Wholesale gas prices rose on Monday and power markets also drew some support from tight supplies, although traders predicted power supply margins would improve as more plants returned to service. Gas for delivery on Monday rose by 0.75 pence per therm to 55.25 pence, while baseload power for Tuesday traded mostly around 82.00-83.50 pounds per megawatt hour.  A modest recovery in oil prices, which can dictate long-term gas contracts, helped to push up Winter 2008 gas by 0.55 pence to 89.25 pence per therm. The shutdown for upgrade work of Shell’s import terminal in Scotland on Monday cut supplies of gas, while a sharp, short drop in flows into another terminal at St Fergus added to supply tightness. But gas prices for the balance of week traded at around 53.25 pence per therm, with supplies expected to improve over the next few days, traders said. The first liquefied natural gas tanker in over three months is expected to arrive at the UK’s Isle of Grain terminal in Kent midweek. Power supplies were also tighter, despite the restart of the Hunterston B8 nuclear reactor over the weekend. ‘The margin is a little tighter than last week,’ one trader said, adding that power prices would likely ease if the gas prompt weakens as expected during the week. Oil was trading at just under to $114 on Monday, and the recovery from falls last week to below $112 helped to drive carbon prices higher, with carbon emissions for December 2008 rising 47 euro cents to 23.66 euros.

Greedy power firms are raking in an £11 billion windfall from a scheme meant to curb greenhouse gases. Figures uncovered by The People’s fuel campaign show The Big Six energy giants are ripping off consumers over permits. The permits, which tell the firms how much fossil fuel they are allowed to burn, are given to them by the Government free. But they pass on a charge of £9 a unit to electricity users which is what they reckon the value of the permits will be in five years when they will have to pay for them. If the scam was ended the 5.5million poorest users could be handed £2,000 each - enough to heat and light their homes for two years. The windfall is at least £2billion higher than previously estimated - and  The People has called for action to end the unfairness. “The figures The People has uncovered are astounding,” said Lib Dem leader Nick Clegg, who backs the campaign. “Energy companies enjoy a massive subsidy when many families are in a desperate struggle to pay bills. “This multi-million pound windfall should be used to protect the most vulnerable from fuel poverty.” And Lord Mogg, boss of industry regulator Ofgem, added: “The Government should reduce the free allocation of allowances. “This could provide revenue to fund measures to help alleviate fuel poverty.” The European Emissions Trading Scheme tells polluters how much carbon they are allowed to burn. Unused permits can be sold to other European companies who need more, which is what gives them their notional value. The Government allocates permits to industry which add up to £10.7billion. Scottish & Southern get the biggest windfall of £1,423million, followed by E.on with £1,386million and npower with £1,271million. Centrica, the British Gas parent company, get the least at £492million because they generate electricity using gas rather than coal. From this year seven per cent of the permits will be auctioned although the Government has the power to sell 10 per cent. A new system will start in 2013 and ministers are pressing for ALL permits to be auctioned then. That would give the Treasury £11billion which they could use to fight fuel poverty. So as a start The People is demanding that the Government auction 10 per cent of the permits now which will give the poor an extra £1billion. You are fuel poor if you spend more than 10 per cent of your income on energy and must choose between heating and eating. The figures The People have uncovered are astounding. This multimillion pound windfall should be used to protect the most vulnerable. 

Looking back, July 30th 2008 might well be marked as a watershed date for Britain’s energy consumers. On that date, British Gas announced an unprecedented increase on the price of gas - an astounding 35% - marking the single biggest increase ever announced by any of the big six suppliers in the UK. Because most consumers already pay about 60% of their household energy bills on gas, British Gas’ decision to raise electricity prices by “only” 9% at the same time will do nothing to undo the damage that has been done. The energy markets are still struggling with the aftermath of this shock. Four of the big six energy suppliers (E.ON, Npower, ScottishPower, and the Scottish and Southern Group), which together supply about 70% of the UK’s households, are furiously working their calculators, deciding by how much to up their own standard rate prices.

