Hi Guys
With gas and electricity prices sky rocketing, It would surely be reasonable to ask just how much (or little) profit these utility companies are actually making. The regulator seems to have played into their hands by effectively allowing them to hugely Increase their prices, potentially on a 3 monthly basis, however, are these increases actually fully justified?
The regulator apparently justifies the huge increases in order to protect the supplying companies from going bust. But just how much or little profit is actually being made I wonder?
There are two parts to the price cap, the Standing charge, which is effectively what the companies can charge to deliver the gas and electricity to our houses, (charged in pence per day) and the unit charge, which is what they can charge in pence per unit (per KWH) on the amount of gas and electricity that we actually use.
In the uk, over the years, our government has naively refused to subsidise the cost of gas storage repairs, which has dramatically reduced the amount of gas storage available here. This now makes buying large quantities of gas, when the price is low and storing it for future use, a non entity.
We apparently only have enough storage to meet the demand for about 4 to 5 days of winter use, about 1% of Europes total storage. Germany has 16 times the storage capacity of what we now have. Part of the reasoning appears to be our governments infatuation with so called green renewable energy and the reduction of gas dependency. With little being done to increase the number of nuclear power stations, so much for that idea!
The government also has their sticky fingers in the pie as increased profits from these companies, mean that they can collect far more revenue by way of corporation tax, which is a tax on the profits being made.
The same argument applies to fuel prices, ie what we are being charged for petrol, diesel and heating oil etc. In this instance, It appears that the likes of BP and Shell, sit back earning vast profits because the price we pay is directly linked to the global price of crude oil per barrel, whether in fact there is actually a shortage or not. In effect, potentially blatantly profiteering using the war in Ukraine as a catalyst to increase prices.
what are your thoughts I wonder?
With gas and electricity prices sky rocketing, It would surely be reasonable to ask just how much (or little) profit these utility companies are actually making. The regulator seems to have played into their hands by effectively allowing them to hugely Increase their prices, potentially on a 3 monthly basis, however, are these increases actually fully justified?
The regulator apparently justifies the huge increases in order to protect the supplying companies from going bust. But just how much or little profit is actually being made I wonder?
There are two parts to the price cap, the Standing charge, which is effectively what the companies can charge to deliver the gas and electricity to our houses, (charged in pence per day) and the unit charge, which is what they can charge in pence per unit (per KWH) on the amount of gas and electricity that we actually use.
In the uk, over the years, our government has naively refused to subsidise the cost of gas storage repairs, which has dramatically reduced the amount of gas storage available here. This now makes buying large quantities of gas, when the price is low and storing it for future use, a non entity.
We apparently only have enough storage to meet the demand for about 4 to 5 days of winter use, about 1% of Europes total storage. Germany has 16 times the storage capacity of what we now have. Part of the reasoning appears to be our governments infatuation with so called green renewable energy and the reduction of gas dependency. With little being done to increase the number of nuclear power stations, so much for that idea!
The government also has their sticky fingers in the pie as increased profits from these companies, mean that they can collect far more revenue by way of corporation tax, which is a tax on the profits being made.
The same argument applies to fuel prices, ie what we are being charged for petrol, diesel and heating oil etc. In this instance, It appears that the likes of BP and Shell, sit back earning vast profits because the price we pay is directly linked to the global price of crude oil per barrel, whether in fact there is actually a shortage or not. In effect, potentially blatantly profiteering using the war in Ukraine as a catalyst to increase prices.
what are your thoughts I wonder?
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. Five times more taxes to be collected to help pay for government services like the NHS.
