Tag Archives: electricity

OFGEM Announcement

I should have known better

Considering myself a canny consumer I always shop around for the best deals for my electricity supply (no gas here, see It’s a gas, gas, gas). So i was relatively pleased with myself when I found a good deal with a company called GB Energy Supply. The name very nearly put me off but it was a good deal so I went ahead with the switch, but I should have known better.

Like the non existent country that this company is named after this company went bust. But they didn’t bother to tell anyone about their financial troubles. The first I heard of it was on a news site. So I went to the website but it was down, then I went to OFGEM. To be fair they provided plenty of reassurance and information about what was happening. But I had some concerns about whether I would ever see the credit that I had with GB energy again.

That was two days ago and yesterday came the news that a Supplier of Last Resort had been found. That supplier is Co-operative energy.

OFGEM Announcement

OFGEM Announcement

I also receive an email from my new energy supplier telling me that they will honour the terms of my contract with GB Energy Supply, so I keep the same tariff and that they would give me the credit that I had built up. So far so good.

But then I did some digging, being an ethically minded person after all. I thought that I should do some due diligence and see who this new supplier was. It turns out that they are part of the Mid-counties co-operative. Which in turn are part of the Co-operative group.

Digging around some more and I find that the Co-operative group had donated a big wad of cash to the Co-operative party in Q3 2016. £312800 to be precise.

Co-operative Group Donations

Co-operative Group Donations

Then I looked for the Co-operative party and I found their website here.

About the Co-operative Party

About the Co-operative Party

Further down the page I find this:

Co-operative Party Politicians

Co-operative Party Politicians

So if I stay with this energy supplier I will be directly funding Unionist politicians, warmongers,  WMD fans and ermine socialists. Why would I want to do that?

So that’s it I’m off to another energy supplier as soon as I can. If you’re one of the 160000 former GB Energy Supply customers you may wish to reconsider this offer too.

Longannet shut

Smashing the monopoly of National Grid

The National Grid holds a monopoly on the operation of the high voltage electricity transmission network within the UK. They have done so since Margret Thatcher sold off the nationalised Central Electricity Generating Board in 1990. They also own the high voltage electricity distribution network in England and Wales, but the grid in Scotland is  owned by Scottish Power and Scottish and Southern Electric (SSE). Last year National Grid made £3863000000 profit (that’s almost £4bn) and disbursed £1614484200 (£1.6bn) in dividends to its shareholders. Since it was created the share price has trebled. All this just goes to show how profitable an enterprise this is.

As regular readers will know, Scottish consumers pay more for their electricity than our cousins in England. We also pay more to connect a generator to the grid, which is why Longannet is closing. If it was located in the SE England then it would be paid for generating electricity. From an environmental perspective, the closure of Longannet’s dirty, coal-fired, furnaces would be a good thing. However lots of jobs depend upon it and it would leave Scotland a net importer of electricity from our cousins down south. Which would cost more than generating it here of course.

The logic behind the closure of Langannet goes like this: generators which are far from London must pay more to connect to the grid because it costs more to transmit the power over longer distances (Edinburgh and Glasgow don’t count as major population centres). In a lovely piece of Joseph Heller style logic remote communities, which are far from power generators, must pay more for their electricity for the same reason. So Scotland not only pays more to consume electricity, our generators also have to pay more to connect to the grid. All this money flows into the energy companies pockets.

So what’s the solution? It’s called the Micro Grid. This is where a community, or even a group of houses or an industrial estate, have their own electricity generator which supplies most of their needs. This generator can be anything, but let’s think of the environment so it should be a combination of renewable energy technologies like solar, wind and some biomass. The generators will be able to power the needs of the community for most, if not all, of the time. There could also be a grid connection, but crucially, the generators will not export to the grid so no connection charges are required. If the community shared a meter then there would only be one consumer connection charge. The grid connection would just cover the shortfall of the generator during high demand periods.

But energy policy is reserved to Westminster, so how can this be achieved? Well the Scottish Government controls the planning system. They could make it a planning policy for all new developments which would free the lucky people who live and/or work there from the extortion of the energy companies. They would be masters of their own power. Eventually, when energy policy becomes more enlightened, all those wee grids could be connected together into the Scottish National Grid.