London brewer and operator Fuller’s is to install new smart energy meters in all 160 of its managed pubs in a bid to reduce energy costs. Fuller’s has teamed up with IMServ to install the smart meters and gas loggers, which will provide the company with comprehensive information on when, where and how energy is being used. The four year deal will also see IMServ provide energy management reports and demand forecasts. “With the rise in utility costs and a company commitment to help combat climate change, managing energy consumption has now become essential,” said Fuller’s Colin Simpson. “You simply can’t manage what you don’t measure. “The smart meters will provide us with the necessary information to help reduce energy overheads and reduce the company’s CO2 emissions. As an environmentally responsible company, it helps to provide the best possible products and services to our customers and all stakeholders involved.”

Centrica may decide to offer 4.0 billion pounds, as well as shares, for British Energy in order to woo the government in London, newspaper reports said on Monday. Centrica announced a week ago that it would consider an all-shares merger with British Energy should Centrica and French utility group EDF fail in a joint all-cash bid for the nuclear power operator, which is 35 percent owned by the British government. However the Financial Times said on Monday that Centrica was now looking at adding a cash portion of about 4.0 billion pounds to its proposal to win over Britain’s Labour government. The FT added: “Although Centrica does not have as much cash as EDF, it has relatively little debt on its balance sheet and a person close to the situation said … it would be possible for the group to make a cash-and-shares offer for British Energy.”

Water companies in England and Wales have been telling the regulator Ofwat how much they want to increase bills for the five years from 2010. Thames Water is expecting one of the highest rises of about 3% a year above inflation. United Utilities plans to raise prices by 2.7% above inflation. Northumbrian’s figure will be 1.3% and Anglian Water sees a 0.7% rise. Severn Trent asked for rises “only slightly above inflation” while Welsh Water’s will not rise above inflation. Overall the firms aim to invest £27bn during the period to ensure the “right balance between supply and demand”, said Water UK, which represents UK water and wastewater service providers. The average bill in 2015 is expected to be £350, with bills increasing £30 over the five-year period, it said.   We have to make sure that our infrastructure, our networks, our treatment works are all ready to cope with an influx of people . “The combined industry programme is a major and timely investment in national infrastructure that everyone depends on and we know will be severely challenged by climate change,” said Pamela Taylor, Water UK’s chief executive.  Thames Water, the UK’s biggest water company, said its £6.5bn investment plan would be the largest spending programme carried out by a UK water company. The firm said its customers had “enjoyed the lowest bills in the industry for many years”, and while there would be “an inevitable impact on bills”, it would try to keep charges below the industry average. Peter Antolik, Thames Water’s director of regulation, told BBC Radio 4’s Today programme that the money was vital to improve London’s ageing water system. “We also have, it should be remembered, a growing population in London and the south east,” he said. “We have, we estimate, about 380,000 more people coming in to the region and we have to make sure that our infrastructure, our networks, our treatment works are all ready to cope with that influx of people.”

Welsh Water announced plans to invest £1.5bn, or £1,000 per household, on average during the period. The money will be used to protect the quality of the water, support new infrastructure, improve water treatments and reduce the risk of repeat sewer flooding to properties. The firm’s average household bill will be £390 before inflation.

United Utilities said its capital investment for the period would be £4bn, of which £1.6bn would be for water services and £2.4bn would be for water waste services. While the firm said it would increase prices by 2.7%, bills were tipped to rise by 2.1% on average thanks to greater use of water meters.

However it added that it would reassess its costs when it submits its final plan to Ofwat in 2009 “in light of financial market conditions at that time”.

Severn Trent said it would invest £3.2bn to deliver improved services, reinforce the network following last summer’s flooding and reduce sewer flooding. It also said the money would be used for environmental improvements. Tony Ballance, the firm’s director of regulation and competition, said: “We believe our draft plan provides the best balance between improved services, the needs of the water environment and a cost that customers are willing to pay”. Anglian Water said it would increase the average household bill from £360 in 2010 to £373 in 2015, an annual rise of 0.7%.

