EXCLUSIVE Energy boss's plan to save YOU £1,000 on bills with a cap on huge oil and gas profits - Daily Mail

EXCLUSIVE Energy boss's plan to save YOU £1,000 off your bills: Multimillionaire tycoon says government can slash gas and electricity prices in a moment if they target North Sea producers' record profits

• Dale Vince, 60, boss of Ecotricity and Forest Green Rovers, called for a price cap on North Sea oil and gas
• A two per cent profit limit, already used for energy retailers, could save UK households a total of £30 billion 
• Energy giants are raking in billions as British families struggle to pay bills amid the cost of living crisis 
• The largest North Sea oil and gas producer saw a 20 times increase in profits from £102 million to £1.3 billion

By Alastair Lockhart For Mailonline

Published: 12:31 BST, 27 August 2022 | Updated: 14:05 BST, 27 August 2022

An energy boss has called for a price cap on North Sea oil and gas producers, which he said could save British households £1,000 a month as families buckle under the strain of rising energy bills.

Dale Vince, 60, founder of green energy company Ecotricity and owner of vegan football team Forest Green Rovers, told MailOnline the plan was 'the biggest single thing bar none' to tackle spiraling energy bills.

Mr Vince said the 'exceptional' cost of living crisis would need a similar response from the government as the Covid-19 pandemic to help families through the winter, as hundreds of thousands face being pushed into poverty. 

UK gas prices have quadrupled since mid-June, sending bills sky-high for Brits struggling to make ends meet as prices continue to soar.

Ofgem announced yesterday the energy price cap for an average household would increase to £3,549 a year from October.

Mr Vince argued that to address the crisis, a limit should be set on the profits made by oil and gas producers in the UK North Sea - as there is on energy retailers, whose profits are capped at two per cent. 

His comments come as Harbour Energy, the biggest North Sea oil and gas producer, saw its profits increase by twentyfold this year from £102 million to an astonishing £1.3 billion as energy prices soar. 

Mr Vince told MailOnline: 'We have a price cap in [energy] retail sales to homes, we don’t have one on wholesale. We’ve done half a job, which causes lopsided problems.  

'It’s simple in retail: energy companies are allowed to make two per cent profit, set by Ofgem. So you can have two per cent top of that for wholesale.

'Currently we let those guys sell it to us at global commodity prices set by the international market - that doesn’t make any sense to me.

'The government made a late and halfhearted attempt at a windfall tax on profits which will make next to no difference. 

'We pay £1,800 for gas - that’s half of our energy bills. In broad terms, take that gas half away from bills and you could be saving £1,000 per household.

Who is Dale Vince? 

Dale Vince, 60, is the founder of renewable company Ecotricity and self-made millionaire

Once a penniless New Age traveler, Mr Vince first garnered attention when he won a battle to build his first wind turbine in Gloucestershire in 1996  

Estimated to be worth £100 million, he is the owner of League One football team Forest Green Rovers 

The club became the first ever vegan football team in 2017 

He said in April he would start the sale Ecotricity to fund a campaign in the next election, which he called 'the most important of my lifetime'

Mr Vince has not declared for any political party, but he has donated to both Labour and the Greens in the past

He is estimated to have made £100 million in the past 26 years and is expected to double that from the sale of Ecotricity  

'Put it in and you take the problem away. 

'It’s not just homes being affected, it’s small businesses - they can’t afford to pay their bills

'The government have to see it like the pandemic - an exceptional event.'

Mr Vince estimated the amount saved by British households if the price cap was brought in would be £28 billion in total.

He added that because the cost of all other energy sources is tied to gas, a profit limit on the North Sea industry would have a major impact.

He said: 'In terms of solving the problem without throwing public money at it, it’s the biggest single thing bar none.

'You don’t need a tax for it and it could take £30 billion off energy bills.'

'A lot of people can’t pay for it, so the solutions are either public money or changing the system.

'40 percent of our electricity comes from gas, but [gas prices] set the price for nuclear, coal and renewables - every other kind of energy we pay for.

'That could half the electricity bill if we did that, and half gas bills.'

