Energy prices – what’s going on? Letter to David Warburton MP

Wind Farm at Sunset” by chaunceydavis818 is marked with CC BY 2.0.

Dear Mr Warburton,

I am writing to you – with copies to local news outlets – about the recent large rise in gas and electricity prices.

I am old enough to remember the oil crisis of the mid-1970s. During that period the government brought in a number of energy-saving measures; these included banning the heating of commercial premises above 18°C, and reducing the speed limit on motorways and dual carriageways to 60mph and to 50 mph on other roads.

Might I ask why we are not seeing such measures at the moment?

More importantly, however, the raising of the Ofgem price cap on gas & electricity is forecast to increase average annual domestic bills from £1,200 to £3,000 by Autumn 2022. I note that according to the latest figures, 37.9 per cent of UK electricity is generated from renewables and 16.6 per cent comes from nuclear. Unless the price of wind, sunshine and uranium has gone up in recent months, electricity from these sources will cost nothing more to produce in the next twelve months than in the last.

While the price of the gas used to generate 48 per cent of our electricity has gone up significantly in recent months, and is likely to continue to rise, the cost of production – and the UK still produces about 40 per cent of the gas it uses – again remains the same.

So first, somebody somewhere is making an awful lot of money: about £1,800 per household, at a time when we are facing a cost-of-living crisis. Might I ask why, exactly, is the price of electricity being set by reference to the most expensive form of generation – open cycle gas turbines – rather than some sort of ‘average’ cost? 

Second, given the cost of gas and oil production in the UK, are we not able either to make fuel available at a price that reflects the cost of production, OR impose heavy windfall taxes on the excessive profits that producers are making? There is an increase in National Insurance from April 2022 to allow the Chancellor to ‘balance the books’, so why are energy producers somehow exempt from tax rises?

It is worth pointing out that founder Martin Lewis has warned that the huge increase in the price of both food and fuel could result in civil unrest. Surely that alone should justify some action.

Yours sincerely

John Boxall

Frome, Somerset