People in Jersey will pay 25% more for their power when Jersey Electricity Company raises its prices on Thursday. The company says the hike is due to “strongly rising” global energy costs and the fact that tariffs have remained unchanged over the previous two years. From January unit charges will increase by 25% and standing order and other fixed charges will increase by 5%. Bills issued after Thursday will be calculated pro-rata to take account of consumption prior to the price rise. A spokesperson for the firm, which is the sole supplier of electricity in Jersey, said that the company had “cushioned” customers from high and volatile wholesale markets and had also absorbed additional costs to the extent possible over the last two years.

However, they added that the importation costs of power had risen by more than 70%.

“For the majority of customers in Jersey, electricity prices are lower than the European average, Guernsey, Isle of Man and the UK,” the spokesperson said.

“The cost increase has been driven by a 55% increase in Euro denominated wholesale electricity costs and a 15% deterioration in the Pound/ Euro exchange rate.

“Since the time of the last electricity price rise in January 2007, the local prices for heating oil and gas have increased by approximately 60% and 35% respectively.”

http://www.jec.co.uk/

A tenth of the UK’s power plants could be forced to close by the spring of 2013 – two-and-a-half years ahead of schedule, new research shows. The revelation will stoke fresh concern that the government has not done enough to head off a looming energy generation gap that could lead to blackouts across the country. Under an EU directive, companies operating old coal and oil-fired plants were given the option to spend hundreds of millions of pounds to upgrade them to comply with tougher pollution standards.

Those that “opted out” of the programme – nine plants representing about 15% of UK power supply – were given 20,000 hours to operate, starting from January last year through to the end of 2015. Based on research from the energy-consultancy group Utilyx, several of these plants have been running at historically high rates that would put them out of commission much sooner than originally thought.

The coal-fired plants at Kingsnorth in Kent, owned by Eon, Scottish Power’s Cockenzie plant, RWE-owned Npower’s stations at Tilbury and Didcot, and Scottish & Southern’s Ferrybridge plant will all be decommissioned by the spring of 2013 if current patterns continue. The stations generate some 7.6GW of electricity – 10% of the UK’s total capacity.

The first of them, Scottish Power’s 1.2GW plant at Cockenzie, which generates enough power for 1m homes, will close as early as September 2010 based on current rates. The research was based on analysis of running patterns at the plants from January 1 this year to the end of October.

“It is likely that a significant proportion of the UK’s opted-out coal plant will close earlier than 2015, with the impact felt around 2013,” said Kevin Akhurst, managing director of generation at Npower.

When companies decided whether to comply with the EU’s so-called Large Combustion Plant Directive (LCPD) four years ago, those plants that opted out were envisaged as “peaking plants” to be used only at time of maximum consumption and power prices. Most of them, it was thought, would easily last until 2015.

Chris Bowden, chief executive of Utilyx, said that because of the price of coal relative to record high prices of electricity and rising power demand, the opposite has happened. “When companies made the decision to opt out it was a very different world. The idea was that they would be peaking plants but now they are running as base-load providers,” he said. “The technology of some of these power stations would make them like classic cars, but now they are ready for the scrapheap.”

The data will add to fears about UK energy security after the Russian gas giant Gazprom threatened to cut off supplies to Europe due to a row with Ukraine.

Next year is critical for the UK energy industry. In January, Ed Miliband, the secretary for energy and climate change, is expected to decide on Eon’s controversial proposal to build a new 2GW plant to replace the Kingsnorth facility. It would be the UK’s first coal-fired power station in more than three decades and is an acid test of the government’s stance on coal and supply security.

New energy and planning bills will also come into effect in April, which the industry hopes will pave the way for swifter building and planning permission for new projects, one of the biggest obstacles to the construction of plants.

Millions of consumers and businesses are set to receive price cuts of at least 10 per cent in their gas and electricity bills early in the new year, although some may have to wait longer. After a collapse in the wholesale price of gas and electricity in recent months, Britain’s Big Six energy suppliers – British Gas, E.ON, EDF Energy, ScottishPower, npower and Scottish & Southern Energy (SSE) – plan to cut customer bills next year in a move that will be welcomed by struggling households and the Government.

SSE, which has nine million customers, is widely expected to be the frontrunner, cutting prices next month. Ian Marchant, the chief executive, announced his intention to move as early as possible in October, partly to ease mounting political and regulatory pressure on the industry to provide relief for consumers who are struggling with the fallout from the worsening recession.

However, some of SSE’s rivals, such as British Gas, E.ON and npower, are expected to hold out until at least February or March. Energy companies buy gas and power using a variety of forward hedging contracts and there is always a delay before they pass on price cuts. Some companies may also have less advantageous hedging positions than rivals, which will influence their willingness to cut. The Big Six increased retail prices twice this year, but have not passed on any of the falls in wholesale energy costs that have occurred since the summer as gas and electricity prices tracked the collapse in the price of crude oil.

