Electricity Prices

Chris Huhne, UK Energy Secretary, has recently taken some time for a Q&A session in today’s Financial Times. When we at Torse found out about this arrangement, we jumped at the chance to ask the Coalition Governments energy expert a question or two, here’s how it went:

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The London School of Economics recently published whitepaper, Energy Risk Management for UK Business, concludes that the risks associated with business energy will continue to grow over the coming years.

The report continues that the increase in financial, legislative and reputational risks associated with business energy mean that within today modern and often complex environment, organisations need to put into place strategies to reduce their exposure to potential risks.

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The ongoing recessionary influences such as fundamental cuts in government spending are patently beginning to bother the speculative scavengers – and by scavengers we are of course referring to those companies or organisations influencing wholesale energy prices. OPEC is intimating that it would be quite nice if everyone paid $10.00 more a barrel to make them feel more financially comfortable, unsuprisingly this was pounced on by the market with new highs.

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Woah! Shutting the stable door after the horse has bolted! As tempting as it is to continue with the theme, we’d better cut to the chase!

Smart Meters are arriving as we speak. The DECC (Dept. of Energy & Climate Change) talk in terms of: 160,000 05‐08 profile electricity meters and 40,000 large gas meters (732 MWhs). These are all supposed to be replaced by 2014 and guess what, DECC and OFGEM are still discussing with energy suppliers the type and capability of the meters to be used, it’s that ‘VHS vs. BETAMAX’ debate all over again.

Worse still some suppliers (and we’re including the ‘big six’ in this) have seen this as some sort of opportunity to tie businesses into long‐term metering contracts, making it difficult to change suppliers come supply contract renewal time, and making spurious claims about ‘interoperability with other suppliers’ meters’.

Lets be clear there may be some technical issues, however, commercial restrictions are certainly not acceptable, and these views we believe are endorsed by the DECC. To make matters worse, there are instances of energy suppliers ringing business customers and telling them they must have a new smart meter by next April…it’s simply not true.

Our advice right now is ‘Hold Your Horses!’ be very careful about any Smart Meter arrangements, get Torse to check things out first…