The latest Energy Matters PDF from npower. This covers: understanding energy prices, new gas power stations, renewable energy projects and looking at the ups and downs of energy prices...
Every day we’re reminded by the media about the current economic difficulties, but it’s not always easy to understand WHY prices are going up. That’s why we’ve put together this newsletter, to try and explain what’s going on behind the headlines. This is based on the independent NERA report published in June 2010 and covers all suppliers. The average breakdown of bills is based on annual average consumption figures. Now turn over to find out more about how we’re investing to secure energy supplies for the future. Do you know... what makes up your bill? The cost of energy includes much more than just the price we pay for your electricity and gas. Take a look at the simple diagram below. What makes up the average electricity bill? What makes up the average gas bill? 44% 4% 21% 11% 16% 5% Wholesale Costs Government Environmental Contribution Delivery to your home Operational Costs e.g. running costs VAT Other Costs e.g. metering -1% Profit 41% 16% 10% 16% 5% Wholesale Costs Delivery to your home Operational Costs VAT Other Costs e.g. metering 4% Profit 8% Government Environmental Contribution “Higher unit rates don’t have to mean higher bills, we’re here to help.” Kevin Miles CEO npower Retail • Change the way you pay We’ll give you a discount if you pay by Direct Debit throughout the year – quite simply because it’s cheaper for us to collect your payments and we can pass the savings on to you. Find out about Direct Debit please call 0845 0770 171 • Pay for what you use, say no to estimates There are around 26 million households in Britain, and getting around all of the ones we supply to read meters isn’t easy. So if you give us regular meter reads, it will help to make sure you pay just the right amount. We also have an online Meter Read Reminder service to help you say goodbye to estimated bills. To leave a meter reading call 0800 028 4361 you’ll need your account number to hand. • Contact us for energy efficiency advice All the major energy suppliers have to advise their customers about reducing their use of energy, and at npower our dedicated specialists are committed to helping you do exactly that. For energy efficiency advice call 0800 02 22 20 energy matters Understanding energy prices
Transcript
Every day we’re reminded by the media about the current economic difficulties, but it’s not always easy to understand WHY prices are going up. That’s why we’ve put together this newsletter, to try and explain what’s going on behind the headlines.
This is based on the independent NERA report published in June 2010 and covers all suppliers. The average breakdown of bills is based on annual average consumption figures.
Now turn over to find out more about how we’re investing to secure energy supplies for the future.
Do you know... what makes up your bill? The cost of energy includes much more than just the price we pay for your electricity and gas. Take a look at the simple diagram below.
What makes up the average electricity bill?
What makes up the average gas bill?
44%
4%21%
11%
16%
5%
Wholesale Costs
Government EnvironmentalContribution
Delivery toyour home
Operational Costs e.g. running costs
VAT
Other Costse.g. metering
-1%Profit
41%
16%10%
16%
5%
Wholesale Costs
Delivery toyour home
Operational Costs
VAT
Other Costse.g. metering
4%Profit
8%Government Environmental Contribution
“Higher unit rates don’t have to mean higher bills, we’re here to help.”Kevin Miles CEO npower Retail
• Change the way you pay We’ll give you a discount if you pay by
Direct Debit throughout the year – quite simply because it’s cheaper for us to collect your payments and we can pass the savings on to you. Find out about Direct Debit please call 0845 0770 171
• Pay for what you use, say no to estimates There are around 26 million households in Britain, and getting around all of the ones we supply to read meters isn’t easy. So if you give us regular meter reads, it will help to make sure you pay just the right amount. We also have an online Meter Read Reminder service to help you say goodbye to estimated bills. To leave a meter reading call 0800 028 4361 you’ll need your account number to hand.
• Contact us for energy efficiency advice All the major energy suppliers have to advise their customers about reducing their use of energy, and at npower our dedicated specialists are committed to helping you do exactly that. For energy efficiency advice call 0800 02 22 20
It’s predicted that the UK will soon have the largest ‘energy gap’ in Europe, as around a third of the country’s power stations close over the next few years. Even though we’re all doing more to save energy at home and in businesses, the demand for energy continues to increase. At the same time, the UK has committed to radically reducing emissions of greenhouse gases.
