The UK is set to experience further energy price hikes next winter. This news comes from Centrica, which is British Gas’ parent company, after it announced that due to unrest in the Middle East and the disaster in Japan, wholesale gas prices have gone up by a quarter compared to last year.

The Japan disaster has meant that the country has had trouble producing enough energy for its people as a result a great deal of liquefied gas supplies have been diverted to make up for the shortfall in power production.

"In the UK the forward wholesale prices of gas and power for delivery in winter 2011/12 are currently around 25% higher than prices last winter, with end-user prices yet to reflect this higher wholesale market price environment," said Centrica.

Due to the rising cost of gas a number of energy suppliers in the UK including Npower, First Utility and British Gas, which has over 16 million customers have already had to increase prices and take away some cheaper tariffs. 

Even though this is not good news for homeowners they can do something now to protect themselves against the hikes and bigger bills during the upcoming winter. Most of the largest gas and electric providers do offer fixed-price tariffs, however suppliers are already increasing prices and withdrawing cheap deals so time is running out.

Homeowners can use sites such as GasBoiler-Buyability.co.uk, Moneysupermarket.com and Uswitch.com to compare the best energy deals on the market.

Although these price hikes are unfortunately unavoidable due to rising wholesale prices they are nonetheless coming at a poor time with record petrol prices and other increased living expenses this is yet another blow to the average household’s dwindling disposable income.

The price hikes are not only affecting domestic users either with businesses set to be hit as well. But the recent Renewable Heat Incentive launched by the government will allow commercial and domestic users later on to receive subsidies and cash back. And with the new price hikes this will surely spur many companies to look at more cost effective forms of energy supply.

The RHI scheme will initially be funded by the government using £860 million and is set to be available to the public and commercial sector as of July 2011. The scheme will provide financial incentives for installing and using renewable energy. This will be done by paying an annual subsidy to the person who owns the installation. The funding will be available for systems such as ground source heat pumps and solar thermal. British Gas has teamed up with Sainsbury’s to promote renewable energy installation by providing advice and information to shoppers. This will help to promote the incentive to the public.

It is predicted that inflation and energy prices could double over the next decade and with the RHI scheme this could mean a new revolution in renewable energy production for businesses and homeowners.

Guest Article by Louise Goldstein

One of the UK’s major energy companies has shocked its customers with a huge 19% rise in its gas prices and a massive 10% uplift in electricity tariffs.

Scottish Power has rocked the energy sector with the scale of its rises and will bring down upon itself the wrath of consumer groups already wondering how people can cope with such inflation.

The rises will come into effect on 1 August, but will only affect those not on fixed deals. This has prompted a number of experts to recommend people to sign up fixed deals as quickly as they can.

It’s feared that others will follow where Scottish Power has led and that the other big five energy companies in the UK will make similar rises soon.

British Gas, EDF, E.ON, npower and Southern and Scottish will make announcements soon as to their pricing intentions in the run up to winter. And British Gas has made strong hints that rises are inevitable, given the continually increasing wholesale costs.

But the extent of the Scottish Power increases has stunned customers and energy pundits alike. For the average bill, it has added about £170 which means over a year, the bill has climbed from £1,150 to £1,320.

Scottish Power has over five million customers and has never been adverse to leading the way in announcing price rises. Industry observers had noticed that for the last few weeks the company had been dropping hints about price changes, but the scale of the change has shocked many.

The company were quick to lay the blame firmly at the door of rising wholesale costs, but consumer groups were less impressed with that view, saying that the protection of margins was the real reason behind the rises.

People are being told to get themselves into long term fixed agreements before they might be withdrawn over the coming months.

In a case of almost shutting the door after the horse has bolted from the stable, the regulator of the energy industry is looking at the whole question of whether companies are justified in using wholesale price fluctuations as an excuse to raise their prices, especially when it appears to many that they don’t cut them when they fall again.

The energy companies claim that the situation is more complicated than people believe and that the process of buying energy some months ahead is complicated, and does not always follow what the wholesale market is doing.

One thing is for sure though, Scottish Power won’t be alone for long.

Guest Article by Neil Camp 

Centrica is the UK’s biggest energy company and owner of British Gas, and it has very obvious mixed feelings when it came to the recent UK budget unveiled by Chancellor George Osborne.

Like most companies in the oil sector, it was particularly scathing that the industry was made to pay for what many believe was a grandstanding tactic when it came to reducing the duty on fuel.

The Centrica Energy Managing Director (who also looks after British Gas) Mark Hanafin said:
“The Budget presents a mixed picture for the UK energy outlook. We are disappointed by the Government’s decision to increase further the already high levels of tax on UK gas and oil production. With more than 50 per cent of Britain’s gas now imported, it is vital for our energy security and for the economy that investment is maintained to ensure we extract all of the untapped hydrocarbons we can. This tax hike could have a chilling impact on future investment in the North Sea.”

The accusation was clear – the Coalition might pay dearly for trying to win cheap political favour and strike at a sitting target.

Yet there was more welcome news when it came to the question of the carbon price and this time, Centrica (and British Gas), has kindlier words to say: 
“However, we are pleased by the Government’s decision to support the UK carbon price from 2013. It is an important first step in delivering cost effective carbon emission reductions by increasing the cost of high-polluting forms of electricity generation. Crucially, it will provide greater financial certainty for the significant investment decisions being made in the next few years.

“While carbon price support is necessary, it is not sufficient on its own to deliver the scale of investment required to meet the UK’s carbon targets and secure energy supplies. It is therefore important that it is seen in the broader context of the forthcoming electricity market reform proposals.”