Existing communities could be encouraged, through grants and planning policies, to create their own micro grids. Through these small steps we can be free of the oppressive pricing regime that currently exists for our electricity, free from the monopoly of the National Grid.

Gas Distribution Networks UK

It’s a gas, gas, gas.

After the furore over the future of the Longannet power station, where the coal-fired generator has to pay £40 million per annum just to connect to the grid, I decided to do a bit more digging into the energy sector of the UK. What I found doesn’t surprise me but it does sadden me. For here we are living in a land rich in natural resources. We have an abundance of energy sources yet we pay the highest prices for our energy in the whole UK. Which is bizarre when you consider that we produce so much of the stuff.

I happened upon a report from Consumer Focus which caught my eye. It is entitled, “Off-gas consumers” and it details the numbers of people who are connected to the mains gas grid in the UK. But before we get into the report it is worth reminding ourselves where the UK’s natural gas comes from, for this we can get the information from the DECC in their DUKES report.

UK gas network

UK gas network

Reading through the DUKES report we can see that the UK is no longer self-sufficient in natural gas, we produce around 50% of what we consume. The rest is imported and the bulk of that comes through the Langeled interconnection from Norway. But if we look at the home produced stuff we can see that the vast majority of it comes from the North Sea. There is an area off East Anglia which produces a lot of gas and very little oil but all of the rest comes from Scottish waters and it is landed at St. Fergus gas terminal near the Broch. Just up the road from me. From there the gas enters the UK’s gas transmission system and travels through 4 pipelines which transport the gas south, all the way south. All of those pipelines pass close to my house, one of them is less than 400m away, yet I have no mains gas.

Which brings us back to the Consumer Focus report, here is a nice wee table which illustrates the costs of different heating fuels:

Fuel costs for heating

Fuel costs for heating

Although the table states 2009 prices it was updated in 2013, but since the fall in the price of oil we can assume that the figures are no longer valid. However the point of the table is to illustrate the costs of each fuel for heating our homes. As we can see, mains gas is the cheapest and electric heating can be almost three times more expensive. Here in Gordon I use heating oil and logs. Cheapish but not as cheap as mains gas.

But I’m not alone in the lack of mains gas, there are others.

Mains gas connections UK

Mains gas connections UK

We can see that in England 92.8% of households have access to mains gas. But the picture here in Scotland is not so rosy, up here we only have 86.4% of our households with access to mains gas. Of those without mains gas access 15.2% of the households use the most expensive fuel type, electricity. As the Consumer Focus report describes, a lack of access to mains gas creates fuel poverty. So how can it be that we produce so much natural gas yet we have so small a distribution network?

Part of the answer is that we have a larger rural population scattered over a larger area than England, but that’s not all of the answer. Methlick is a village not far from me and it has a population of 442 at the last census, yet it has no mains gas. There are countless other small villages dotted about the countryside which are also deficient of a mains gas supply. So who or what is responsible?

Gas Distribution Networks UK

Gas Distribution Networks UK

The distribution of mains gas in Scotland is controlled by a single company which is now called SGN, some might call that a monopoly. SGN is owned by three shareholders: Borealis Infrastructure Europe (UK) Ltd (25%), Ontario Teachers Pension Plan Board (25%) and Scottish and Southern Energy (SSE) Ltd (50%). SGN also distribute gas in southern England. SSE has some directors on SGN’s board. SSE also produce electricity, and as we have seen we have the most expensive electricity in the country.

If you have dual fuel, that is both gas and electricity, you can save money by purchasing both from the same supplier. Lets take a look at what a customer in Inverness would pay Eon for dual fuel at the standard rate:

Dual fuel Inverness Eon

Dual fuel Inverness Eon

Now lets take a look at what a customer in Ilford would pay for the same package:

Dual fuel Ilford Eon

Dual fuel Ilford Eon

We can see from the above that the electricity is more expensive in Scotland but the gas price is exactly the same. We discussed the extra cost that Scotland pays for electricity in this post. The normal reason given is that we are so remote from the generators that the transmission costs are higher, also our generators pay more to connect to the national grid because they are remote from the main population centres (hence the £40 million connection charge for Longannet).

