UK Gas Prices: The Rip-Off Continues

So, as the dust settles over the last gas price rise we can look back and see if the reasoning behind it was sound.

As I remember the last price rise  (of around 10%) was to....

  • Cope with rising wholesale prices,
  • Pay for some unspecified rise in costs associated with gas transport
  • Pay for renewal of capital equipment.

It was (I am told) absolutely nothing to do with raising huge and unreasonable profits.


Wholesale prices

Look at this graph.

(graph from Catalyst Energy Solutions. Here)

The graph looks a  bit of a dogs breakfast because it show several years of wholesale (or spot) gas prices. Each colour is for a different year. Notice that the wholesale price to when the graph ends (Oct 2012) is little changed since December 2010.

So even from this you have to ask: Why the price rise? But look back further. Notice the whole sale price COLLAPSED at the end of 2009, so the rise they keep droning on about actually arises from a large price decrease in 2009. Wholesale prices in Oct 2012 are not much different to Jan 2009.

So, has the gas price today in January 2013 massively risen since the end point on the graph (Oct 2012) ?

No. The wholesale price today  is much the same as the end of October which is much the same as January 2009. But it gets worse. If you go even further back, beyond this graphs resolution you find the wholesale gas price was similar or higher than today way back to March 2008. (see future post)

Of course, wholesale gas only accounts for about 55% of the retail price anyway. So if the wholesale price is flat, then to get a retail price rise of 10%  the price of gas transport and customer servicing must have risen by 22%. Wow!

Even though these companies then go on to whine about making large capital investments they still manage to produce an enormous, and rising year on year profit. Clearly the concept of using your profits to invest in the future is alien to the Utilities.

Why can they do this? Because rather than operating as competing companies, their operation looks more like that of a cartel. They pretend to compete yet actually protect their combined markets at the cost of the consumer, and the government lets them get away with it.

The words “arrogant rip-off” come to mind.

Windfall. A film by Laura Israel

Laura Israel
Released in 2011 Windfall is a film about the effects of wind turbine deployment on a small community in upstate New York. The documentary  has won a host of awards and has met with huge critical acclaim. I've listed some of the awards and plaudits after the trailer and synopsis below.

So you may well ask: Have I seen it? You may be surprised that my answer is no. So far  I have only seen the trailer.

The reason I am blogging about it somewhat prematurely it is due to recommendation from a trusted friend of mine over the pond. She demanded  I see it and also tell my friends to see it as well.

I trust her judgement. So as the film, has started doing the rounds over here, then perhaps if you get a chance, you may consider having a look yourself. Sadly, I expect I'm going to have to fork out and buy a copy.

(Where Oh Where is this evil coal/oil/nuclear conspiracy that is supposed to be funding blogs like mine? Especially when you need to spend a few quid?)

Official Trailer: Windfall


Wind power …it’s sustainable…it burns no fossil fuels… it produces no air pollution. What’s more,it cuts down dependency on foreign oil. That’s what the residents of Meredith, New York first thought when a wind developer looked to supplement the rural farm town’s failing economy with a farm of their own – that of 40 industrial wind turbines. WINDFALL, Laura Israel’s, richly photographed, feature-length film, documents how this proposal divides the people of Meredith, as they fight over the future of their community. Attracted at first to the financial incentives that would seemingly boost their dying economy, the townspeople grow increasingly alarmed as they discover the impacts that the 400-foot high windmills slated for Meredith would bring to their community. Israel also turns her camera on Tug Hill, New York, another small upstate town, where wind power is a done deal. Tug Hill’s 195 wind turbines create non-stop low frequency “whomping” sounds and strobe-like effects, resulting in health effects on the people living among them. With wind development in the United States growing annually at 39 percent, WINDFALL, is an eye-opener that should be required viewing for anyone concerned about the environment and the future of renewable energy.

Awards, Accolades


New York Post

New York Times

Huffington Post

Wind Turbine Reliability and that Elephant Again

A detailed  analysis of the reliability and life span of on-shore and off-shore turbines has been produced by Professor Hughes of Edinburgh University. Because his findings are so controversial the paper has been independently statistically verified.

Far from having a lifespan of 25 years as promoted by the wind industry, it looks like the lifespan will be more like 10-15 years. Furthermore, during that 15 year lifespan, the capacity factor will progressively diminish.

Professor Hughes paper is Here
The Telegraph has also produced an article on this Here.

Professor Hughes suggests that even the wind industry has not yet realised it has this problem. Personally I think they have known about it for years.

I first blogged about the massive ongoing gearbox reliability issue (Here) This was based on this article Here. But it is not just the gearboxes. Since then we have had the grouting failure that has affected almost all offshore turbines in Europe, with many shifting on their base (Here). But these failures are just the headlines.

Yet the wind industry are in denial. Take the  pathetic bluster from RenewablesUK in the Telegraph article.

[quote] it’s very much in their interests to make sure that their turbines are maintained… to an optimum level, which includes upgrading as the technology improves. 

