Energy price rises and price cap discussion.

[trebor79]

Also makes sense if you're on economy 7 and get up while the night rate's still active.

It costs literally 6p to boil a full kettle of water at the price cap.
Hardly worth distrubing your sleep to save a couple of pence!

 

[Xenophon PCDGS]

It costs literally 6p to boil a full kettle of water at the price cap.
Hardly worth distrubing your sleep to save a couple of pence!

Since there is only me at home now, I only half-fill (or slightly less) the kettle when I want to make a cup of tea or coffee.

 

[trebor79]

Since there is only me at home now, I only half-fill (or slightly less) the kettle when I want to make a cup of tea or coffee.

I never boil more than I intend to use, who does?

 

[swt_passenger]

I never boil more than I intend to use, who does?

Possibly quite a few people whose old fashioned kettles need the element completely covered?

 

[DelayRepay]

It costs literally 6p to boil a full kettle of water at the price cap.
Hardly worth distrubing your sleep to save a couple of pence!

I didn't mean set your alarm for the wee small hours just to boil the kettle. I meant if you happened to be awake at that time.

 

[Xenophon PCDGS]

Possibly quite a few people whose old fashioned kettles need the element completely covered?

Well said!!!

 

[jon0844]

I've had one of those one cup machines for years. Why boil more than you need?

Martin Lewis now on ITV and made it very clear about how to work things out and explaining the cap isn't what a lot of people think.

 

[najaB]

Can you clarify the mention of tax above, as recent Governmental statements about taxation would appear less coming into the coffers of the Treasury in the next period leading up to the next General Election.

Money doesn't grow on trees. If the government is putting £150 billion in financial support in place for energy price support, that's at least £170 billion in additional tax revenue that will be needed over the next 20 years or so.

 

[Xenophon PCDGS]

Money doesn't grow on trees. If the government is putting £150 billion in financial support in place for energy price support, that's at least £170 billion in additional tax revenue that will be needed over the next 20 years or so.

But not all tax is paid by the populace at large, much as some would have you believe. You would think that some people are blissfully unaware of how tax is raised and who pays it.

 

[najaB]

But not all tax is paid by the populace at large, much as some would have you believe. You would think that some people are blissfully unaware of how tax is raised and who pays it.

Pretty much all of it is. Just about the only money that doesn't ultimately come from the 'man on the street' is corporation tax earned on foreign operations.

 

[Xenophon PCDGS]

Pretty much all of it is. Just about the only money that doesn't ultimately come from the 'man on the street' is corporation tax earned on foreign operations.

Is it not the case that Corporation Tax is paid by UK companies which is calculated on their totalised annual profits and not just on foreign operations.?

What percentage of tax is levied on oil and gas producers in Britain?

I think we are straying a tad off topic with this discussion.

 

[najaB]

Is it not the case that Corporation Tax is paid by UK companies which is calculated on their totalised annual profits and not just on foreign operations.?

Yes, it is. The point I was making is that (using an example) Tesco's corporation tax is paid on the profits that they almost exclusively generate from sales to UK customers (I believe they've exited their ex-UK operations). So that money also came out of the pockets of UK taxpayers, just indirectly.

 

[Sm5]

Is it not the case that Corporation Tax is paid by UK companies which is calculated on their totalised annual profits and not just on foreign operations.?

What percentage of tax is levied on oil and gas producers in Britain?

I think we are straying a tad off topic with this discussion.

I have to start looking for these huge corporations which make millions overseas and bring their sacks of gold back here to share with the populace then.

last time I looked, shipyards are closing, striking, air travel has shrunk, we import way more than we export and weve just retrenched and insulted our largest and nearest trading customer, and we cant get a deal with the big one, who knows they can play us all day long. Most of the international set are very protective about their wealth, its either that or they just arent very good at making a profit.

Still the more the £ sinks, the closer those 10cents carriers returning here start looking like they are millionaires.

 

[Dai Corner]

I have to start looking for these huge corporations which make millions overseas and bring their sacks of gold back here to share with the populace then.

No need for you to look, His Majesty's Revenue and Customs already know who they are

How HMRC taxes foreign income

Avoid tax penalties by reading our guide on how HMRC taxes income from overseas earnings. We discuss tax on individuals and companies and how to report it.

www.1stformations.co.uk

How does HMRC tax limited companies on their foreign income?​

The short answer here is simple: UK limited companies are expected to pay HMRC tax on most of their income, whether it was earned here in the UK or in a foreign country. But as always, there’s a bit more to it than that.

All UK limited companies are required to pay Corporation Tax on all company profits. HMRC’s flat rate for Corporation Tax is currently 19%. That means for every pound you make in profit either domestically or overseas, you’ve got to pay 19 pence worth of Corporation Tax.