As an integrated energy company, we both produce energy and supply it to our customers, so we have a big part to play in making all
this happen. To do this in a way that remains affordable for our customers and maintains the UK’s business competitiveness, we need to invest in a variety of new technologies, including renewables, gas, and new nuclear power.
Only then can we be prepared for whatever the future may throw at us, and provide the best possible service to you, our customers.
If you’d like to learn more about our commitment to future investment for UK energy please visit npower.com
Did you know... Did you know... Did you know......We have over 460 wind turbines helping to power homes all over the UK.
...When fully operational our newest gas power station at Staythorpe has the generating capacity to produce enough electricity to power around 2.8 million homes.
...Every year we run education programmes for schools all over the UK and our power stations work closely with local schools and community groups to help them learn more about how electricity is made.
…building new gas power stations…
…and renewable energy too
Staythorpe A major new gas power station is in the final stages of construction at Staythorpe in Nottinghamshire.
Four generating units capable of producing enough electricity to power around 2.8 million UK homes
Reductions in average annual CO2 emissions by up to 7.5 million tonnes compared to an existing coal-fired power station producing the same amount of electricity
Long-term benefits for the local economy which include around 80 permanent jobs at the station and lasting investment in the local economy
We’re investing more than £700 million in Staythorpe
Gwynt y Môr Offshore Wind FarmWe’re investing in one of the largest offshore wind farms in the world off the coast of North Wales.
Due to be fully operational in 2014
Average annual energy generation will be enough for around 400,000 UK homes
Major boost to North Wales economy, with the community continuing to benefit throughout the operational life of the wind farm
We’re investing more than £1.6 billion at Gwynt y Môr
The ups and downs of energy pricesThis graph shows wholesale gas prices, petrol prices and npower’s gas prices from January 2007 to October 2010.
Crude oil Petrol npower retail QCC gas Wholesale gas cost for year ahead
0
50
100
150
200
250
300
350
Jan 07
Mar 07
May 07
Jul 07
Aug 07
Oct 07
Dec 07
Feb 08
Apr 08
Jun 08
Aug 08
Oct 08
Dec 08
Feb 09
Apr 09
May 09
Jul 09
Aug 09
Oct 09
Nov 09
Dec 09
Feb 10
Mar 10
May 10
Jun 10
Jul 10
Sep 10
Oct 10
350
300
250
200
150
100
50
0Jan07
Mar07
May07
Jul07
Aug07
Oct07
Dec07
Feb08
Apr08
Jun08
Aug08
Oct08
Dec08
Feb09
Apr09
May09
Jul09
Aug09
Oct09
Nov09
Dec09
Feb10
Mar10
May10
Jun10
Jul10
Sep10
Oct10
Crude oil Petrol npower retail QCC gas Wholesale gas cost for year ahead
0
50
100
150
200
250
300
350
Jan 07
Mar 07
May 07
Jul 07
Aug 07
Oct 07
Dec 07
Feb 08
Apr 08
Jun 08
Aug 08
Oct 08
Dec 08
Feb 09
Apr 09
May 09
Jul 09
Aug 09
Oct 09
Nov 09
Dec 09
Feb 10
Mar 10
May 10
Jun 10
Jul 10
Sep 10
Oct 10
350
300
250
200
150
100
50
0Jan07
Mar07
May07
Jul07
Aug07
Oct07
Dec07
Feb08
Apr08
Jun08
Aug08
Oct08
Dec08
Feb09
Apr09
May09
Jul09
Aug09
Oct09
Nov09
Dec09
Feb10
Mar10
May10
Jun10
Jul10
Sep10
Oct10
npm8440/11.10
The relationship between wholesale and retail energy prices is complex. As a supplier we buy gas and electricity in advance of when it’s delivered to you, our customer.
The red line on the graph above, shows the amount paid by an average npower gas customer paying by quarterly cash/cheque (QCC). As you can see wholesale energy prices are extremely volatile, because they’re tradable commodities and are therefore subject to global influences.
Energy suppliers may not pass on wholesale cost increases immediately and falling wholesale prices may not immediately result in bill reductions.
We’ve also included petrol and oil prices in the graph to show how closely they are linked. Petrol companies are able to instantly increase or decrease prices in response to oil prices.
Pric
es fo
r Jan
200
7 ar
e in
dexe
d at
100
To stop retail energy prices from going up and down constantly, like wholesale prices, energy suppliers look ahead and smooth out the difference in costs.
