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But in this case "... Prices aren't determined by costs and never have been. Prices are only determined by supply and demand. ..." is patently incorrect! OFGE

by iam-TJ 4y ago

But in this case "... Prices aren't determined by costs and never have been. Prices are only determined by supply and demand. ..." is patently incorrect! OFGEM (Office of Gas and Electricity Markets) [0] imposes retail price caps based on what it considers 'fair' for the retailers, and this came about specifically because retailers were charging standard-variable-rate and pay-by-meter customers excessively as well as having far too many 'offers' that confused customers. There's nothing to stop the government amending the legislation with a 1-clause Bill that gives OFGEM the power to impose a cap on the energy producers. I agree about building wind farms. I'm on a farm where a neighbour wanted to install a single turbine for local generation but it was refused - due to NIMBYs in villages 2 miles away complained it would "spoil their view" despite the fact most of them are out at work all day and probably only see that view for 2 minutes a day, if that! [0] https://www.ofgem.gov.uk/about-us/our-role-and-responsibilities https://www.ofgem.gov.uk/about-us/our-role-and-responsibilit...

deleted 4y ago
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kaashif 4y ago
Yeah, you're right that prices are also affected by regulation. I should've been more precise - the price the suppliers want to charge is only set by supply and demand. They'll charge whatever the market can bear. If the cap is lower than that, they'll charge the cap. That's an inescapable feature of markets. If Ofgem caps the prices for producers, the reaction of the producers will obviously be to limit production. They'd prefer to produce when profits are high. The next step would be for the government to mandate production, and this is another stopgap measure on the way to admitting energy markets don't work when one of the largest global energy producers are actively fighting an economic war against us. My point is just that we shouldn't be at all surprised when markets don't work when one of the largest actors is behaving in an economically irrational way. We shouldn't be surprised when countries will abolish any kind of energy market and set supply and demand centrally by controlling producers and rationing.

by iam-TJ 4y ago

deleted 4y ago

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kaashif 4y ago

Yeah, you're right that prices are also affected by regulation. I should've been more precise - the price the suppliers want to charge is only set by supply and demand. They'll charge whatever the market can bear. If the cap is lower than that, they'll charge the cap. That's an inescapable feature of markets. If Ofgem caps the prices for producers, the reaction of the producers will obviously be to limit production. They'd prefer to produce when profits are high. The next step would be for the government to mandate production, and this is another stopgap measure on the way to admitting energy markets don't work when one of the largest global energy producers are actively fighting an economic war against us. My point is just that we shouldn't be at all surprised when markets don't work when one of the largest actors is behaving in an economically irrational way. We shouldn't be surprised when countries will abolish any kind of energy market and set supply and demand centrally by controlling producers and rationing.