Why our price is going up
Posted in: Energy
Posted on: 18.01.2017
We work really hard to keep bills for our customers as low as possible and hold our prices for as long as we can. We made the decision to freeze our prices over the winter period when people needed to use more gas and electricity and other suppliers raised theirs.
Like anyone else, we don’t like price rises. But because of a number of increasing costs, our prices for electricity and gas will go up on 1st March 2017.
What factors are affecting your bill?
What is going on? Oil and gas prices have been plummeting over recent years. So how’s it possible that energy prices are rising? And why should that affect a company like Good Energy whose electricity is 100% renewable? Well, fossil fuels are only one piece of a very complex puzzle.
#1 Wholesale energy costs (affected by supply and demand)
Oil and gas are important. For example, in 2011 wholesale costs made up 54% of the average energy bill. By 2016, this had dropped to 36% – heavily influenced by lower fossil fuel prices. Unfortunately, they’ve been rising again recently. And elsewhere, global events and supply uncertainty – such as the drop in the pound, French nuclear power problems and even storms damaging cables – have all negatively impacted wholesale energy prices.
#2 Network modernisation (repairs and updates)
The UK was one of the first countries to have a national electricity grid. Much of this old infrastructure still survives – some of it harking back to the original 1930s grid. But things have moved on, especially in recent years. And to meet 21st century demands, improving reliability and efficiency, requires a major overhaul. This present and future investment all results in rising network costs.
#3 Securing the supply of energy (keeping up with increasing demand)
For the last 30 years, the UK has also under-invested in new energy generation. Despite recent spending on renewables, we still don’t have enough generating capacity. So every now and then, during times of high demand, the national grid needs to bridge this gap through other sources. Often it means firing up old coal power stations and diesel generators. This is known as the “Capacity market” and it means paying a premium: a cost that’s passed on to all suppliers, including Good Energy.
The good news? As a nation, we’re spending investing more and more on subsidising the growth of renewable energy It’s vital to supplement backfill our legacy infrastructure as it retires. The UK is now sourcing 25% of its electricity from renewables, and this is already becoming cheaper than energy from fossil fuels. Soon we’ll have enough low carbon energy to eliminate the shortfalls in supply – which means eliminating those high premiums. That’s why at Good Energy we think it’s essential to maintain subsidies and investment.
#4 Operational costs (our day-to-day work)
Good Energy works hard to keep costs down, while still delivering great service. The compulsory introduction of smart meters by 2020 can help everyone use less energy, but also pushes up our immediate operational costs, which affects your bill.
#5 VAT (the bit the Government takes)
The final piece of the puzzle is the VAT added to your bill. It’s only 5% and this in itself shouldn’t be changing. But it does affect any other increases, automatically making them 5% higher.
Why your bills are doing more good with us
If the underlying costs to Good Energy have gone up then everyone else’s will too, but as yet we don’t know what others will do.
One thing will never change -with Good Energy you can be proud that your money is always doing good – investing to change the energy market!
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