Energy co-ops weigh the costs of the world’s power supply crisis

LONDON– The energy crisis is forcing price hikes around the world; in the UK, millions are in fear of fuel poverty as winter looms, and many businesses are concerned about unaffordable fuel costs, prompting new prime minister Liz Truss to announce a price cap, leaving the typical domestic bill at £2,500.

Accoriding to Coop News, the country’s biggest energy co-op, Your Co-op Energy, a joint venture between Octopus Energy and the Midcounties Co-op, has posted a Q&A for members on its website, noting that “the government price cap has increased by almost £58 per month for a typical home, which means that families all across the country are wondering how they can take control and do something to manage their energy bills”.

It says it “takes great pride in our relationship with our customers and we understand that this is a strenuous time for everyone”, but adds, “tariffs have gone up this much because it costs us five times more to buy energy now compared to last year. Our new variable price is protected by the price cap.”

Co-op Energy says there has been an average increase of 54 percent in the cost of energy price cap was last set six months ago. “If you’re coming off a fixed price, your increase may be more,” it warns.

One question it addresses relates to the cost of renewable energy: the crisis was sparked by soaring gas prices resulting from the Ukraine war, but 100 percent renewable tariffs are also rising.

Co-op Energy tells customers: “It’s down to the way the market works. The grid sets a single half hourly price for all types of energy in the system. That price often ends up based on the most expensive source in the mix which is generally gas, which is why even on green tariffs right now, gas is setting the price.”

It adds that the price change only affects customers on flexible tariffs, not its fixed tariffs, and is contacting those affected to discuss their options. “We’re committed to making renewable energy affordable for everyone, so we’d prefer to never raise prices,” it adds. “Our relationship with Octopus Energy has meant that we have been able to offer alternatives during this hard financial time.”

Meanwhile, Community Energy England [CEE], which represents member-owned renewables across the country, welcomed the energy cap – and suggests its members take advantage of the government advice that “companies with the wherewithall should be looking at ways they can improve energy efficiency and increase direct energy generation” by contacting local firms.

But, it warns, the energy cap “does not solve the problem and comes packaged with a lot of downsides”, with millions already struggling with the cost of living. Even with the price cap, “potentially more than 7 million households will be struggling to pay energy bills – and will be going cold and/or hungry this winter”, it adds.

The government’s support package could cost upward of £100 billion, to be funded by borrowing and ultimately borne by the taxpayer. “This money will effectively add to the excess profits of the oil and gas giants who should be contributing to paying for it,” says CEE, criticising the decision not to levy a windfall tax on gas and oil industry profits.

It is also concerned about government ambitions to increase gas sourcing from the North Sea, and to lift the ban on fracking – which would not cut the price of gas, or energy bills.

“They will also temporarily suspend all ‘green levies’ on electricity bills which pay for many measures in the energy transition,” CEE adds. “They made no statement about how these things will continue to be paid for or where some of them will simply stop.”

It notes the government promise of an Energy Supply Task Force “to focus action on securing domestic energy supply to reduce energy price shocks from international factors”, a fresh look at the regulatory system, and a review to ensure that Net Zero will be achieved by 2050 in a way that is pro-business and pro-growth. This will be conducted by Chris Skidmore MP, described by CEE as “a previous energy minister, who set up the Net Zero Support Group of Tory MPs to counter the [climate-sceptic] Net Zero Scrutiny Group led by Steve Baker and Craig Mackinlay”.

The crisis is a global one, prompting comment from energy co-ops around the world. In the Philippines, the Association of Mindanao Electric Cooperatives [Amreco] – a coalition of 34 electric co-ops – warned that the Ukraine crisis has inflated the price of the coal that generates much of the power on the island.

Amreco president Jose Raul Saniel, in a statement to the press, said: “Why are we being blamed when we are just the collectors of the payments for different charges imposed by power suppliers, transmission operators, and government taxes?”

Sergio Dagooc, from the Association of Philippine Electric Cooperatives [APEC], agreed, and called on the government to take action to stop the independent power producers dictating energy prices.

In the US, NRECA, the apex for rural electric co-ops, is running a weekly fuel price watch – a useful resource in a country where retail electricity rates have risen nearly 16 percent between August 2021 and August 2022, according to the US Department of Labor.

Many co-ops across the country have been forced to increase rates, but some are working to limit the impact; in Wyoming, commercial electricity rates in June 2022 were 20 percent lower than the national average – with the Basin Electric Power Cooperative board voting on 10 August for a rate decrease that will save its members approximately US$ 33.5 million in 2023.

https://thecooperator.news/us-electric-co-ops-to-benefit-from-broadband-support/

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