With every week that goes by it becomes clearer that, within a few years, Britain will face an unprecedented crisis, thanks to the shambles the Government has made of our energy policy. After years of dereliction, when only a crash programme of measures could keep our lights on and our economy functioning, our policy has become so skewed by blinkered environmentalism and diktats from the EU that we are fast heading for the worst of all worlds - a near-total dependence on foreign sources of energy which will not only be astronomically expensive but which can in no way be guaranteed to supply all the electricity we need.

Between now and 2015 we shall lose 40 per cent of the generating capacity we currently require to meet maximum demand (still rising), due to the phasing out of almost all our obsolescent nuclear reactors and the closure of nine of our major coal- and oil-fired power stations under an EU “anti-pollution” directive. Gordon Brown talks about building a new generation of nuclear power plants, for which we would have to rely on the French - having two years ago sold off Westinghouse, the only British-owned firm capable of constructing them.

But even if the French play ball, which seems less likely since the collapse of Brown’s plan to sell off British Energy to France’s EDF, the new plants could still not be built in time to plug the gap.

The only short-term remedy will be to build yet more gas-fired stations, at a time when we are fast running out of our own gas supplies and when gas prices are shooting through the roof, reducing us to dependence on countries such as Mr Putin’s Russia or Qatar, both of which have recently announced caps on future exports.

Our best bet might seem to invest urgently in a dozen more coal-fired power stations, which still supply more than a third of our electricity.

But own coal industry is so run down - though we still have more than 100 years of reserves - that barely a quarter of the 62 million tons of coal we used last year was British.The rest had to be imported, including 22 million tons from Russia and 12 million tons from South Africa.

At a time when rocketing world demand for coal has already doubled prices in a year, we should again be dependent on unreliable foreign sources, to generate electricity by means which excite almost as much fury from environmentalists as nuclear power - as we saw with last week’s demonstrations against plans by German-owned E.On to build a new “clean coal” station at Kingsnorth in Kent.

With this colossal crisis fast approaching, our ministers are still lost in the cloudcuckooland of Mr Brown’s £100 billion “green energy” plan, to meet our EU target of generating a third of our electricity from renewables by 2020.

Not an energy expert in the country says this is remotely feasible. Our present 2,000 wind turbines supply just 1.5 per cent of our power, and even if Mr Brown’s 7,000 additional turbines could in practice be built, we would still be more than 200 per cent short of our EU target.

Worse still is the fact that our electricity investment market is now so skewed by the various subsidy and “carbon savings” schemes adopted to meet our various EU targets that these are now uselessly soaking up more than £5 billion a year which should otherwise be urgently invested in proper generating capacity.

Our major power companies can now make so much money from “renewables” subsidies and other “planet saving” schemes that they have much less incentive to risk capital on those which might keep our lights on.

Our energy policy is now so constrained and distorted by EU requirements that, even if we had a government with the knowhow and will to sort out the mess, we should soon be breaking EU laws all over the place.

Tragically, no one seems to remain in more blissful ignorance of all these harsh realities than our Conservative opposition which, when the crisis arrives, may well be in power.

Not only will those at the top of the Tory party, on present showing, have no idea why the lights are going out, but they will have even less idea of what to do about it - because by then it will be too late.

Thousands more families are facing a winter of fuel poverty misery after British Gas announced a huge price rise this week. If the increase is followed by other energy suppliers, then gas and electricity prices will push up the rate of inflation by one per cent, which will increase pressure on the Bank of England not to cut interest rates. So are the energy companies simply raising prices because they can ? or is something else to blame? Nigel Burton reports

Q: Why are gas prices risnig?

A: Thanks to a generous North Sea dowry exploited in the Seventies and Eighties, the UK is now the third largest gas consumer in the world.  But British suppliers have to buy gas from an international market place because the UK is no longer self-sufficient in gas production. In effect, they are a shopkeeper selling the product not the factory boss making it. According to Centrica, British Gas?s parent company, the price it pays for gas has risen by 89 per cent in the past 12 months. Although we still getmost of our gas from the North Sea, production has been declining faster than expected. As a result the UK is having to import gas from Europe where prices are linked to the price of oil.