By the same logic surely we should see the same thing for gas: the further away from the supply you are the more you would pay since there are losses in the gas network also? However this is not the case. A customer in London can buy gas from the Scottish sector of the North Sea for the same price that a customer who lives right next door to where that gas comes ashore pays. What kind of twisted logic is this? Is this a case of Scotland subsidising the rest of UK again?

But that is not all, lets take a look at where some of this gas ends up; power stations. The most efficient, and cleanest, form of power generation from fossil fuels is currently the Combined Cycle Gas Turbine power station. With such an abundance of gas you expect that Scotland would have a few of these? Eh no, we have one at Peterhead and the old Cockenzie coal-fired station is due for conversion at some point.

So if we don’t have them who does? Well if we have a look at this list from Wikipedia we can see that England has 45 of them, all of them being built since 1991. Coincidentally this is just after the privatisation of British Gas in 1986. Perhaps that explains why there are no extra transmission costs for gas? Or am I just being overly cynical?

Longannet is back in the news today with the announcement that it may have to close next year due to the high connection charges. The UK government, who have energy as a reserved matter, say that they will look at the pricing structure for electricity transmission in 2016. They also say that Scotland’s energy supply is assured due to the pooling and sharing of resources and all those lovely CCGT power stations daan saarf will keep the lights on.

The problem is that we will have to pay more for this electricity, which is produced from Scottish gas in England, to be sent from England back to Scotland, due to transmissionlosses. Logical it is not.

Is this a case of the UK government deliberately running the Scottish industries and infrastructure down in order for us to be more dependant upon rUK and therefore less likely to become independent? Therein lies the question.

Why does Scotland pay more for electricity?

It will probably come as no surprise that here in Scotland we have to pay more for our electricity than our cousins in England. Meanwhile the electricity companies who provide us with this electricity make heavy profits. Does this seem fair? No I don’t think so although you may have a different opinion. But how does this come to pass? Why do we pay more and how much more?

Well the following picture illustrates the cost of electricity bought from SSE/Scottish Hydro for a property in Aberdeenshire:

Electricity Costs Aberdeenshire

Electricity Costs Aberdeenshire

So you can see that the Tariff Comparison Rate (TCR) is 17.29 pence per unit (kWh). So for a property which uses 4000 units per annum the cost would be £691.60. So what about our cousins down south? Well the following table illustrates the costs of electricity bought from SSE/Scottish Hydro for a property in Southampton:

Electricity Costs Dingwall

Electricity Costs Southampton

As you can see the TCR for this property is 15.73 pence per unit which is 1.56 pence less than the Aberdeenshire property. So for our 4000 kWh user the bill would be £629.20 per annum. Which means that our Southampton property would pay £62.40 less than our Aberdeenshire property for their annual electricity. So our Aberdeenshire property pays almost 10% more than our Southampton property.

Here in Scotland we are having a renewable energy boom, which is mostly driven by Government subsidies, but it is to be welcomed none the less. Renewable energy has exceeded our demand for electricity on a few occasions recently and our carbon emissions have been drastically cut. Most of this boom in renewable energy is being driven by wind turbines, but we also have some biomass and solar in the mix too. In order to get the energy being generated to a customer the generator needs to be connected to the electricity grid, but this costs money as you would expect. But how much? The following table shows how much it costs to connect a generator to the grid across the UK:

Generator Connection Charges UK

Generator Connection Charges UK

As you can see, if you want to connect a generator to the grid in Scotland you will pay much more than you would if you were located in England or Wales. In some areas of England they will pay you to connect your generator to the grid. Here is another picture which illustrates the difference in generator connection charges:

Generator Connection Charges UK

Generator Connection Charges UK

The reasons given for these discrepancies are “a combination of a locational element that reflects the cost of providing incremental capacity to generation on an area of the main integrated onshore transmission system, and a non-locational residual element which ensures that the appropriate amount of transmission revenue is recovered from generators.” In other words it costs more to get the power from remote areas to the main users in built up areas.

The reality is that we in Scotland subsidise the rest of the UK, we pay more for the electricity we use and we pay more for the getting the power that we produce onto the grid. These extra costs are holding back our renewable energy sector and punishing the people with higher electricity charges.

So what can be done? We could re-nationalise the electricity grid. Then we could ensure that the transmission charges are the same no matter where you live or generate and then I could be paying the same for my electricity as someone in Southampton. Are there any bold politicians out there who would make this their policy?