Electricity Prices To Rise From September.

[manshimajin]

Given that the cable can only operate at a maximum of 70mw and the island load can be as high as 100mw where do you propose to get that spare 30mw from?

 

Cheers Frances fair point 30mw wouldn't really be a cause for concern and a pack of tesco value batteries would probably solve that problem at no major cost to the consumer . 30MW is 1 gas turbine running at full capacity , don't forget there are also the 5 diesels at Pulrose which are still operational giving another 40-45MW so in total that is 120-125 MW from the Pulrose site .

So, have you answered your own point? Run a gas turbine for the time being? Gas has got a lot cheaper this year.

[Nosferatu]

So, have you answered your own point? Run a gas turbine for the time being? Gas has got a lot cheaper this year.

Exactly so therefore it would be impractical to close the power station .

As for the gas prices it wouldn't surpise me if the old "we buy the gas in advance" excuse would get trotted out in much the same way that airlines and the racket "buy our fuel in advance" . Funny how the prices never seem to drop 6 months down the line from when they were buying the gas/diesel/aviation fuel at the then cheaper rate.

Ideally if an extra cable was laid it would enable a lot more trading and therefore bring prices right down . I would expect that to happen at about the same time as the aforementioned pigs formed their own airline .

[Terminal]

Given that the cable can only operate at a maximum of 70mw and the island load can be as high as 100mw where do you propose to get that spare 30mw from other than laying a new cable which in turn would cost another fortune.

 

Why didn't they lay a proper cable in the first place which could handle much more than we need now? This Island isn't getting any slimmer is it?

[manshimajin]

So, have you answered your own point? Run a gas turbine for the time being? Gas has got a lot cheaper this year.

Exactly so therefore it would be impractical to close the power station .

But just use Peel which has 40MW or close Peel and run Pulrose at a very reduced capacity? The Energy from Waste Plant is supposed to generate 10% of our needs - which on your numbers is another 10MW.

 

The gas price has certainly come down a lot - so either the MEA is incompetent or they think nobody else knows that natural gas prices have dropped by about 40%. Clearly they have not told the Minister.

[Nosferatu]

[

But just use Peel which has 40MW or close Peel and run Pulrose at a very reduced capacity? The Energy from Waste Plant is supposed to generate 10% of our needs - which on your numbers is another 10MW.

 

The gas price has certainly come down a lot - so either the MEA is incompetent or they think nobody else knows that natural gas prices have dropped by about 40%. Clearly they have not told the Minister.

The waste of energy plant is unreliable and on a very good day will push out about 5-6 MW max , on a usual day it chunters away at around 3-4 MW .

Running Peel as an alternative to Pulrose would defeat the object as you would just be back to running 4 old diesel engines .

What could work is if Peel and Ramsey were bought out by a different power company in order to create competition , that way you would maintain security of supply and also there would be the chance of a mini price war .

[manshimajin]

[

But just use Peel which has 40MW or close Peel and run Pulrose at a very reduced capacity? The Energy from Waste Plant is supposed to generate 10% of our needs - which on your numbers is another 10MW.

 

The gas price has certainly come down a lot - so either the MEA is incompetent or they think nobody else knows that natural gas prices have dropped by about 40%. Clearly they have not told the Minister.

The waste of energy plant is unreliable and on a very good day will push out about 5-6 MW max , on a usual day it chunters away at around 3-4 MW .

Running Peel as an alternative to Pulrose would defeat the object as you would just be back to running 4 old diesel engines .

What could work is if Peel and Ramsey were bought out by a different power company in order to create competition , that way you would maintain security of supply and also there would be the chance of a mini price war .

Hmmm - particularly if they could also buy in and distribute electricity from the UK? Starts to look more sensible. There would need to be some way of having realistic access costs to the power distribution network.

 

Of course MHKs and MLCs don't read these threads and seem to have a vested interest in maintaining the MEA monopoly.

 

PS: Nosferatu when you mention running old diesel engines do you happen to know the costs and efficiency of diesel versus natural gas generation? Natural gas price reductions don't seem to be passed on by the MEA to consumers - but in theory should it be significantly cheaper than diesel generation?

[Nosferatu]

PS: Nosferatu when you mention running old diesel engines do you happen to know the costs and efficiency of diesel versus natural gas generation? Natural gas price reductions don't seem to be passed on by the MEA to consumers - but in theory should it be significantly cheaper than diesel generation?