Q: Will electricity continue to go up as well?

A: Yes. British Gas increased its electricity bills by 9.4 per cent yesterday. Gas fuels 40 per cent of UK power generation so if it goes up, the price of electricity goes up ? a classic vicious circle.

Q: So will they go on rising?

A: Embarrassingly for British Gas, the international price fell by almost half last week, from 60p per therm to 33p.

Q: Why did this happen?

A: Several North Sea gas fields that were out of commission have resumed production? easing fears of a shortage of supplies this winter. The warm weather has also led to a decrease in demand.

Q:So why didn’t British Gas just scrap its 35 per cent price rise?

A: Sadly, the international energy market is notoriously volatile. Companies such as British Gas have to buy suppliesmonths ahead and don?t have the flexibility to chop and change prices in line with the price fluctuations. However, gas prices shadow oil prices and the cost of a barrel of crude has been slipping back gradually from an all-time high of $140 a barrel last month to yesterday?s price of $126.48. A barrel in the energy industry contains 42 gallons.

Q: What does British Gas suggest its customers tdo?

A: In an interview earlier this summer British Gas chief Jake Ulrich could offer nothing more than a glib suggestion that people should wear two jumpers this winter instead of one when it gets cold. The company’s line is that higher prices aren’t the problem, poor energy efficiency is. It urges customers to invest in new central heating boilers and better appliances to reduce consumption.

Q: What about the least well-off customers?

A: In an attempt to head off renewed calls for a windfall tax, the company said it would delay the increase for its 340,000 poorest customers. But British gas, the country?s biggest energy supplier, has ten million gas customers.

Q:Is British Gas profitable?

A: Yes, but not as much as it used to be. Profits have fallen 69 per cent, to [pounds]166m. Things are looking better for parent group Centrica, which unveiled better-than-expected profits of [pounds]992m yesterday. These are 19 per cent lower than last year, but that was a record.

Q:I’m not a British Gas customer, will I be okay?

A: Probably not. The latest round of increases was sparked by EDF earlier this week. nPower, the North?s biggest supplier, warns today that an hefty increase is inevitable.

Q:So what can I do?

A: The Government encourages homeowners to switch suppliers. Websites such as uswitch. com will help you choose a new supplier, but customers need a good grasp of their energy costs for the sites to return meaningful results.

Experts are advising customers to sign up for fixed rate deals, but get in quick, they are expected to be withdrawn soon.

Q:Don’t we have reserves of gas?

A: No. The Government has been criticised for not doing more to boost Britain?s gas storage capacity. In Europe most countries have about 60 days? worth of reserves. France has 122 days-worth in store. In Britain if there were amajor supply disruption we could hold out for only 13 days.

Q:Can’t we use liquefied natural gas(LNG)?

A: We could if someone would sell it to us. Britain opened its first LNG import terminal recently, but it has been idle for much of the time.  Shipments have been going to Spain and the US, where market prices are higher.

Q:Will the Government step in?

A: Chancellor Alistair Darling is facing calls to levy a windfall tax ? a one-off charge ? on energy companies to give to the poor. But the Prime Minister is resisting such calls and British Gas says it already pays a huge tax bill.

A windfall could be counterproductive by driving UK energy companies abroad, thereby depriving the country of future tax revenue.

Last week, British Gas announced it was putting up its prices by another 35 per cent, piling yet more financial misery on families who are already struggling with the burden of rising food prices, higher mortgage costs and sky high petrol prices. Although there are many straightforward ways to cut your energy bills in the home – keeping the thermostat on a lower setting, for example, or installing insulation – another more radical, environmentally-friendly and increasingly popular way is to generate your own power.