Oil and gas manufacturers have strongly opposed increased taxes, but the government u-turned to introduce a windfall tax in May to levy money from the industry as profits boom.

Liz Truss, likely Britain's next Prime Minister, has repeatedly said she wants to cut taxes, and wants to 'maximise' oil and gas production, although output in the North Sea peaked 20 years ago. 

Soaring energy prices are partly the result of Russia's invasion of Ukraine, which has caused energy company profits to soar.

Households, meanwhile, face a potentially disastrous winter as average gas and electricity bills hit £3,549. 

There are concerns they could rise to over £5,000 next year

Boris Johnson said yesterday his successor will 'plainly' have to help families out with paying their bills this winter.

He said cash handouts are: 'Clearly going to be augmented, increased, by extra cash that the government is plainly going to be announcing in September.'

He added: 'What I don't think what we should be doing is capping things for absolutely everybody, the richest households in the country.  

'This will go on for a few months and it will go on over the winter.

And it will be tough – and I'd be very clear about that – but in the end, we are also putting in the measures we need to ensure that we have the energy independence to get through this.'

Charities have warned lives could be at risk this winter after the latest price hike, as the cost of heating homes is pushed beyond the reach of many.

Chancellor Nadhim Zahawi went as far as to suggest people should cut down on energy usage this winter.

He said: 'The reality is that we should all look at our energy consumption. It is a difficult time. There is war on our continent'

He added the government 'know we need to do more' and said 'more help is on its way'. 

Money saving expert Martin Lewis said he was concerned about people dying this winter amid the cost of energy crisis.

He told BBC News: 'This isn't about mechanics, this is about the will.  We're going to have to take government funds whether from taxpayers or from debt and redistribute it down to some of the most vulnerable and stretching up to some middle earners. 

'That is what we are going to have to do.

'I am begging and praying and pleading that there is more government help this winter so that people do not die.' 

Dale Vince: My plan to tackle soaring energy bills 

1) The government has to intervene to protect people from these madly high energy bills. It will cost some £40 billion to do it this winter, just 10 per cent of pandemic spending. The government has to recognise that the energy price crisis is an exceptional event like the pandemic and increase borrowing to protect millions of people from the consequences. Not doing so will be a false economy

2) Price cap North Sea gas and ban exports. Allow the same two per cent profit margin that OFGEM allows energy retailers - and fix the price. Half our gas comes from the North Sea (or could) and that will take away half the price rise problem. It will also stop windfall profits before they occur - leaving no need for proper windfall tax, which government clearly has no appetite for

3) Decouple the price of electricity from the price of gas. It makes no sense to let gas, from which we maybe get 40 per cent of our electricity, set the price for all the electricity we make in Britain. Especially when the price for gas is set by global commodity markets. We need to break the link

4) Launch a proper public information campaign, helping people to save energy. For example, changing the flow temperature on a gas boiler can reduce consumption by 10 per cent with no temperature reduction. The government needs to share this vital information to help people use less energy

5) Beyond this winter and these immediate moves - a national energy efficiency programme is urgently needed. We can knock maybe 30 per cent of our energy bills permanently this way 

6) Unshackle onshore wind and solar - the fastest, cleanest and the cheapest form of new energy available to us bar none. And they need no public money - it's a free option the government could take

7) We need a green energy sprint. From the 50 per cent green electricity we have on the grid now - to 100 per cent. We could do it in 10 years easily enough or five if we deal with it as a national emergency

8) Replace fossil gas with green grass. We have the potential to make all the gas we need from grass - and create 160,000 jobs in the rural economy (providing a transition for farmers) with a big biodiversity boost. We can keep the gas grid we have and the gas appliances, just change the gas we put into it

 

 

Source: Twitter/Dale Vince 

Can my bills be higher than the energy price cap? Will it get worse? How 80% rise will affect YOU - as it's revealed a family of five in a four-bed home face monthly bills of £513 from October 

What is the energy price cap?

The energy price cap decides the maximum cost per unit that energy companies can charge for both gas and electricity. This is then used to calculate a typical annual bill.