 

Gas prices Diesel prices

The gas price is based on thermal units so not sure what the conversion is to get that into £ per m3 . The MDO or MGO (marine diesel oil , marine gas oil) prices are the ones closest to what will be getting burnt in the Pully engines . Rough estimate from the diesel prices would be around $16-20k per engine per day .

These 2 paragraphs give some indication

"At the New York Mercantile Exchange (NYMEX), the natural gas futures contract for September delivery increased by 49 cents to $4.042 per MMBtu. The September futures contract closed above $4.00 per MMBtu for the first time since June 19 on Monday, reaching $4.031 per MMBtu. The near-month contract has remained above $4.00 per MMBtu since Monday" relating to the gas price.

"The price of the West Texas Intermediate (WTI) crude oil contract rose by $8.55 per barrel on the week to $71.97 per barrel or $12.41 per MMBtu. " relating to the crude oil price , so if crude is 3x more expensive per thermal unit we can safely assume that the MDO MGO will be a fair few $$ more than that .

[triskelion]

The monopoly thing is a bit of red herring, as I believe only 20% of UK residents have taken the opportunity to switch supplier since the market there was liberalised. Indeed, in the EU the figure is less than 10%. It hasn't really led to lower prices per se, as those reductions that have occured have been shown to be entirely down to buying practices.

 

The MEA is required to provide a retail presence in the Island's towns, so introducing 'competition' in the form of a UK chain would be comparable to what what happened to Royal Mail when the postal market was opened up - companies scooped off the most lucrative sector (business mail), leaving Royal Mail struggling.

[manshimajin]

It hasn't really led to lower prices per se, as those reductions that have occured have been shown to be entirely down to buying practices.

 

The MEA is required to provide a retail presence in the Island's towns, so introducing 'competition' in the form of a UK chain would be comparable to what what happened to Royal Mail when the postal market was opened up - companies scooped off the most lucrative sector (business mail), leaving Royal Mail struggling.

Does this mean that the MEA's buying practices are poor as we have not benefited from the reductions in gas prices or does it mean there is monopoly behaviour here?

 

I didn't quite follow the 'retail' argument Triskelion - do you mean the shops or the electricity supply? As the power grid is in place wouldn't any other supplier access that grid?

 

As mentioned earlier the CEO of Bord Gais in Ireland said on RTE recently that they were able to bring down their electricity prices by 20% (with further falls likely) because gas prices had dropped by 40%. Once BG entered the market the previous Irish monopoly supplier dropped their prices too.

[bluemonday]

Does this mean that the MEA's buying practices are poor as we have not benefited from the reductions in gas prices or does it mean there is monopoly behaviour here?

 

Probably not interested in ensuring the cheapest price as that would leave less price per unit to hide the add on pecentage for their own stupid failures.

[manshimajin]

Does this mean that the MEA's buying practices are poor as we have not benefited from the reductions in gas prices or does it mean there is monopoly behaviour here?

 

Probably not interested in ensuring the cheapest price as that would leave less price per unit to hide the add on pecentage for their own stupid failures.

i.e. monopoly behaviour - firstly driving a careless approach to business development and then being able to "afford" their mistakes at the consumers' expense.

[TheBloodyNine]

It hasn't really led to lower prices per se, as those reductions that have occured have been shown to be entirely down to buying practices.

 

The MEA is required to provide a retail presence in the Island's towns, so introducing 'competition' in the form of a UK chain would be comparable to what what happened to Royal Mail when the postal market was opened up - companies scooped off the most lucrative sector (business mail), leaving Royal Mail struggling.

Does this mean that the MEA's buying practices are poor as we have not benefited from the reductions in gas prices or does it mean there is monopoly behaviour here?

 

I didn't quite follow the 'retail' argument Triskelion - do you mean the shops or the electricity supply? As the power grid is in place wouldn't any other supplier access that grid?

 

 

 

The way I read it was that the MEA is required to have a retail shop in every town, which is fine. Although seen as retail loses so much money I cant see how the comparisons with the royal mail fit in? The royal mail lost the profitable part of its business and got left with the crap, if the MEA had competition they could close the crap part of their business and keep the good stuff.

 

I would imagine the requirement was to ensure that people had some where to buy electrical goods locally, if they were to open up the market and have a big chain store then we would have some where to buy our goods at a decent price and the MEA could close their stores meaning they would stop losing money.

[QLD-Bloke]

Does this mean that the MEA's buying practices are poor as we have not benefited from the reductions in gas prices or does it mean there is monopoly behaviour here?

