.
Oakey said:
£50k to insulate a house? Where you do live, Buckingham Palace?
Add up the cost of: External Wall Insulation
Properly done loft insulation to Part L (i.e. between rafters not just joists, and with some form of condensation control)
Retro-fitting some sort of floor insulation (jackhammer the foundation slab and dig it out?)
Triple glazing all round
and you really won't be far off for a modest property.
The economics of retro-fitting insulation are not at all compelling based on my analysis - even at elevated energy prices. That is all the more so if you own a period house with cornicing and the like. The assumption that higher energy costs will translate into people investing in energy efficiency is pretty speculative. It assumes that the people in question can afford to do so and are willing to invest substantial sums of money for what will be a long term payback.
The "market" solution is for the cost of housing to fall if it is energy inefficient. But the UK market is rigged and successive governments have directly and indirectly rigged the market to secure house price inflation. One of the few universal truisms in UK politics is that it is impossible to be politically popular while introducing policies that adversely affect house prices.
So the extent to which the politicians allow the market to correct itself based on energy efficiency will make them politically unpopular. Falling house prices will do nothing to assist existing owners afford higher energy bills (and indeed are liable to prevent the heavily indebted from being able to do so). Equally borrowing money to spend on energy bills is a ridiculous policy and unsustainable from an economic perspective. The alternative is high bills which will also be deeply unpopular with pretty much everyone. I am not sure how the politicians will unravel all of that.
The only realistic solution for us is to reduce consumption and fit alternative sources of carbon based energy e.g. wood burners. It's impractical to ban coal and woodburners in the near term.
Much as I regret resorting to dirtier sources of energy, the political class have made an almighty mess of energy policy, so I don't see a realistic alternative. The spot price of gas remains at almost 400% higher than in 2020. The narrative that gas prices are below where they were this time last year conceals that point. 2023 forward prices remain elevated. Electricity is also massively more expensive.
I can see net zero being fudged in the near term to allow a dirtier energy mix for longer. The alternative is not politically sustainable.
The "market" solution is for the cost of housing to fall if it is energy inefficient. But the UK market is rigged and successive governments have directly and indirectly rigged the market to secure house price inflation. One of the few universal truisms in UK politics is that it is impossible to be politically popular while introducing policies that adversely affect house prices.
So the extent to which the politicians allow the market to correct itself based on energy efficiency will make them politically unpopular. Falling house prices will do nothing to assist existing owners afford higher energy bills (and indeed are liable to prevent the heavily indebted from being able to do so). Equally borrowing money to spend on energy bills is a ridiculous policy and unsustainable from an economic perspective. The alternative is high bills which will also be deeply unpopular with pretty much everyone. I am not sure how the politicians will unravel all of that.
The only realistic solution for us is to reduce consumption and fit alternative sources of carbon based energy e.g. wood burners. It's impractical to ban coal and woodburners in the near term.
Much as I regret resorting to dirtier sources of energy, the political class have made an almighty mess of energy policy, so I don't see a realistic alternative. The spot price of gas remains at almost 400% higher than in 2020. The narrative that gas prices are below where they were this time last year conceals that point. 2023 forward prices remain elevated. Electricity is also massively more expensive.
I can see net zero being fudged in the near term to allow a dirtier energy mix for longer. The alternative is not politically sustainable.
Edited by ant1973 on Tuesday 24th January 14:36
Flooble said:
DeejRC said:
So you can afford a loan to pay for additional insulation but you don’t want to, providing others pay to help subsidise the overal energy cost to you?
I’m not entirely sure that’s the way to think about it.
What? How did you draw that conclusion? I’m not entirely sure that’s the way to think about it.
If it costs me £1000 per year to heat my house, and insulation to reduce that to £500 will cost me £50K, then it's not a sensible thing to do - I should spend the limited funds I have on the heating.
If it is going to cost me £5000 per year to heat my house, and the insulation will reduce that to £2.5K, then it becomes more logical to spend the money on insulation provided I think I will live for another 20 years.
If it will cost me £10000 per year to heat my house, and the insulation reduces that to £5000, then I only have to live another 10 years.
It is quite literally Vimes boots, as per another poster.
ant1973 said:
So the extent to which the politicians allow the market to correct itself based on energy efficiency will make them politically unpopular. Falling house prices will do nothing to assist existing owners afford higher energy bills (and indeed are liable to prevent the heavily indebted from being able to do so). Equally borrowing money to spend on energy bills is a ridiculous policy and unsustainable from an economic perspective. The alternative is high bills which will also be deeply unpopular with pretty much everyone. I am not sure how the politicians will unravel all of that.
Instead of the tax free threshold being £12,500, it should be £15,000, then it should be 10% tax up to £25,000, 20% up to £50,000 and 40% over, thus letting people keep more of what they earn to spend on said energy bills. Now what else they cut to cover this is the poloitical football.Edited by ant1973 on Tuesday 24th January 14:36
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