The price cap was introduced in January 2019 as a way to ensure that households who do not have fixed deals - and who are, in some cases, less financially savvy - are not ripped off by their energy suppliers.

Twice a year, energy regulator Ofgem would set the maximum price that households on their supplier's default tariff would have to pay for every unit of gas and electricity they used for the next six months.

It allowed for a small profit - capped at 1.9 per cent - that energy suppliers were permitted to take for supplying the service. The frequency of the cap was increased on August 4 from every six to every three months.

How is the price cap calculated? 

The cap is calculated by Ofgem based on the wholesale price of gas and electricity and also includes allowances for tax, charges paid to the energy networks, green levies and social payments.

What is happening to the price cap?

The price cap is going up significantly. The 80 per cent rise announced today - which comes into force from October 1 - will push the cap to £3,549 per year for the average household. This is the highest it has ever been.

Can my bills be higher than the price cap? 

Experts warn there is no cap on the maximum households pay – but the cap is actually a maximum cost per unit that firms can charge for gas and electricity. The actual cap for each home therefore varies according to use.

Ofgem said that from October 1 the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 52p per kWh for electricity customers and a standing charge of 46p per day. The equivalent per unit level for a typical gas customer is 15p per kWh with a standing charge of 28p per day.

Why is the price cap going up?

The price cap on energy bills is linked to the wholesale price of gas and electricity, which is itself based on what happens on European markets.

The wholesale price of gas has soared by around eightfold in the last year. That rise has been passed onto customers in increments - the price cap was already at a record £1,971 over the summer.

Gas prices were already increasing last summer as demand bounced as countries emerged from lockdown but the situation was made much worse when Russia invaded Ukraine and started to restrict gas exports to Europe. 

Gas prices are also decisive for electricity prices, because gas is so important for the generation of electricity. Over the last year, 42 per cent of the UK's electricity came from burning gas.

Ofgem said the increase reflected the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic, and had been driven still higher to record levels by Russia's actions.

When will the price cap change again?

The price cap will be changed again in January 2023. It used to be changed twice a year, but changes announced on August 4 mean it will be reviewed every three months. It will change again in April, July and October 2023.

What is the price cap likely to be like next year?

Experts expect the cap to rise significantly in January 2023 and again in April, and then to fall back again in July and October next year - but the exact levels of the cap remains to be seen. 

Experts at Cornwall Insight expect the cap to hit £5,387 in January 2023, while those at consultancy Auxilione think it will hit £5,405. In April, Cornwall expects a £6,616 cap, while Auxilione believe it could reach £7,263.

There is then an expectation that the price will fall. Cornwall's forecasts for the July and October 2023 caps are £5,897 and £5,887 respectively, while Auxilione expects it to reach £6,485 and £6,006.

What does the new price cap mean for monthly bills?

Experts at Uswitch estimate that monthly bills in October, November and December this year will hit between £243 and £513 a month, depending on the size of the home and usage, and based on the October price cap.

They say 'low user groups' are usually one or two people living in a one to two-bedroom flat, who are at home in the evenings and weekends and have a weekly laundry cycle. They also use the heating occasionally and don't use a dishwasher or tumble dryer. These people are likely to spend around £243 a month on energy bills from October.

Then, 'medium user groups' are typically families of three or four people living in a three-bedroom house. Some members are home in the day as well as in the evening and weekends. The heating is used regularly, and electrical appliances are often turned on. Laundry is done three times a week. Their average energy bill is likely to be £363.

Finally, 'high user groups' tend to be large families with five or more living together in a four-bedroom house or larger. There is always someone at home in the day and and in the evenings and on weekends. 

There could be multiple television in use as well as a tumble dryer and dishwasher which are used regularly. Laundry is done daily. These groups are likely to face a bill of £513 a month from October.

What is the cap's purpose?

When Theresa May's government introduced the cap in January 2019, the aim was to protect households against profiteering energy giants. It would also, in theory, protect customers against sudden increases in bills.

More recently, Ofgem has allowed the cap to rise in a way that protects energy firms from going bust amid the soaring cost of wholesale gas and therefore electricity.

