Today, 28 million British households and 6 million businesses will read their electricity and gas meters in order to unwittingly participate in a giant scam inflicted on them by their own government

Today, the UK regulator called the Office of Gas and Electricity Markets, OFGEM, will act as the price setter for the prices paid for electricity and gas for the entire country.

It will raise prices by around 10% (with a further 4% coming in January 2025. This comes a t a time when the mad hatters tea-party called the Labour Government has already abolished winter fuel subsidies to old age pensioners and has also banned North Sea Oil exploration (instead, probably buying North Sea oil and gas from neighbouring Norway (on the other side of the North Sea).

The mechanism for controlling the price is called a price cap.

OFGEM does not seek out the cheapest price for electricity and gas, it just does the following (from Brave AI):

1.      Cost calculation: Ofgem calculates the costs associated with supplying energy, including:

o   Wholesale costs (the cost of buying electricity and gas from generators and traders)

Network costs (the cost of transporting energy through the grid and pipes)

o   Operating and maintenance costs (the cost of running and maintaining the energy infrastructure)

o   VAT (Value-Added Tax)

2.      Review and update: Every three months, Ofgem reviews and updates the price cap to reflect changes in these costs. This ensures that the cap remains aligned with the actual costs of supplying energy.

3.      Typical household usage: Ofgem uses a “typical household” assumption to determine the average energy consumption and costs for a standard household. This assumption is based on data from the UK’s energy industry and takes into account factors such as regional variations in energy consumption.

4.      Cap calculation: Ofgem calculates the price cap by dividing the total costs (from step 1) by the typical household’s energy consumption. This yields the maximum unit rate (per kilowatt-hour) and daily standing charge (a fixed fee for being connected to the grid) that suppliers can charge customers.

5.      Announcement and implementation: Ofgem announces the new price cap levels and suppliers update their tariffs accordingly. The new cap takes effect on the specified date, usually every three months.

6.      Monitoring and adjustment: Ofgem continuously monitors the energy market and adjusts the price cap as needed to ensure that suppliers are not overcharging customers.

All looks pretty straightforward, right? But it hides a multitude of sins. Not least the Governments manic and costly push for wind and solar.

From here:

The History of the Energy Price Cap | Electricity Prices

The “cap” on prices started in 2019 – the year before the scamdemic.

The chart indicates the beginning of the end for many companies and energy poverty for a significant number of Brits.

From Brave “Based on the provided search results, the UK’s total energy consumption per year is approximately 287.13 billion kWh (electricity) and 70.14 billion cubic meters (natural gas).”

Given the 10% increase in energy prices – and assuming no increase in natural gas prices – and a 5 pence per kWh starting point, this means the UK economy just lost around 1.5 billion in spending power with all the second and third round effects of that.

Not this is the “cap” on prices that has passed through the steps outlined above. It is not the cheapest price available to UK consumers. It is the “dirty” price that includes prices from ALL energy sources including wind and solar.  If gas prices used to power gas turbine power stations go down – on lower volume - and renewables prices go up – on higher volume – in the overall mix, prices will go up.

In other words, there is no “switch” to the cheapest source of electricity sourced from natural gas.

It is hard to hide the price of natural gas. It is publicly traded around the world.

I have previously written about the price of natural gas futures contracts from Henry Hub in the US, trading at around 3 bucks per 10,000 MMBTU – which converts to around 3,000 Megawatt hours (MWh) compared to the charge for UK household electricity of 22.407 per kWh and 5.285p per kWh for gas.

For apples and apples, a single natural gas futures contract costs around ONE pound for 1,000 mWh whilst UK households pay 224.07 pounds per mWh for electricity and 52.85 pounds per mWh for gas.

A mark up of more than 200 times for electricity and more than 50 times for gas – based on the “raw material” of a deliverable natural gas futures contract.

OFGEM has zero interest in pointing this out – the government is intent on wind and solar. Remember the electricity price charged has a significant proportion generated from natural gas – it’s not all renewables. Just 40% of electricity comes from renewables – meaning if 60% comes from the far cheaper natural gas, the price of renewables must be around 50 pence per kWh to equate a 60% natural gas usage in order to arrive at the total electricity charge of 22 pence per kWh (assuming 5 pence per kWh for natural gas).

There will be costs associated with the delivery of natural gas to the gas fired steam turbines that generate electricity and for natural gas delivered directly to households.

Just for the electricity component, generated from natural gas fired power stations, let’s use Brave to give us an indication of prices from gas-fired electricity generation in the US.

Question: “2024 how much does it cost a gas fired power station to produce electricity” we have this answer:

“In summary, based on available data and assumptions, the estimated cost of producing electricity at a gas-fired power station in 2024 is around 4-6 cents per kilowatt-hour (kWh), with the average cost of natural gas being around $4-5 per MMBTU.”

The average cost of natural gas of $4-5 per MMBTU should be for 10,000 MMBTU as per the deliverable natural gas futures contract, but let’s leave that aside.

4-6 cents per kWh to produce electricity. Call it 4 British pence per kWh, compared to the 22 pence per kWh charged to households. There will be other costs associated with transmission to the house etc but still, that is a mark-up of more than five times!

I will end with a couple of quick points.

The electricity price per kWh for UK households hides the actual cost after standing charges AND 5% VAT.

The standing charge us supposed to cover maintenance of the energy supply network, meter reading visits, Government support schemes and policy costs – that is, nothing of value to a household, 90% of whom will have not seen a meter reader because they supply their own readings!

Here is a bill for a low use household for electricity and gas:

See the standing charge of 13.09 for electricity? That means the actual cost per kWh is £53.63 for 172.5 kWh = 30.1 pence per kWh not 22.5 pence and for gas, the actual cost is 13.6 pence per kWh, not 5.285. – during a mild autumn month – all designed to be opaque and not challengeable by shoving it right in your face!

Now add 5% in “Valu Added Taz”!!!

Secondly, the UK government intentionally conceals the value of subsidies given to the renewables sector – even with its vastly more expensive cost for producing electricity.

In answer to this question of Brave AI “2024 how much has the UK government paid in subsidies for renewables over the last ten years” We have this:

·        “In 2014, the UK’s renewable energy sector received around £1.1 billion (approximately $1.4 billion USD) in subsidies.

·        By 2023, the total subsidy amount had increased significantly, with an estimated £3.4 billion (approximately $4.3 billion USD) allocated to renewables

And this:

“While the exact figures for annual subsidies are not publicly disclosed, we can infer that the total amount paid over the last ten years would be substantial, likely exceeding £20 billion (approximately $25.6 billion USD).”

With this horribly complex effort at hiding these subsidies:

·        The Renewables Obligation (RO) scheme, which provided subsidies to renewable energy generators, was replaced by the Contracts for Difference (CfD) scheme in 2017.

·        The CfD scheme has continued to support renewable energy development, with auctions held regularly to allocate subsidies to successful bidders.

·        In 2024, the UK government revised the Renewables Obligation level for 2024-2025 to account for a 100% exemption from RO costs for energy-intensive industries.

The recent CFD “auction” went for around 80 pounds per mWh (8 pence per kWh) – the previous auction failed to attract any bidders.

Transparency is the enemy of the criminal in every field – from big pharma to big energy.

Onwards!!!

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