Using the likes of solar panels, biomass heaters, wind turbines or ground-source heat pumps, it’s possible to wipe hundreds of pounds off your energy bills each year – and, if you generate enough power, you can ever sell what you don’t need back to the National Grid. At the moment, this is still a relatively primitive process. But Oliver Wright of the Energy Retail Association says that once smart meters are rolled out over the next few years, it will become much easier. Smart meters will automatically keep the power company informed about how much energy you’re using, as well as how much you’re generating – and will help to ensure you get full credit for any micro-generation

Although the initial outlay for most of these technologies is quite high, the Government is offering grants, which can pay for up to 50 per cent of the cost. To qualify, your home has to meet certain energy efficiency standards – such as having full loft and cavity-wall insulation as well as temperature controls. But if you pass these tests, you could receive as much as £2,500 for your project. For more information, and to apply for a grant, visit www.lowcarbonbuildings.org.uk.

Below, we look at the five main options for generating your own power.
Wind turbines

Although Tory leader David Cameron may have a wind turbine attached to the roof of his home in Notting Hill, don’t be fooled into thinking that micro-wind power will be suitable for your home. For wind power to be a viable option, you need to live in an area that has an average wind speed of at least 6 metres per second (m/s), below which you won’t generate nearly enough power to justify the not inconsiderable cost of installing a turbine.

The Department of Business Enterprise and Regulatory Reform has a useful function on its website (www.berr.gov.uk/energy/sources/renewables/explained/wind/windspeed-database/page27326.html), which allows you to check whether you live in a suitable area. For anyone that was in any doubt that the installation of a turbine at the Cameron residence was anything more than a gimmick, you’ll find the proof here. At 10 metres above ground level, the average wind speed in Notting Hill is just 4.8m/s – well below the required level.

Even if you do live in a windy area, however, it’s hard to make the numbers stack up for the micro-generation of wind power. A small turbine attached to your roof will cost around £1,500, but the savings are likely to be less than £100 a year – so it could take you a long time to pay back that investment if you don’t secure a grant. Tall, stand-alone wind turbines can cost between £11,000 and £19,000 – and although these will generate larger savings, the high cost means it’ll be even longer before you’ve recouped your initial outlay.
Solar

A more popular option is to install solar panels on the roof of your home, from which you can replace some of your electricity, or heat your water. According to the Energy Savings Trust, the average domestic system will set you back between £5,000 and £7,500 – and could save you around £230 on your annual electricity bill. Alternatively, if you choose to use solar panels only to help heat your water, your initial outlay would be slightly smaller – between £3,000 and £5,000 – but savings would also only typically be between £50 and £80 a year.

However, Oliver Wright of the Energy Retail Association says scientists in the US are currently working on a new range of cheaper solar panels, which could cost less than half the currently available systems. Once these hit the mass market, the economics of solar-power generation may be more attractive.
Biomass heaters

Biomass is biological material that can be used for fuel production, such as wood and energy crops. A biomass heater works by burning biomass to heat your home and your water, and, according to the Energy Savings Trust, could save you as much as £550 a year on heating bills. Stand-alone heaters generally cost between £2,000 and £4,000 to install, but they must comply with a number of building regulations, so it’s important to check with your local authority that you have the right to build one.

A wood-pellet boiler, which can generate even more heat, costs between £5,000 and £14,000 to set up, but could save you as much as £750 a year on energy bills. Obviously, some of these gains will be offset by the cost of the fuel.
Ground-source heat pumps

The earth a few metres below the ground stays at a constant temperature of 12-degrees centigrade, and by running a system of pipes underneath your garden, it is possible to harness some of this heat. The pipes, which are filled with a mixture of water and antifreeze, are arranged to run in a series of underground loops, heating their contents, which can then be used to heat your home.

The cost of installing one of these systems is between £6,000 and £12,000, but they could help to generate savings of as much as £900 a year.
Hydroelectricity

Finally, if you’ve got running water on your land, you could consider using its power to generate electricity. Although start-up costs are high – between £5,000 and £25,000 – efficiency levels are very good.

With energy prices rising even higher, consumers in the UK should have no problem finding the incentive to generate their own power.  Just last week British Gas made the announcement that prices would rise by an additional 35 percent - further compounding the financial burden. For the poorest families the rise is especially harsh considering the other rising costs of living such as mortgages and grocery bills.  The time has arrived for Britons to seriously consider alternate sources of energy for the home.