Anyone running machinery should optimally maintain it! But it will still wear out.

The question here is : What is the lifespan WHEN you optimally maintain it.

It sounds like the wind industry is back to relying on miracles. You know, something (as yet unknown) will come along that will make it all better. Don't forget wind turbines are supposed to be a mature technology. Sadly, whatever you upgrade to, you are simply not going to beat the laws of physics, and every upgrade is yet  another capital cost.

As any rotating machine ages it requires more maintenance. Eventually it reaches a stage where the machine requires so much maintenance it is classified as Beyond Economic Repair (BER). In other words, it is clapped out. This happens to ALL machinery. It happens to Jumbo jets, nuclear power stations, buses, cars AND wind turbines.

The wind industry propaganda has declared that BER for a turbine is 25 years. The truth, as proven by Prof. Hughes, is that the BER is reached in about 15 years.

Wind Turbines are capital intensive. The whole of their potential profitability is solely dictated by the total amount of energy they can produce over their life time. If their lifespan to BER is lowered then the possibility of them being profitable without an enormous subsidy decreases, especially later on in their life cycle.

You will also find that from a DECC document (Here) that current wind turbine annual maintenance costs range from £12000 to £110,000 per turbine. The amount is heavily dependant on the status of the warranty and consequently its age. As it gets older the maintenance cost sky rockets – until you reach BER.

With a decreasing capacity factor and an increasing maintenance cost over time, the money making years for a wind turbine are the first 5 years. Then its downhill all the way.

Turbines are medium term cash cows for their corporate owners. When they approach BER, either because the subsidy is cut or they blow up their second gearbox, they will be sold on. Then when the second/third/fourth company has run them into the ground they will be sold on again for scrap and  the  valuable components stripped out. Then they will be abandoned. In situ.

When the bailiffs finally turn up demanding the derelict  be cleaned up they will find that the “owner” is a post office box in Belize.
Guess who will get the final clean up bill.

Wind and Solar Renewables:- The German Experience

This is about a shocking German report from RWI Essen – the leading German economic research institution

The link to the report (in English) is  Here
The English version of the RWI-Essen website is Here
The wikipedia page on RWI Essen is Here

Why is this foreign report important to us?

In the UK we are at a point of crisis regarding future electrical energy generation. Decisions that should have been made 20 years ago have been avoided.  Arguably, whatever is now decided comes too late. Nothing short of a miracle will now prevent power cuts within the next 10 - 15 years. But unbelievably there are still people in government who, either for reasons of self interest or political advantage, still seek to pursue the current insane renewables agenda. If these people are allowed to prevail then the power cuts, economic dislocation and the consequential casualty list will be considerably worse.

Politicians, green zealots and other assorted wishful thinkers have there heads firmly buried in the sand. In Germany it has been even worse. That is why this German report is so important.

As part of the unending Green propaganda, we continually  bombarded with how Germany have embraced wind and solar. It is well worth cutting though the bullshit and picking up on exactly what the real experience is.

The above RWI-Essen document is a highly reputable study regarding renewables in Germany. This report is now three years old. Nothing has improved. It is (even for me) a shocking expose of the cost and waste of the German experience. I'll quote a few items from it below, but perhaps the concluding paragraph from the executive summary say it all.

Although Germany’s promotion of renewable energies is commonly portrayed in
the media as setting a “shining example in providing a harvest for the world” (The
Guardian 2007), we would instead regard the country’s experience as a cautionary
tale of massively expensive environmental and energy policy that is devoid of economic
and environmental benefits.

From the Abstract:

To the contrary, the government’s support mechanisms have in many respects subverted these incentives, resulting in massive expenditures that show little long-term promise for stimulating the economy, protecting the environment, or increasing energy security.

Some more quotes from the Executive Summary

Currently, the feed-in tariff for PV is more than eight times higher than the wholesale
electricity price at the power exchange and more than four times the feed-in
tariff paid for electricity produced by on-shore wind turbines.
Even on-shore wind, widely regarded as a mature technology, requires feed-in
tariffs that exceed the per-kWh cost of conventional electricity by up to 300% to
remain competitive.

In the end, Germany’s PV promotion has become a subsidization regime that, on a
per-worker basis, has reached a level that far exceeds average wages, with per worker
subsidies as high as 175,000 € (US $ 240,000).
It is most likely that whatever jobs are created by renewable energy promotion
would vanish as soon as government support is terminated, leaving only Germany’s
export sector to benefit from the possible continuation of renewables support in
other countries such as the US.

Claims about technological innovation benefits of Germany’s first-actor status are
unsupportable. In fact, the regime appears to be counter productive in that respect,
stifling innovation by encouraging producers to lock into existing technologies.

Clearly, the German experience should serve us as a dire warning rather than an example. Already their energy prices are only second to Denmark. Luckily (so far) for Germany, their industrial base built up from the second world war has enabled them to indulge in this fiasco.  Only a fool would take us down the same debilitating path.

Unfortunately we have no shortage of fools in Westminster.