If your company is incorporated in the UK, you’ll be expected to pay Corporation Tax on company profits generated from any number of business activities. Those activities might include buying or selling goods and services, leasing or buying a property, selling assets, interest or dividends, managing investments, and more.

The same rules apply to a certain extent for foreign companies trading in the UK. If your company is based in another country but you’ve generated income here in the UK, your foreign business must pay HMRC Corporation Tax.

But you’ll only be taxed for the profits generated at UK branches or through UK activities.

 

[Nicholas Lewis]

UK Gas is well down below £3.00/therm today to stand at £2.48 and actually sits below the 10p/kwh for gas that govt is now charging us. Lets hope the numpetys have the sense to use govt firepower to buy up gas at this price to at least keep govt borrowing down.

https://tradingeconomics.com/commodity/uk-natural-gas

 

[najaB]

UK Gas is well down below £3.00/therm today to stand at £2.48 and actually sits below the 10p/kwh for gas that govt is now charging us. Lets hope the numpetys have the sense to use govt firepower to buy up gas at this price to at least keep govt borrowing down.

The problem is that winter gas was bought a couple of months ago when the prices were near their peak (which was a large part of why they were so high in the first place).

 

[Dai Corner]

The problem is that winter gas was bought a couple of months ago when the prices were near their peak (which was a large part of why they were so high in the first place).

Energy suppliers had little choice but to do that because of the price cap.

 

[najaB]

Energy suppliers had little choice but to do that because of the price cap.

Oh, I'm not blaming them. Just explaining that low market prices in October probably aren't going to feed through into the market until Feb/March. The only thing that could be done to lower prices now would be pre-buying spring/summer gas now and providing a hypothetical 'mix' of expensive and cheap gas - meaning constant, medium high prices through until next year rather than very high prices now and low prices in spring.

 

[trebor79]

The problem is that winter gas was bought a couple of months ago when the prices were near their peak (which was a large part of why they were so high in the first place).

Not quite. The gas prices that are in the news are the day ahead prices (ie what price you will pay for gas delivered tomorrow if you are unhedged).
Hedged prices are a commercial negotiation between buyer and seller, so there isn't one price for "winter gas". Traders report very little hedging activity in the market in recent months. Some companies will have bought ahead, many haven't. Certainly those I am involved with did not as they couldn't run profitability at those prices so chose not to hedge and see what happens.

Oh, I'm not blaming them. Just explaining that low market prices in October probably aren't going to feed through into the market until Feb/March. The only thing that could be done to lower prices now would be pre-buying spring/summer gas now and providing a hypothetical 'mix' of expensive and cheap gas - meaning constant, medium high prices through until next year rather than very high prices now and low prices in spring.

But again, that isn't how it works. If you buy gas at a fixed price for April delivery, you can't say "Oh actually I want it in December". What you would do is sell your April position and buy a December position at whatever price you could get.
Otherwise on the flip your supplier could say "Oh that gas you bought for December? Yeah, we're gonna deliver it April cos that's better for us".

 

[najaB]

But again, that isn't how it works. If you buy gas at a fixed price for April delivery, you can't say "Oh actually I want it in December". What you would do is sell your April position and buy a December position at whatever price you could get.
Otherwise on the flip your supplier could say "Oh that gas you bought for December? Yeah, we're gonna deliver it April cos that's better for us".

I think you misunderstood what I meant. I didn't mean that you would change the delivery date. What I meant was that (making up the dates) if they've already bought their October-December gas, rather than waiting until January to buy their January-March gas, buy it now and then sell everything from October to March at the average price that they paid for the lot.

Almost certainly more expensive overall but it does shave the top off the peak prices.

 

[Nicholas Lewis]

The problem is that winter gas was bought a couple of months ago when the prices were near their peak (which was a large part of why they were so high in the first place).

Not as much as you think because the margin calls were so high to buy at the volumes they need even the likes of British Gas didn't have the collateral to fully cover their likely needs.

Not quite. The gas prices that are in the news are the day ahead prices (ie what price you will pay for gas delivered tomorrow if you are unhedged).
Hedged prices are a commercial negotiation between buyer and seller, so there isn't one price for "winter gas". Traders report very little hedging activity in the market in recent months. Some companies will have bought ahead, many haven't. Certainly those I am involved with did not as they couldn't run profitability at those prices so chose not to hedge and see what happens.

Indeed thanks for that insight.

 

[david1212]

My bill itemises the unit price and the part payment funded by the government cap.