 

Check the debate in 2005 when the 'Rescue package' was approved in Tynwald. This has RPI + X% increases up to September 2013 - the increase started at 4% above inflation in 2006 and will be 1% above inflation in september 2013.

 

Note that despite these rises, the Authority still requires a subvention from Treasury in order to meet working capital needs as tariff is set below present costs (due to the Proffitt cost overrun etc etc...)

 

These increases are fixed and therefore any savings in gas prices will return to Treasury by way of reduced subvention - which has (per Statements in the house) been some £16 million less than allowed for by Treasury.

 

If Treasury was so minded it could retain the subvention at the 'approved' higher level and allow the Authority to reduce consumer tariffs. However, it appears that the Government is of the view that the Authority should return to a cash neutral position - one not requiring government cash support - before they are prepared to revisit the fixed price tariff increases.

 

From statements by the Authority, they are ahead of the recovery program and it may be that we do not have to wait until 2013 before RPI plus tariff increases are removed.

 

Note that the recovery plan approved by Tynwald was set out prior to the massive hike in gas and oil prices - the recent 'falls' still leave fuel costs well above those in the recovery plan. We might therefore hold the recovery plan to have been "too bloody optimistic" but if higher prices had been included either the tariff hike or early years subvention would have been much higher to compensate - I think Treasury got it about right.

 

Yes, it is all because the old board spend too much on the Station but for those who think that the Authority should have put in more cables instead - I refer you to the 1992 (ish) Tynwald debates on energy policy where our politicians decided that we would not be beholden to the Uk for electrical power and rejected a scheme where scottish power would have bought the MEA, closed the generation stations and run two cables to supply the island. If there's any blame to be attached - don't forget those responsible for that decision.

[Nosferatu]

access that grid?

 

As mentioned earlier the CEO of Bord Gais in Ireland said on RTE recently that they were able to bring down their electricity prices by 20% (with further falls likely) because gas prices had dropped by 40%. Once BG entered the market the previous Irish monopoly supplier dropped their prices too.

Very interesting because that is who the MEA buy their gas from .

[Fossils]

In case you missed this - everyone else can look forward to electricity price cuts:

 

<H1 class=news_article_title>Energy firms told to slash prices by regulator</H1>Guy Anker

News Editor

6 August 2009

Energy regulator Ofgem has finally got tough with suppliers by demanding they cut household bills to reflect the falling price they pay for power.

 

Campaigners have been calling for price cuts for months because the wholesale prices the major firms pay for gas and electricity have slumped by around 50% since their peak last summer.

 

Yet the price we pay for energy has fallen by no more than 10%. Last year, prices rose by up to 50% (see the Cheap Gas & Electricity guide).

 

Ofgem has written to the six major power companies' chief executives this week demanding they slash bills and better explain their charges to consumers.

 

Ofgem chief executive Alistair Buchanan says in his letter: "Wholesale costs have fallen from last year's peak and look set to fall further as we head into the winter. In a strong competitive market, we would expect prices to respond to such falls.

 

"You will be familiar with these trends and also aware of some public dissatisfaction with suppliers' response so far to wholesale price reductions.

 

"You know that I have been, and remain, concerned about how effectively the sector communicates with consumers. I believe you owe it to consumers, ahead of the winter, to explain how cost changes, including falling wholesale costs, are likely to bear on future energy bills and I urge you to do this."

 

Some firms, such as EDF, Eon and Npower have recently introduced new, cheaper online tariffs.

 

However, only savvy customers searching for the best deals are likely to benefit, rather than those stuck on standard tariffs.

 

Martin Lewis, MoneySavingExpert.com creator, says: "This is the nearest thing to teeth we've seen bared by Ofgem so far. Be under no uncertain terms Ofgem's politely-worded letter can only be read as a loud, wailing shriek at suppliers.

 

"If suppliers choose to ignore this then surely Ofgem must realise the time for words is over and the time for action is here."

 

Despite the plea, the Energy Retail Association, which represents the major power firms, did little to suggest households would see their gas and electricity costs drop further.

 

Its chief executive Garry Felgate says: "We have seen energy prices falling for the vast majority of customers this year. Despite these falls, the wholesale market remains volatile and a challenge for energy suppliers coming up to the winter.

 

"Customers were protected from the massive rises in wholesale prices last year, price rises that were not fully passed on at the time.

 

"Companies are investing billions of pounds in new generation capacity to ensure an essential, reliable and safe energy supply to their customers."