The effect is that bills are rising more sharply, and more often, to ensure suppliers can cover the spike in the wholesale prices of gas and electricity, which are around ten times higher than normal.

Who is affected by the price cap?

The new cap will come into effect for around 24million households in England, Scotland and Wales on default energy tariffs on October 1, and will remain in place until December 31, when it will be adjusted again. 

A few million people are on long-term fixed rates - which are not affected by the cap. However, many of these deals are expiring in the next few months.

What is the cheapest way of paying for energy? 

Paying by direct debit tends to be the cheapest way of paying for electricity and gas, because energy companies normally provide a discount for those using this method as it reduces their costs and administration time.

What about those on pre-payment meters?

The 4.5million pre-payment meter customers, who are often the most vulnerable and already in fuel poverty, will see an even more punishing increase, with their average annual bill set to go up to £3,608. 

What support is available for you?

It depends on your personal situation. All households have been promised a £400 discount on their energy bills. This support was announced in May, and will be paid in six monthly payments from October.

For direct debit customers this will be taken off their payments, while prepayment meter customers will be given discount vouchers from the first week of every month. These will be issued by text, email or by post.

Eight million of the most vulnerable households will also get extra support, taking the total they can get to £1,200.

These include a £650 one-off payment to households on means-tested benefits, a £300 payment to pensioners, and £150 for six million people who receive disability benefits.

Will the Government announce more support?

Charities, think tanks, opposition parties and potential future prime ministers have said the Government will need to do more for struggling households. But extra support will have to wait until the next prime minister is in place.

Consumer watchdog Which? has said the Government's financial support for all households must increase from the current £400 to £1,000 - or from £67 to £167 per month from October to March.

However, no immediate extra help will be announced by Boris Johnson's Government, with major financial decisions being postponed until either Liz Truss or Rishi Sunak is in No 10 after the Tory leadership contest.

The current Government has said that it is exploring the options and will present them to the new prime minister when he or she comes into office next month.

Energy Q&A 

Should I switch tariffs?

There are no fixed deals on the open market that come close to the incoming price cap.

Yesterday, the cheapest one-year tariffs were priced at around £4,700.

Forecaster Cornwall Insight suggests the cap will rise again to £5,386 in January and £6,616 in April. But anyone fixing with a £4,700 deal today will miss out on at least four months of savings when the price cap is cheaper. Overall, the average household would save just under £300 by fixing, if Cornwall Insight's figures are correct.

But experts say this saving is still probably too marginal to risk switching.

Joe Malinowski, of comparison service The Energy Shop, said: 'You would ideally want to fix to a tariff that is significantly below £5,000.

'Anyone who signs up to a £4,700 deal could end up regretting it if there is some kind of price freeze.' He added: 'In my opinion, there are too many uncertainties.'

Is £3,549 what I'll be paying?

This figure is based on the average energy use of a typical household.

If you use more energy, your annual bills will be higher. This is because the price cap limits what suppliers can charge for the gas and electricity they sell per kilowatt hour (kWh) as well as their daily standing charges, which cover the cost of supplying your home.

From October, your energy provider will be able to charge up to 52p per kWh for electricity and 15p per kWh for gas, up from 28p and 7p respectively.

What if I'm on a pre-payment meter?

Around 4.5million households use energy pre-payment meters and the price cap has historically been higher for these customers.

From October the average pre-payment meter household will pay £3,608. Critics have long argued that this is unfair, when most prepayment customers are on low incomes.

But energy firms argue that they face extra administrative costs for these households.

By FIONA PARKER 

Read more:

Adblock test (Why?)

https://news.google.com/__i/rss/rd/articles/CBMifGh0dHBzOi8vd3d3LmRhaWx5bWFpbC5jby51ay9uZXdzL2FydGljbGUtMTExNTE3NjMvRVhDTFVTSVZFLUVuZXJneS1ib3Nzcy1wbGFuLXNhdmUtMS0wMDAtYmlsbHMtY2FwLWh1Z2Utb2lsLWdhcy1wcm9maXRzLmh0bWzSAQA?oc=5

2022-08-27 11:31:13Z
1544023557