So, the reaction was definitely mixed and industry observers now await to see the relationship between the energy companies, including British Gas, and the UK Coalition Government will develop over the coming months. Some say this spat will be soon forgotten as the companies will be keen not to rock the perhaps fragile Coalition as it enters the choppier waters of austerity cuts. Others are pointing out that although Labour expanded a lot of hot air about windfall taxes, they were comparatively few levelled when they were in power.

British Gas, alongside its parent Centrica, remains on the sidelines.

Guest Article by Neil Camp 

The recent nuclear scare in Japan has done more than frighten the life out of Western European governments who were just persuading their populations that nuclear, afterall, was now a tamed monster.

It has thrown the whole energy debate out of kilter. Latest conceived wisdom is that the world has about 20 to 30 years left of comparatively cheap fossil fuels (before they become very expensive with higher production costs).

Nevermind for a minute that they might be harming the environment, the fact is that at today’s estimates, the current stocks are at the wrong end of the tank: nearing empty.

Now, okay, Russia has lots left (oil, gas, you name it), as does parts of the Middle East which appears to have discovered plentiful natural gas. But Russia has a tendency to sulk when it comes to supplying energy, and the Middle East is undergoing radical political upheaval which might not stop at Libya.

But if the West wants true energy freedom and comfort, the frozen wastes of the poles will have to fall to the oil companies, despite the environmental howls of protest, and the US might just have to start drilling off their East coast where it’s said there’s buckets of oil.

So politicians across the West saw nuclear as literally a great white light ready to save their problems. Three Mile Island was just an ugly memory (and some say not a bad movie) and Chernobyl thankfully happened in a part of the world where people don’t go on holiday.

And for the UK Government in particular, who see that in 20 years time the country is going to struggle to generate little of its own power, nuclear power was a God send. And when the French company EDF came along and started buying parts of the UK nuclear infrastructure, the Government took shelter in their upbeat PR machine which had well groomed men in suits saying that nuclear power was now nice and clean.

Oh dear. What a difference a Tsunami half way across the world makes. And for every day that TV stations focus on hissing steam coming from the stricken plant, you can strike a year off the time before nuclear power once again becomes the power of the future. Think of the bowed heads in the EDF Boardroom.

And the mother of all problems now confronts the politicians. Nuclear is back on the naughty step, shale gas retrieval is about as popular as killing badgers and wind power is fine as long as it’s about a hundred miles offshore and out of sight.

Yet the country’s population craves ever more energy to run their iPods, cars and every other conceivable gadget you can think of.

In other words, the UK populace can’t have its cake and eat it. Nuclear energy is out (given the fear of meltdown); the new wonder fuel shale gas is getting people onto the streets in protest and wind turbines either make too much noise, or kill too many birds.

But if the population of the UK don’t wake up soon, they might find their energy is more expensive than they ever had imagined, and that’s the true cost of not in my back yard.

Guest Article by Neil Camp 

The horrific events in Japan have had one unfortunate side effect for the Government in the UK: it proves yet again that nuclear power is not without risk.

The Government had warmed to the idea that nuclear power, which currently accounts for around 10% of energy provision in the UK, should play a greater role over the coming years.

Centrica, which owns British Gas, has taken a large stake in the UK’s major provider of nuclear power and French energy giant, EDF, now mostly controls the country’s nuclear energy production.

The nuclear option is extremely tempting for the UK because it allows the country to meet its carbon emission levels (if all goes well, it is one of the cleanest fuels in the world) and also helps mitigate the fact that no longer does the country have large stocks of its own fossil fuels.

The UK has almost exhausted both its own oil and gas reserves, and has now even become a net importer of gas. This is coming from Norway and increasingly, via shipped liquid gas from the Middle East.

The obvious implications for the UK Government on relying on being a net importer of your energy is very clear. It’s population will have to pay more for their energy; individual nations can hold the country to hostage as regards the energy flow (take what happened to the Ukraine when they fell out with Russia) and should a natural disaster interrupt supplies from overseas (or a war situation), then the country will struggle to meet its own energy needs.

So the attractions of a clean fuel such as nuclear fission is obvious to see, but the industry doesn’t have a long term PR clean sheet. Just mentioning names of Chernobyl and Three Mile Island are enough to send environmentalists mad with anger.

There are two big problems with nuclear power. The waste product is extremely dangerous and can have a shelf life of hundreds of years and, if something should go wrong with the actual process – as just witnessed in Japan – then it becomes very quickly an unstable energy generating process. And far from the problem being contained within a stone’s throw of the energy plant, the implications of having radioactive waste in the atmosphere and able to travel thousands of miles, is not worth thinking about for most people.

Ironically, the nuclear power solution has had a superb track record of late. The industry is far more aware of the power it has to harness and the modern stations are light years away from the flawed design in Chernobyl.

Yet even so, if Japan cannot eventually contain it, which country can. When a nuclear reaction cannot be cooled, it enters meltdown which can have catastrophic effects.

Now the UK does not sit in a earthquake zone, but there are worries that the same problem now faced by the Japanese could also occur through another natural disaster scenario (say a major storm), or indeed, perhaps more frighteningly, a major terrorist attack.

Whatever happens in Japan, the ugly side of nuclear power has again raised its head and that will once again give the nuclear doomsayers a chance to say nay to what is the Government’s great white hope for future energy sustainability.

Guest Article by Neil Camp