Saturday, 14 October 2017

Electricity Retailers Increase Prices

Most electricity retailers are increasing their prices this month and the blame is been put on wholesale prices. However, gas prices are no higher than 2005 levels. 

Figure 1: Gas prices since 2000

I have been keeping track of my own electricity bills since 2012. I wanted to see if the reduction in wholesale prices and gas prices have been passed on to the consumer. The result can be seen in Figure 2.

Figure 2 shows little correlation between gas prices and unit price of electricity

The result is clear. The large fall in gas prices has not been matched by a similar fall in the unit price of electricity.   There has been a reduction in gas prices of about 50%. The reduction in the unit price of electricity has been about 7%. If we compare the energy payments or the annual market value of the electricity wholesale market with the gas prices we do see a better correlation (Figure 3).

Figure 3 shows good correlation between Annual Energy Payments (in orange) and Gas Prices(in red)

This means that when the gas prices are low, generators receive lower prices from the market. But these savings in wholesale prices are not passed on to the consumer in any meaningful way.

The hidden force in these graphs is wind energy. It has increased every year since 2012 now making up about 23% of the electricity mix. While we are constantly told that wind energy reduces the wholesale price of electricity, there is no evidence in the actual data.   With this increase in wind energy, there has been a parallel increase in system costs - grid and transmission infrastructure, back up costs, new interconnectors, and high wind penetration feasibility programmes (known as DS3). 

All these costs make up the unit price of electricity. After that, the PSO Levy gets added on, another component that only ever increases (an increase has also been announced this month).

The Energy Regulator seems to be toothless in the face of an electricity sector with out of control costs, government interference and regulation. His name is now redundant, and increasingly appears more like something out of Orwell's novel 1984 where Government Departments like the Ministry for Truth do the opposite of their name.       


  1. Is this the first sign of income cannibalisation in Ireland. Too much capacity ,reduced income and falling output per wind farm. Subsidies like the PSO not increasing sufficiently to cover increasing losses.

  2. Wind Energy Denmark tries to regulate itself from the pressure on the settlement price by introducing a
    method so that about 400 MW of its 2,500 MW wind turbines can be centrally stopped entirely or partly by
    prospects of imbalance and very low prices. However, in the same situation German mills often sends
    electricity to the North because of their permanent settlement of approximately 70 øre/ kWh continue to flow
    northward, even when the electricity market is negative. It has in some cases forced Wind Energy Denmark
    to stop Danish turbines without there being an isolated Danish needed. Niels Dupont had, he said, hard to see
    how the situation should improve. On the contrary, the gloomy view of the time the record volume of water
    in the Nordic magazines and what Niels Dupont called wind power "cannibalization", i.e. that more and
    more wind turbines are erected and produce more and more in both Denmark and Germany and is pushing
    electricity and the settlement price further down.


  3. There are reports from the Washington Post and the UK Daily Mail that that the Australian government have rejected clean power in favour of less expensive more reliable fossil fuel electrical generation. In fact they have mandated states to invest in fossil fuel generation. Google "Australia rejects Clean energy target for cheaper fossil Fuel Power" The Mail and Washinbgton Post." and read about it. In my view, this takes two major players (the USA and China) out of the green global plan. India, Russia and China are already out in reality. Canada and the EU appear to be the last ones standing. I have claimed that a huge miscalculation is being make in relation to renewable generated electricity and the world can either learn the easy or the hard way. It will learn one way or the other.

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  5. Funnily enough, in Germany and the UK, renewable energy is pushing down the cost of gas.
    Anyone that uses the daily mail and other newspapers for quotes cannot be taken seriously! These are written by journalists who are there to sell advertising space for gas companies

    1. Daily Mail is not an argument.

      Gas does not require a subsidy. In Ireland only wind and peat require a subsidy.

  6. Nothing wrong with subsidies. They only get paid for energy produced and are paid for out of our energy bills. Factor in energy efficiency and social incentives for better insulation etc which bring down the usage and its win win for consumers. Unlike fossil fuels which receive generous tax breaks paid for out of taxation and we all know the big firms which dodge paying their fair share of tax, then the tax payer gets stung twice for having to pay the social costs of health issues caused by fossil fuels

    1. Oil is a net contributor to state coffers. In Ireland 60% of the price of petrol is government tax. So oil is a net CONTRIBUTOR. Wind on the other hand is a net COST.