Criticism

Venerable consumer ‘champion’ Which? has jumped on the band wagon for the latest onslaught against the government’s handling of Smart Metering. They have criticised the scheme for what they see as spiralling costs and inefficient methods of installation. Which? have recommended that Smart Meters should be installed as part of a government scheme installing meters by the street and not by energy companies fufilling a request from customers on an individual basis. Their arguement is that this will maintain a greater level of control in installation costs and that consumers will not end up paying for what should be part of an energy and cost saving exercise.

Commentary

Does the capitalist model really work for the distribution and sale of homogenous and essential products to our society? The notion that the UK’s ‘competitive market solution’ will keep costs down is facile. We have a full–blown oligopoly in place, the DECC is staffed by scores of interns from the Big 6, the Big 6 have established direct ministerial links to facilitate the ‘considered contributions of the Energy suppliers in government policy’, OFGEM are still bleating to be given at least some enforcement capabilities in legislation after the best part of a decade in the wilderness, rambling on at Commons Select Committees, achieving virtually nothing.

Why, as ever are we missing the blindingly obvious; we can’t expect the Big 6 to be altruistic or philanthropic [despite some of their disingenuous marketing], they are in it to make money for shareholders… they’re all powerful oligopolistic global players who have got our government under their collective thumb. Efforts by German and French governments to constrain the likes of Eon, RWE and EDF has got the Energy companies suing their respective governments for recompense!

Come on; let’s have a bit of a wake-up here. The suppliers don’t really have any pressure on them to do a good job. If it costs a lot, currently they simply pass on the costs. There is very little discussion of the savings they make through reduced customer services, reduced meter reading costs etc. Simplistically meters should be replaced as a matter of course [nominated lifespan of 10 years], and doing it piecemeal probably doesn’t make much economic sense, however the reality would be unstructured whatever is tried.

To be honest, probably the last thing we need is Which’s suggestion that the government run the scheme. Keep it straight forward:

• Government introduce targets and penalties
• Get the consultations over with’ in months not years
• Every Energy Contract Renewal [where there isn’t a smart meter in place] is accompanied by an SM installation
• Every Contract transfer to another supplier – the same
• Existing replacement schemes to be accelerated [all meters subject to replacement requirements]
• Complete unfettered Smart meter transfer between suppliers when consumer changes supplier

So it’s as simple as that. Watch it all smoothly glide into operation. We shall see.

With civil unrest in the Middle East unlikely to ease, mixed with increased export capabilities, wholesale prices are expected to fluctuate heavily. European leaders look likely to impose an oil embargo on Iran, with Tehran warning of rising tensions and likely retaliation.

With one fifth of worldwide oil passing through the Strait of Hormuz, closing the doors would have huge economic implications around the world.

Increase in Exploration

The ever increasing demand for natural resources had led to fierce competition in the discovery for new supplies. Whilst the South China Sea is yet to be fully explored, estimates suggest oil reserves of over 200 billion barrels. Graeme Sheils, oil and gas partner believes, “Whilst there are risks to establishing operations [in the area], the potential rewards could be even greater. Oil and gas companies have, in recent months, been pushing the boundaries by expanding their exploration in contested waters”. Should these reserves become developed, a positive trend in price reduction should be seen.

Chris Huhne, UK Energy Minister, has recently reached agreement with Norway to show “commitment to support the industry in the future development of our oil and gas resources in the North Sea”. The enhanced relationship ensures joint development of the remaining North Sea resources with a keen eye to make renewable energy generation more profitable.

Most importantly, it provides a stable supply of natural gas from Norway, in theory meaning price stability for domestic and business customers in the medium-term future. Norway is currently the largest foreign producer of oil and gas to the UK and has proven to be a reliable natural gas supplier. Please click here to view the joint statement.

Ofgem Monitoring Suppliers

From a UK perspective, Ofgem are closely monitoring supplier behavior so improvements should be seen in terms of contract ‘roll-overs’ and objection handling. 2011 saw reduced back office support for all of the Big 6 Energy suppliers, making use of the Torse Client Services team a fundamental necessity for many of our clients.

So with rising uncertainty, volatile wholesale prices and vague supply agreements what does this mean for Torse’s clients? Essentially, it places increasing importance of securing your energy contracts at the correct time, with the correct supplier. Energy costs are now the second highest outgoing of many organisations, reducing costs and providing greater efficiency will become key to the success of many UK SME’s.

Renewable Energy

Historically, renewable energy was simply unaffordable and unfeasible for UK SME’s. This cost is now being reduced and Torse are able to procure 100% renewable energy contracts. Although the costs are slightly greater, many clients are finding increased turnover due to the brand awareness renewable sources brings. Please contact Torse for more information.

Smart Meters

The UK wide roll-out of Smart Meters to domestic and commercial properties has already started, with an estimated completion date of 2020. The new technology allows customers to control their energy consumption, save money and cut carbon emissions in the long-term and ensure accurate billing.

The transfer of meters has already started, many suppliers are installing the meters at ‘no charge’, however the costs are recouped on an ongoing basis hidden in post-installation supply rates.

Please contact Torse before agreeing to what could be a costly ‘upgrade’.

Thanks for your patience.

As RWE struggle to come to grips with the phase-out of nuclear energy in 2022, net debt of over £24 billion, a less than anticipated return on a recent share sale, loss-making long-term gas deals and its failure to setup a joint venture with Gazprom for the takeover of all European generation including the UK, it doesn’t bode well.

Indeed Npower might still make an attractive proposition for some. Whilst it is probably the worst performer in the portfolio in terms of ROCE (return on capital employed), Npower generates operating profits in excess of £309 million in the six months leading up to July 2011.

Whilst RWE has stated an intention to dispose of €8 billion of assets by 2013, the question is who might be in the market?