The forward price of gas for delivery in the winter of 2009 has almost halved from 109p per therm in July to about 63.6p per therm. The forward price of the same contract for power has dropped from £94.50 MWhour to £56.65 MWhour.

Harriet Harman, the Leader of the House of Commons, has warned the utility companies that the Government could force them to pass on falls in wholesale prices more swiftly. “The energy companies must pass on the price cuts to consumers – both businesses and families. They must also treat all consumers fairly,” she told MPs last week. “If they don’t … we will change the law to force them to do it.”

Expectations of the size of the potential price cuts vary widely. John Hall, an independent energy analyst, who advises many of Britain’s biggest companies, said that the wholesale price of gas and electricity represents about two thirds of the total cost of supply for the Big Six.

Mr Hall said this suggested that the companies could afford to make cuts of as much as 20 to 30 per cent by the spring “provided the wholesale price does not go back up again”.

Industry sources say that the companies are wary of slashing prices too far or too quickly because of their wish to protect profit margins and because of the risk that wholesale prices could go up again.

One source close to one of the Big Six said that the preferred option would be to make a “relatively small cut in the spring. This is not going to be a case of £250 off your bill”.

He said that 5 per cent to 10 per cent was a more likely figure, although much would depend on the competitive pressures if the first to move made bigger than expected cuts.

The source added that after SSE’s expected cut, the remaining suppliers would find themselves in a “staring contest”, trying to hold out for as long as possible before cutting bills. They will want to boost their earnings during the period of peak energy demand in January and February. The companies might also choose to announce price cuts several weeks before they are applied – in contrast to the price rises this year, which took effect immediately, or within days.

Andrew Horstead, energy analyst at Utilyx, the consultancy, forecast price cuts of 10 per cent to 20 per cent. “We have seen a sharp correction in wholesale gas and power prices since July’s record levels but the drop has been less severe than the dramatic U-turn in oil prices,” he said.

“But we are expecting wholesale prices to remain depressed into the new year, reflecting the deteriorating demand outlook, and we expect utilities to reflect this by passing on drops to end-users in early 2009, possibly in January, with tariffs potentially falling 10 to 20 per cent.”

Britain’s dependence on natural gas as a source of energy is growing, even as supplies from the North Sea are running out, figures suggest. hey indicate that the UK is relying increasingly on gas as its primary source of fuel for electricity generation, even though the country is being forced to import more and more as domestic reserves grow scarce.

The use of gas to generate power in the UK soared by 21 per cent in the third quarter of this year, compared with the same period last year, to 44 terrawatt hours, according to Energy Trends, a quarterly report on UK energy use published by the Department of Energy and Climate Change.

Meanwhile, output from Britain’s ageing fleet of nuclear power stations, which have been beset by maintenance problems this year, fell by 30 per cent during the same period, to 11 terrawatt hours.

The figures emerged as leaders of some of the world’s leading gas-exporting countries met in Moscow yesterday for talks about the formation of the Gas Exporting Countries Forum, an Opec-style cartel.

The meeting has alarmed gas-consuming countries, raising fears that the group, which includes Russia, Iran, Venezuela and Libya, would try to massage prices higher by setting production quotas.

Vladimir Putin, the Russian Prime Minister, who is embroiled in a dispute with Ukraine over gas supplies, told delegates at the meeting: “The time of cheap energy resources, cheap gas, is surely coming to an end. Costs of exploration, gas production and transportation are going up. It means the industry’s development costs will skyrocket.”

The figures contained in the British Government’s latest study reflect the huge challenges facing the country in weaning itself off gas and other fossil fuels.

The report showed that household use of gas in the UK fell by about 6 per cent during the third quarter of the year, mainly as a result of record price rises that prompted consumers to adopt a more frugal approach to energy use. However, the commercial use of gas for power generation is surging, as it displaces other fuels, such as coal and nuclear power.

Overall, UK gas demand in the third quarter was 5.3 per cent higher than during the third quarter of last year.

Although the Government wants energy harnessed from renewable sources, such as wind and waves, to play a much bigger role in electricity production in the long term, it still accounts for only 5 per cent of electricity supplies.

Meanwhile, many coal-fired plants are operating under restricted hours because of tough new European emissions standards, and Britain’s nuclear industry, which produces little carbon dioxide, has also struggled with a string of technical problems at key plants this year. Commercial reactors at Hartlepool, Dungeness, in Kent, and Heysham, in Lancashire, were all out of service for repairs this year.

