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Simplifying Energy #1: How does the energy market work?
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- Опубліковано 21 чер 2023
- This is the first video in a series aimed at simplifying the over-complicated UK energy market.
In this video I give a very basic overview of the three main groups of the energy market and their role within it:
- Producer
- Supplier
- End user
To ask your energy questions, please comment below or reach out to me at Richard@over50smoney.com
Look forward to the rest of the videos. I'd like to know exactly what has contributed to the massive price increases, as the explanations given by energy companies, government and media just don't seem to add up! Thank you
Great point that..!
Hi Emma,
Thank you, the next one will be out tomorrow, but will probably do 1 or 2 a week after this.
Thank you for the question as well, this is an excellent question, I actually think a lot of people will find it really interesting what lead to the energy crisis. I'll put some time into preparing some animations and then I'll produce a video to answer this question next week :) keep an eye out!
Thanks,
Richard
Although it is useful to provide these basic aspects of the structure of the industry it would be useful to know more about exactly how the producers come to be producers. Who are they? How do they know there is is a source of energy in this or that location? Who is considered to OWN the energy source and what responsibilities come with the role of extractor?producer? It would also be useful to find out about INVESTMENT in these companies? Who invests? How are profit levels determined and who ensures that the energy producers meet all the requirements set out in their contracts with governments. What global standards apply, if any?
Basic but fundamental.
Very true, figured I'd start at the beginning :) keep watching them, the next few will be looking at simplifying some of the more complex areas of the energy industry.
Thanks for watching and taking the time to comment, I appreciate it :D
Richard
Thanks .It is good. Although, in my opinion, you could give more information about the producers: who they are and how /from where they produce their energy (i.e. Bite Gaz (UK) has a nuclear power in County; Squid (Japan) windmills in North sea ... ), to whom they sell , and other minor intermediaries . I am quite confused with suppliers and the difference in prices. Why it is cheaper from a second minor intermediary than from the supplier itself Thanks
Hi Jim,
Thanks for the compliment, I'm glad you enjoyed the video. The information about producers etc might be something I cover later down the line, but the purpose of this series of videos is to focus on how the UK energy market works, what we pay for, why we pay and how the money we pay gets moved around. The actual forms of generation and the companies that do that generation isn't something I'll initially be covering.
Your last question is an interesting one, I'll make sure I cover it in this series of videos, I'm going to compose a few questions that get asked on these comments and make a video that answers them all :)
Thanks again,
Richard
How can the regulator justify increases in wholesale cost of home produced wind energy? How can ofgem justify increases on daily standing charges? How can government justify allowing foreign interests to control our fundamental infrastructures?
I'll do a video on this, possibly tomorrow but no later than the end of next week. It's an interesting question with a complicated answer that I'm certain I can simplify a bit.
Thanks for posing the question! I appreciate you taking the time!
Richard
I hope you will cover why solar energy costs so much to the ordinary household
I'll make sure to add this to the list, it is a common question tbh! Make sure you're subscribed with notifications on so you don't miss it :)
My supplier has advised that they are reducing my charges as from next month. However, when I contacted them to ask if that meant they would be reducing the monthly direct debit they said no. What it does means is that what they charge me will come down but they will not necessarily reduce the monthly payment. As I am presently some £230.00 in credit with them, is that not a bit ridiculous?
Hi Charles,
I'd say that is extremely odd. If we were coming into winter then I would understand their position, but as you already have credit and we're in summer so you're credit is going to continue building for the next few months, I'd suggest it's unreasonable that they're not reducing your direct debit. That being said, you do have the right to request that your direct debit be changed if you think it is too high.
Thanks for taking the time to post your question.
Richard
In the basic form this is just the process of workings but I disagree with the part that producers set the price. The world economic markets sets the price of the wholesale medium and the producers merely sell at what the market rates are. This is why the companies that sell their energy are making record profits and we as consumers are having to pay more. Blaming the companies is inaccurate as they the only choice they have is sell or not sell and by not selling they won’t be viable business. Explain who sets the wholesale costs further and the factors that influence the price. When the market prices are rock bottom the companies don’t get windfall handouts because it costs them more to produce than they can sell it for. They literally have to make a business decision whether to ride it out or shut down.
IF the "Producers add profits on to the wholesale cost" as you've mentioned then, shouldn't the price of energy be dropping instead of increasing...?
If our political leaders around the world stopped wars around the world, wouldn't it make the energy prices and inflation reduce and help the worlds economy..?
Hi Faruk,
Energy prices are falling, the price cap peaked at the beginning of this year at £4,279, it came down in April to £3,280 and now it will go down again on 1 July to £2,074. This is primarily driven by wholesale costs coming down. But it's important to remember that this is still almost double what it was in August 2021 when the crisis started.
Thanks for taking the time to comment, I hope you enjoy the other videos when they come out :)
Richard
You are confusing people. No mention of the ridiculously high Standing charges or the amount we have to contribute towards the costs of suppliers going Bust.