There are obvious ways to save on energy bills at home – the thermostat can be turned up a few degrees, or extra insulation can be added, for example – however, others are finding that generating their own power is not only environmentally-friendly, but also dramatically decreases the monthly electric bill.

It’s possible to save hundreds of pounds off your energy bills annually by generating your own power using solar panels, wind turbines, biomass heaters, or geothermal heat pumps.  Consumers can even sell excess energy that is not needed at the home back to the power grid. 

Currently, however, selling excess power is a bit cumbersome but the process will become much easier as smart meters are introduced over the next several years, according to Oliver Wright of the Energy Retail Association.  By automatically informing the power provider how much energy is being consumed as well as informing the consumer how much energy is being generated – smart meters will ensure precise measurements are recorded so proper credit can be given for power generation.

Installing many of these money-saving technologies is currently quite expensive but the Government is offering grants that can cover up to half the cost.  In order to qualify, the prospective homeowner must meet certain standards of energy efficiency – such as full insulation in wall cavities and temperature controls, for example.  Once these objectives are established, you could qualify for a grant of as much as £2500 for a power generation project.  More details and an online application are available at www.lowcarbonbuildings.org.uk.

Now, let’s take a look at the five primary options for generating power at home.

Wind turbines: Even though Tory leader David Cameron was able to install a wind turbine on the roof of his Notting Hill home, wind power generation isn’t suitable for everyone.  In order for wind power to be considered, you must live in an area that has enough wind available to turn the turbine – at least 6 metres per second.  If the wind doesn’t reach that speed you won’t be able to generate enough power to cover the cost of installing the turbine.

The Department of Business Enterprise and Regulatory Reform has a useful tool on its website that allows you to check if you live in an area with the desirable wind speed at www.berr.gov.uk/energy/sources/renewables/explained/wind/windspeed-database/page27326.html.  Where Cameron lives, at 10 metres above ground level, the wind speed is only 4.8 metres per second – so the installation may be little more than a publicity gimmick.

Wind turbines are costly.  A small one costs around £1500 but the savings would only be at most £100 annually even if the wind is adequate.  The stand-alone turbines cost much more – between £11,000 and £19,000 – and would take significantly more time to generate enough power to recoup the investment.

Solar: Solar panels have become a more popular option for generating power at home.  These can be used to generate electricity, or as a way to heat water at no cost.  The average home solar panel system costs between £5000 and £7500 and can trim £230 annually of the electric bill according to the Energy Savings Trust.  The investment is smaller if you choose to install only a solar-heated water system – with the initial investment of between £3000 and £5000 you can save between £50 and £80 a year on energy bills.

According to the Energy Retail Associations, current research in the United States is on the verge of a breakthrough in solar technology that will result in a whole new range of cheaper solar panel systems.  Once these are introduced to market, installing solar panels will become a much more cost-effective option for the average consumer.

Biomass heaters: Biomass heaters use biological material, such as energy crops or wood, to generate electricity.  The material is burned for home and water heating and could save the average consumer as much as £550 annually on heating bills alone according to the Energy Savings Trust.  Typical stand-alone systems require an initial £2000 to £4000 investment.  Before considering installing such a system, homeowners must ensure they are compliant with local building regulations.

Geothermal heat pumps: Just a few metres below the earth’s surface the ground stays at the constant temperature of 12 degrees centigrade.  Simply by installing a simple system of pipes beneath your garden this heat can be harnessed.  The pipes are filled with a mixture of antifreeze and water and arranged in a network of underground loops, which heats the liquid and, in turn, provides heat to the home.  The initial investment costs around £6000 and £12,000 but could generate savings around £900 annually.

Hydroelectric: The final option is to install a water turbine if you have a viable source of running water.  Startup costs are significant – typically starting at £5000 and up to £25,000 – but installing your own hydroelectric power will result in significant energy savings for your home.