Npower’s current PR record might take the edge off for some prospective enquirers and there are many energy players around who could buy them without coming up against the Competition authorities.

So whilst a Boxing day bargain is unlikely, watch this space.

The Friends of the Earth is urging the Government to get a grip on the urgent need to invest in the UK’s green energy – and to make the feed-in tariff scheme more ambitious, not less..is this last minute attempt by Friends of The Earth and two solar installation companies going to ‘Save the Solar Industry?’

Even if they are successful next week in their efforts to effect a judicial review, are they right anyway? DECC ‘s decision to ‘slash’ the subsidy does in fact seem likely to have fallen short of their initial intentions to reduce subsidy levels to 9 ppkWh, that is to say, things could have been at lot worse.

As part of the Accelerating a Low Carbon Economy: Feed-in tariffs consultation workshop attended today, the general consensus of the Solar Fitting organisations in attendance, was that 21p per unit ‘was workable’ and in fact was ‘pretty much bringing the sector back to where things were two years ago’. There were also suggestions that the ‘Solar Vultures’; the typically larger commercially financed projects might ultimately be better for the whole development of sustainable energy for the UK’s Energy Security requirements.

The current situation seems to be driven more by politically motivated attention to the original intention of support for Feed-In-Tariffs for the Domestic / Social sector vs. the aspirations of the large Energy Suppliers; as the last thing the BIG6 want is for anyone to start generating their own energy, never mind having to pay them for it.

Alternative Energy is here to stay, the real battle as ever, is whether there is anyone with the balls in Government to actually stand up to the global energy providers [and their shareholders]. Otherwise this ‘competitive’ energy market will continue to play an increasing role in the suppression of the UK in these dire economic times.

Solar will play a significant future for us, so long as it is managed sensibly and not stifled by some knee-jerk politically motivated [or lobbied for] suppression.

It has taken 25 years of de-regulation for realisation that the Energy Market is in a mess. Whilst some of us brokers and consultants have been a small but insistent voice over the years, trying to persuade Suppliers not to deal with unprofessional TPIs (Third Party Intermediaries), finally Ofgem could have power and legislation to make this happen by the accreditation of energy brokers and TPIs

Short of nationalising the energy industry, solutions to the power of the Big 6 in the Business [non-domestic] market have been thin on the ground. Whilst a significant number of businesses have over the years used the experience and expertise of professional Brokers and Consultants to take on the Suppliers to ensure a better deal, others have been duped/misled by sales agencies masquerading as professional organisations.

Ironically much of the call for increased legislation and control of unscrupulous TPIs has come from within the Professional Brokering community, albeit a small voice. Efforts to establish a trade body, the UIA, which required adherence to a Code of Conduct never really found favour, and, whilst well connected, remained somewhat parochial. Finally it looks like Ofgem will get more legislation in place and hopefully clean up the TPI marketplace.

What is also heartening to hear publicly is that Ofgem has finally and formally realised that the Big 6 will only cooperate when legislation and the “power to punish” actually come into play.

When Ofgem’s proposals come to fruition you can be sure many of the less established brokers within the market will struggle; a serious and professional energy broker like Torse will continue to provide real competitiveness in the Business Marketplace and reduce the oligopolistic powers of the Big 6 in the Energy Market.

Read the full Ofgem report.

What’s wrong with carrying on the scheme we’re paying for it anyway (funded from the CCL that most households and businesses pay)? Don’t lose your nerve now Greg Barker (Climate Change Minister).

It’s a familiar and fairly obvious story for most right-minded thinkers; generally the UK continues to use energy which ultimately is fossil-fuelled, an increasingly scarce resource, with increasing costs (financially and geo-politically). Renewable has to be the way forward.

But and it’s a big but, the principles espoused by George Osbourne on a macroscopic basis, are it has to be economically viable for businesses to take up, whilst we have Greg Barker softening us up for significant cuts in the existing subsidies.

Whilst there is a strong case for reducing the Domestic proposition; where else will you get investment returns of 8 or 9%?

Ultimately business is a fundamental energy consumer generating real value for the UK economic community. There is already downward financial pressures with FIT subsidies having already been reduced for commercial solar projects [the bulk of FIT scheme take-up] to as low as 8.5p/ kWh for greater than 250 kW installations.

Ultimately the commercial schemes are likely to bring the most significant improvements with overall lower costs per kWh.

So hopefully some sense of balance will prevail. By all means reduce the domestic subsidies by 50%, but also ensure that commercial Enterprises are not penalised unfairly. If it does indeed continue to be successful, why not increase CCL on business energy costs to pay for development projects and those who do take the plunge will benefit?

Within the plant, maize silage is anaerobically digested over a period of around 90 days, during which time the majority of the organic matter is broken down to produce a methane-rich biogas. The gas is then used as a fuel in combined heat and power plants (CHP) to generate both electricity and heat. The electricity produced is used to help power the adjacent sewage works, reducing the amount of fossil fuel-derived electricity imports from the national grid to zero. - Interserve Case Study on Severn Trent

With wholesale energy continued pricing fluctuations, the project is an integral part of its renewable energy expansion programme. By 2013, Severn Trent aims to generate 30 percent of its energy demand through renewable sources and even allows them to produce surplus electricity to be sold back to the grid for profit.

A second environmental benefit of the process is that during the cultivation of the maize crop, the plants naturally convert carbon dioxide into oxygen. The heat given off from the CHP engines is re-used in the process to maintain optimum operating temperature. And finally, after the maize silage has been digested it is recycled back to the fields as a fertilizer to help grow next year’s crop. This makes the plant highly efficient and represents an annual carbon saving of around 8,500 tonnes of CO2 equivalent. - Interserve Case Study on Severn Trent