For electricity 50.86p/kWh with the cap contributing 17.84p/kWh, which is 35%.
For gas 14.67p/kWh with the cap contributing 4.43p/kWh, which is 30%.
In addition is the fixed £400 payment split of the October 2022 - March 2023 bills.
My annual standing charges are 72p/day so £272pa.

Taking the reference capped £2500pa it would be otherwise around £3700pa. With the two year capping of Truss and Kwarteng cut to until April 2023 unless either the unit price falls significantly or the capping is continued not something to look forward to.

 

[Nicholas Lewis]

My bill itemises the unit price and the part payment funded by the government cap.

For electricity 50.86p/kWh with the cap contributing 17.84p/kWh, which is 35%.
For gas 14.67p/kWh with the cap contributing 4.43p/kWh, which is 30%.
In addition is the fixed £400 payment split of the October 2022 - March 2023 bills.
My annual standing charges are 72p/day so £272pa.

Taking the reference capped £2500pa it would be otherwise around £3700pa. With the two year capping of Truss and Kwarteng cut to until April 2023 unless either the unit price falls significantly or the capping is continued not something to look forward to.

Thing is gas prices have dropped back to sub £2/therm which is same price as 12mths ago so if they hold at this level price cap levels could fall back further than what OFGEM actually set weeks ago.

 

[Xenophon PCDGS]

I have just received my dual fuel bill from Good Energy covering the period 19th September 2022 to 18th October 2022. The Good to Fix tariff ended on the last day of September 2022 and the new tariff commenced from October 2022.

The bill was fully sectionalised and in the account side, the total bill for gas and electricity was shown, then a figure of the HM Government Discount (Energy bill support scheme) of £66.00 was deducted, giving me a final net total.

 

[Dai Corner]

Having fixed my tariff at below the cap back in April, I'm spending less than £2 a day on energy at the moment so the Government (taxpayer) is paying my entire bill and, together with my own monthly payments, helping build up credit for the winter.

That's very nice for me, but hardly a sustainable situation.

 

[trebor79]

Having fixed my tariff at below the cap back in April, I'm spending less than £2 a day on energy at the moment so the Government (taxpayer) is paying my entire bill and, together with my own monthly payments, helping build up credit for the winter.

Similar. Installed batteries and got a tariff with 4 hours of cheap overnight power to charge them in the expectation that further help would be far more targetted. My electricity now costs about 75p a day. The £400 from the government will help defray the cost of heating oil, which has more than doubled from this time last year.
I'm pleased Hunt has declared an end to universal energy bill help from the spring. Absolutely monumental waste of future public money (it's all adding to the national debt) subsidising the energy costs of every home and every business in the land. The only thing he could have done better was end it immediately.

 

[najaB]

The only thing he could have done better was end it immediately.

That would be disastrous absent implementation of a targeted scheme.

In related news:

Shell has reported its second highest quarterly profit on record but it has not paid the UK's windfall tax on energy firms.

The energy giant said global profits reached $9.5bn (£8.2bn) between July and September, compared to $4.2bn during the same period last year.

However, Shell said that because it had made large investments in the UK, it meant it had made no profit here.

It also does not expect to start paying windfall taxes until early next year.

The Energy Price Levy - or windfall tax - on the profits of energy firms was announced by the then chancellor Rishi Sunak in May who said at the time that it would raise £5bn in its first year.

Shell pays no UK windfall tax despite profits jump

The energy giant reports $9.5bn in profits, its second highest quarterly earnings on record.

www.bbc.co.uk

 

[trebor79]

That would be disastrous absent implementation of a targeted scheme.

Yes, I meant immediate termination of the indiscriminate "subsidise the whole country's energy cost" approach. The most needy households should get help. Zero support for businesses IMO.

 

[Trainbike46]

Yes, I meant immediate termination of the indiscriminate "subsidise the whole country's energy cost" approach. The most need households should get help. Zero support for businesses IMO.

I suspect it wasn't considered possible to come up with a targeted scheme for this winter, hence the decision to end it in spring rather than immediately.

 

[najaB]

Yes, I meant immediate termination of the indiscriminate "subsidise the whole country's energy cost" approach. The most need households should get help. Zero support for businesses IMO.

Not sure I agree with no support for business at all. There are a lot of smaller businesses that are just getting over the impact of Covid, are still struggling with the impacts of Brexit and which will be finished off by the sudden rise in energy prices. That's a lot of future tax revenue that would be lost.

I suspect it wasn't considered possible to come up with a targeted scheme for this winter, hence the decision to end it in spring rather than immediately.

Which is exactly what the Labour plan proposed - six months of support to get us through to spring and then a review to study the lay of the land. This was, of course, derided as unworkable, until it suddenly wasn't.