Energy prices and how they are priced

JUST under two years ago I replaced my aged oil fired boiler with an air source heat pump. At the same time, I changed my energy supplier to a firm who assured me that my electricity was from 100% renewable sources.

All was well; the heating provided a comfortable 21C throughout my 200-year-old stone and cob cottage. My electricity and heating bill was covered by an £80pcm standing order. In December 2021, that was increased to £130pcm. I was aware that most of the increase in energy costs are down to the increases in wholesale gas prices.

Like many other people, I am fearful of the further massive increases predicted in October. As I only use electricity from renewable sources, which I believe have not increased in cost to a major extent, why the price increase? Are electricity customers being used to subsidise gas users?

I asked my energy supplier (who shares its name with an underwater creature). The response was that “the market price bore little relation to the cost of production and distribution”.

The supplier used the illustration: “If you bought a house, the price would be tied to the current price of a similar house in your area sold recently, not by the cost of land, labour and materials.”

I replied to this by saying, “Why can’t energy be priced on a costplus basis?” which would seem a fairer system that would give the generator, distributor and supplier a fair return on their capital, while being fairer on the customer.

This question was not answered, but it strikes me that the market is paying scant regard to the needs of the consumer, especially the less fortunate members. Maybe it is time the consumer got a fairer crack of the whip and the money men were not so damned greedy.

Justin Beament Crediton, Devon