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Those are wholesale rates, literally everybody will be paying more than that. Business will be paying less of a premium.

tialaramex 5y ago
No, consumers will likely be paying the capped price. (A regulator on behalf of) the British government sets a six monthly price cap, based on the actual prices from a historical six month period, ordinarily this cap just means that people who are too poor or too lazy to "shop around" for a better deal pay no more than this amount for their electricity, but because the UK uses a lot of natural gas to make electricity and European gas prices are very high now (even though the UK has its own gas fields and doesn't use very much Russian gas) the cap is actually lower than any rational supplier would offer, and so there are no "better deals" out there, the alternatives are fixed rates far higher than the cap for long periods, essentially a bet that prices will go much higher and stay high. Right now the price cap is 21p per kWh (plus standing charges) and in April it rises to 28p per kWh, it is already anticipated that in October it will be closer to 40p per kWh. Because metric units are convenient that means right now wholesale energy prices above £210 per MWh mean a loss even before expenses to the suppliers, and from April until October, wholesale prices above £280 per MWh are likewise a loss. Peak prices of typically £300-£400 are literally bankrupting the suppliers. For small suppliers the consequence is they went bankrupt last year, in huge numbers once these prices began to bite. Some hadn't even been profitable with normal prices, so now asked to eat millions of pounds per month of losses they just folded. Their customers were handed to the other suppliers, on these capped rates, which are of course hurt those suppliers too. The biggest will probably survive this, if necessary with government money (although none of the "suppliers" for consumers actually supply any electricity anywhere, they exist on paper to satisfy a pro-business agenda for government, obviously if you're confident of the principle that capitalism is a good idea then more capitalism is a better idea right?) Anyway, as a result of the cap, essentially all consumers are not paying what electricity actually costs. British consumers are angry because their bills went up maybe 40-50%. But the wholesale prices more than doubled. They, as you might say, ain't seen nothing yet. I can afford this, lots of people cannot.
- londons_explore 5y ago
  Which raises the question... Can I as a consumer put a big pump in my back yard to pump water uphill (paying the price cap), and then own a company that generates power from the water flowing down the hill, and get paid wholesale rates, profiting from the difference?
  - tialaramex 5y ago
    You're not going to get a wholesale contract for the electricity from a swimming pool full of water moved once a day. I have no idea where you even go to get the contract, but if you remember that lobby "meeting" scene from "The Big Short" you've got the idea. https://www.youtube.com/watch?v=LUC1BuH_Gdo https://www.youtube.com/watch?v=LUC1BuH_Gdo By the time you're moving enough water to get a wholesale contract to sell your power, you're also going to need to buy enough electricity that you had to sign a wholesale contract for that and now you're just another small energy storage company, you are competing with the hollow mountain and all the startups who've bought a lot of batteries and a building on an industrial estate near a big transformer. You could doubtless make some money, this is a growing industry and enthusiasm goes some distance but you aren't going to get away with having a capped consumer supply contract and then selling that as wholesale electricity.

tialaramex 5y ago

No, consumers will likely be paying the capped price. (A regulator on behalf of) the British government sets a six monthly price cap, based on the actual prices from a historical six month period, ordinarily this cap just means that people who are too poor or too lazy to "shop around" for a better deal pay no more than this amount for their electricity, but because the UK uses a lot of natural gas to make electricity and European gas prices are very high now (even though the UK has its own gas fields and doesn't use very much Russian gas) the cap is actually lower than any rational supplier would offer, and so there are no "better deals" out there, the alternatives are fixed rates far higher than the cap for long periods, essentially a bet that prices will go much higher and stay high. Right now the price cap is 21p per kWh (plus standing charges) and in April it rises to 28p per kWh, it is already anticipated that in October it will be closer to 40p per kWh. Because metric units are convenient that means right now wholesale energy prices above £210 per MWh mean a loss even before expenses to the suppliers, and from April until October, wholesale prices above £280 per MWh are likewise a loss. Peak prices of typically £300-£400 are literally bankrupting the suppliers. For small suppliers the consequence is they went bankrupt last year, in huge numbers once these prices began to bite. Some hadn't even been profitable with normal prices, so now asked to eat millions of pounds per month of losses they just folded. Their customers were handed to the other suppliers, on these capped rates, which are of course hurt those suppliers too. The biggest will probably survive this, if necessary with government money (although none of the "suppliers" for consumers actually supply any electricity anywhere, they exist on paper to satisfy a pro-business agenda for government, obviously if you're confident of the principle that capitalism is a good idea then more capitalism is a better idea right?) Anyway, as a result of the cap, essentially all consumers are not paying what electricity actually costs. British consumers are angry because their bills went up maybe 40-50%. But the wholesale prices more than doubled. They, as you might say, ain't seen nothing yet. I can afford this, lots of people cannot.

londons_explore 5y ago
Which raises the question... Can I as a consumer put a big pump in my back yard to pump water uphill (paying the price cap), and then own a company that generates power from the water flowing down the hill, and get paid wholesale rates, profiting from the difference?
- tialaramex 5y ago
  You're not going to get a wholesale contract for the electricity from a swimming pool full of water moved once a day. I have no idea where you even go to get the contract, but if you remember that lobby "meeting" scene from "The Big Short" you've got the idea. https://www.youtube.com/watch?v=LUC1BuH_Gdo https://www.youtube.com/watch?v=LUC1BuH_Gdo By the time you're moving enough water to get a wholesale contract to sell your power, you're also going to need to buy enough electricity that you had to sign a wholesale contract for that and now you're just another small energy storage company, you are competing with the hollow mountain and all the startups who've bought a lot of batteries and a building on an industrial estate near a big transformer. You could doubtless make some money, this is a growing industry and enthusiasm goes some distance but you aren't going to get away with having a capped consumer supply contract and then selling that as wholesale electricity.