Energy Prices Fall – Too little too late?

As of January 2012, i’m sure that you’ve heard in the news that Energy Prices are beginning to fall, but before you get too excited, they are only reducing by around 5%, and the reduction announced across many suppliers is restricted to Gas only, although British Gas have announced that its reduction will be levied on Electricity prices, whilst its gas prices remain the same, for now.

But you have to get this energy price reduction into some prospective. First of all, many energy customers have very short memories, as it was only about twelve months ago, that energy suppliers announced the first of two energy price increases for 2011, and this was across both Electricity and Gas prices. This was followed by Gas and Electricity companies making their biggest hike of the year during September to November 2011, when all of the companies made their biggest price increase yet, adding around 15% – 20% on the average household energy bill.

Of course, if you are an Economy 7 Electricity customer, then the 5% reduction on Electricity prices made by British Gas will not affect you!.

So when you consider that, taking into account, the combined increases that both energy price rises brought households throughout 2011, even with the recent price reduction of energy prices by 5%, we are still effectively paying 10% – 15% MORE than we were paying back in 2010. It hardly touches the surface when you look at it in real terms.

Many people also think that by reducing energy prices, Electricity and Gas suppliers are doing them a huge favour, in reality they are not, they are businesses with shareholders which ultimately means that Energy companies are out for themselves and for what they can get. In this case, energy prices are falling by 5% because wholesale prices have fallen because there has been a surplus. Back in October the UK had some record breaking temperatures, with temperatures hitting 27c in some parts, add this to a very mild December, and start to January, and Winter hasn’t really delivered for Gas and Electricity suppliers this year, and the mild weather looks set to continue. In two short months, it will be spring, and many areas haven’t even seen a heavy frost let alone a fall of snow.

In short, consumers are not using energy this winter, certainly not in the quantities that were consumed in January 2010 when we had record breaking cold and days where the daytime temperature rarely rose above freezing. So now the energy companies are in a panic, because they are not selling as much energy as they should do at this time of year, and so are reducing prices, in an effort to kick start demand.

With temperatures currently well above average for the time of year, energy companies are now announcing reducing the cost of their Gas and Electricity, at a time when consumers least need it. So before thanking them, or thinking what great people they are for reducing gas prices by around 5%, also consider the fact that this time last year they hiked their prices during one of the coldest spells in living memory, and at the time when the majority of people NEEDED a price reduction, especially the elderly and those on low incomes.

Unfortunately, we are being taken for a ride in relation to the Energy prices that we pay in the UK. France for example, has much lower energy prices than us, and their Government has only increased their energy prices by around 2% during 2011, in fact the French Government actively stepped in to introduce an upper cap to ensure that energy companies in France could not increase prices by more than this figure. You probably also wouldn’t be surprised to learn that a lot of Energy companies who sell Gas and Electricity in the UK, are also wholly owned companies based in Europe. A case of UK customers subsidising French energy customers perhaps?.

It also has to be pointed out, that France has also heavily invested in Nuclear Power stations, the type that were once the dream of Britain, but never materialised. During the Thatcher years, much investment was spent in rolling out nuclear power, however this was shelved shortly after by a change of Government, and no doubt interference by a bunch of green folk tying themselves to trees.

Currently the majority of the UK is powered by steam, literally. Most power stations generating Electricity are still currently powered by steam turbines from heat produced by burning Gas and Coal. In other words, we have to buy one form of energy to burn in order to produce the means to generate another different form of energy. This is one reason why Electricity in the UK is so expensive, because its a secondary energy source, reliant one another expensive fuel to produce it, and so two seperate middlemen, both making a profit.

Had the UK, have invested in Nuclear Power Stations when we had the opportunity then our energy would not only be plentiful, but just like France our energy prices would be around 40% less than those who haven’t moved forward and are still living in the 1930’s and using steam. Essentially, the reliance on Gas to burn to produce Electricity would vanish, meaning more Gas for those who use Gas for heating, and a subsequent drop in Gas prices too, so we would all be happy.

However, there is also one other factor that also increases energy costs, and that is the amount or profit that the Energy suppliers announce every year, obscene amounts of money, whilst in comparison some of their consumers struggle to heat their home – a basic human right.

This is not Dickensian Britain, and in 2012 people should really not be in a position where they have to literally choose between eating and heating, but unfortunately for a lot of low earners and those with illness and disabilities it is rapidly becoming a reality as energy prices rise quicker than they fall. What next?, the return of the workhouse?.

Unfortunately in the UK, we have a well deserved reputation for being a spineless nation, and unlike many other countries we don’t voice our protest, at least in the right places. In the UK, any protests which venture beyond a coffee morning, or a leaflet campaign are usually restricted to a few blog posts and a facebook style rant, but essentially nothing gets done, nothing changes and prices still continue to rise, at an alarming rate.

My Grandfather once said that if the UK was invaded by Hitler today, he could just walk into the country at 9AM, by housed in an eight bedroom £1 million mansion by 1PM and we’d all be talking German by 5PM, because the backbone shown by our ancestors throughout WWII is not evident in society today, and we simply don’t have the gumption or solidarity to stand up for ourselves, even if its only against energy companies, rather than invading nations, and I can;t help but think that his anology is 100% accurate.

So what can be done to decrease energy prices?.

1) Limit the profits that Energy companies can make. Just like the French Government, why can’t the UK Coalition step in an introduce a ceiling of a maximum 2% energy price cap per annum?

2) Remove the 5% VAT that domestic customers pay on their Energy bills. After all, we managed to run and fund the country without any VAT on fuel for a considerable amount of time, we can manage without it again.

3) Stop paying ludicrous amounts of money out in the form of feed in tariff’s for Wind Turbines that burst into flames during high winds.

4) Start investing in Nuclear Power stations. The safety argument no longer holds water, after all if the ones in France exploded then we would be equally affected by it anyway, so we may as well build our own and take the same risks, but benefit greatly from doing so by reduced energy prices.

5) Above all, we need to stop limiting our protests to social networking sites and just complaining amongst ourselves and take them to where it matters, the Energy companies themselves. Given the massive profits they are making out of the misery of their customers, its about time the gravy train was stopped and we began to get a fairer, more realistic deal.

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