With the depletion of gas from the UK continental shelf, Britain is becoming dependent on imports, either by pipelines from Norway or elsewhere on the Continent or as liquefied natural gas from places farther afield, such as Algeria and Qatar.

Andrew Horstead, of Utilyx, the energy consultancy, said: “Having an energy system that is so reliant on gas at a time when our own supplies are running out is a concern.”

By 2015, the UK is expected to import up to 80 per cent of its gas supplies compared with about 40 per cent now. The UK was a net exporter of gas as recently as 2004. UK petrol consumption has fallen by 6 per cent over the past year.

Thousands of UK businesses, big and small, are scrambling to reduce carbon emissions, and comply with new regulations. The Department for Food and Rural Affairs (Defra) targets non-energy intensive private and public sector organizations under the new Carbon Reduction Commitment (CRC). Some 5000 companies will be affected by the scheme. A large portion of these assumed their low emissions kept them under the regulatory radar. However, offices, waiting rooms and stores are unwittingly generating over a third of total UK emissions.

Companies’ main responsibility is to produce evidence that at least 90% of a company’s emissions are accounted for under the EU Emissions Trading Scheme (ETS), Climate Change Agreements or the CRC.

Proactive firms, such as Boots Alliance, began implementing their compliance and emissions reduction strategies. Richard Ellis told Ethical Corporation Institute, a London-based ethical business research institute, that Boots has already installed 275 mandatory half-hourly meters. These meters have enabled the company to identify and target energy wastage across its UK sites and generate energy savings of between 10%-15% at individual sites. The extent of its voluntary installations also indicates that the company will score well on the early action metric.

Other companies are only in the initial stages of developing a compliance strategy. Tardiness could harm their profits if strategies are not put in place quickly.

A recent Ethical Corporation Institute briefing advises managers and executives how leading companies design their emissions reduction strategies in the UK, what the key deadlines are and what challenges are being faced.

According to the Defra CRC team, the rules are designed to be “simplistic, with minimal administrative burden; revenue neutral (in that firms recoup the upfront costs via the revenue recycling scheme); and to overcome behavioural barriers with regard to energy efficiency.”

The energy regulator has demanded commitments from power companies to slash gas and electricity prices. Alistair Buchanan, Ofgem’s chief executive, told the big six power companies yesterday that they should announce firm pledges to pass on recent steep falls in wholesale energy prices by February at the latest. Amid mounting fears of profiteering, he also said that Ofgem would refer the industry to the Competition Commission if there was not faster progress on cutting bills and scrapping price plans that penalised poorer and more vulnerable customers.

Ofgem, which began a competition inquiry into the industry in February after steep price increases, also said that it was considering changes to the licences of UK energy companies to abolish common industry practices. These included charging customers who use pre-payment meters more than those paying via other methods, such as direct debit. The regulator is also focusing on the cost of electricity to rural customers who are not on the gas grid and unable to benefit from “dual fuel” deals.

Ofgem said that some progress had been made by the energy companies since the inquiry began, including an end to about £500 million of unfair premiums charged to customers. But it demanded “more and quicker action” for customers who were losing out at the moment. “We’ve seen progress, but it’s certainly not the end-game,” Mr Buchanan said.

Ofgem’s announcement unleashed a wave of criticism, in which the regulator was accused of acting feebly. Paul Kenny, the leader of the GMB trade union, said that the Government needed to close down Ofgem and replace it with a beefed-up watchdog. “Ministers need to get the message fast. Ofgem does not have the power or the political will to stop the energy companies ripping off consumers. Threatening to refer these companies to the competition commission is not taking action, it is the equivalent to sending a memo,” he said

Centrica, the owner of British Gas, said that it had already cut prices for pre-payment customers. “We are fully confident we will meet all Ofgem’s requirements for transparency and fairness in our pricing,” Phil Bentley, the managing director of British Gas, said.

Meanwhile, the Energy Retail Association, which represents the six big energy producers, said that it took Ofgem’s statement seriously. “All the companies will be considering the concerns Ofgem has raised. However, today’s statement also recognises that energy companies have already invested £300 million in response to the regulator’s report,” it said.

As well as British Gas, the UK’s biggest power companies include Scottish & Southern Energy, E.ON, RWE npower, Iberdrola’s Scottish Power and EDF Energy, the UK arm of Electricité de France, the French power group.

Our service has received approval from the UK gas and electricity regulator, Ofgem, as a statutory redress scheme in the energy sector. If you have a problem sorting out a complaint with a gas or electricity company (an energy company), we may be able to help. The service is free and independent. The Ombudsman is the person who decides what action should be taken when you and a gas or electricity company can’t agree. Our job is to investigate complaints fairly. We listen to both sides of the story and look at the facts.

http://www.energy-ombudsman.org.uk/