The energy market is not working to benefit consumers in the UK or Europe – here is why
This crisis is occurring because of the way the government structures the markets. Consumers cannot access cheap green power, we all have to buy expensive power.
We pay more as residential consumers in London than in any other capital city except Rome. The data is here and it is clear.
In the UK more than half our electricity is generated from non-fossil fuel sources, and yet renewable energy has not protected us from expensive power.
The price of gas sets the price of electricity! The most expensive form of generation sets the price. Moreover, of course, we consumers can’t switch out of electricity – cheap electricity has not benefited consumers.
The price of electricity is set by the most expensive way of generating it. This is not a free market, it is fixed to benefit the most expensive producers and then we all pay the higher price, while more efficient producers make high profits.
This leads to excess or windfall profits, made at the expense of consumers
“in today’s liberalised market, which is based on so-called marginal-cost pricing, the final price of power is set by the most expensive fuel needed to meet all demands — in this case gas. This means that as gas prices soar, so does electricity, even if cheaper, clean sources contribute to the total mix.”
Industrial users of gas are closing and laying off workers, and supply constraints raise prices for steel, aluminium, fertilisers and power – more & more
Across Europe we now have
- a market for permissions to emit greenhouse gases,
- marginal-cost pricing, which meant that the wholesale price of every kilowatt should equal that of the costliest kilowatt. LNG is the marginal price setter in many EU gas markets,
On Orkney, with plenty of cheap renewable power, local consumers pay higher prices than on the mainland. Listen to Costing the Earth
Why Are Energy Bills Rising When Suppliers Are Making Record Profits? Huffington Post
UK Sees Up to £170 Billion Excess Profits for Energy Firms Bloomberg
UK Big Six energy firms made more than £1bn in profit ahead of price hike Open Democracy
