Use bumper energy profits to scrap ‘grossly unfair’ energy bill postcode lottery

The Liberal Democrats have called for the scrapping of the regional differences in electricity and gas bills, which is seeing some households paying £124 more for their gas and electricity just because of where they live.

The UK is broken up into fourteen different pricing regions where it costs different amounts to get electricity and gas to people’s homes. This leads to people in the North of Scotland, Wales and South West England paying more for their gas and electricity bills than other parts of the country.

Analysis by the Liberal Democrats shows that households in North Wales and Merseyside pay the most for their bills, paying £126 more for the same amount of energy as households in the North East who pay the least. Households in the South West pay almost £109 more, with those in London paying an extra £97.59.

Party leader Ed Davey said Boris Johnson’s failure to scrap the differences showed he isn’t serious about “levelling up the country” and called for the electricity and gas companies, who made £5 billion in profits last year, to divert a proportion of this windfall to ensure households pay the cheapest possible price for gas and electricity.

Liberal Democrats are also calling for a Windfall Tax on the super profits of gas and oil producers and traders to fund support for the most vulnerable households. Their calls come as households are facing an unprecedented cost of living crisis, with Ofgem announcing that average energy bills will rise to £1,971 in April.

Liberal Democrat Leader Ed Davey MP said:

It is grossly unfair that at a time millions are facing eye-watering increases to their energy bills, some people are paying more based simply on where they live.

If the Conservatives were serious about levelling up, they’d work with energy companies to use some of the huge windfall profits they’ve seen to end this energy postcode lottery right now – which would help ease the squeeze on hard-pressed families.

The deadly cocktail of rising inflation and soaring energy bills is pushing people to breaking point. Ministers must do more to address this growing crisis before it’s too late.

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13 Comments

  • Brad Barrows 28th Mar '22 - 3:42pm

    I noticed that the point was being made during the Alba Party conference that Scotland current generates enough electricity from renewable sources to satisfy the country’s domestic needs, and therefore was asking for the justification for electricity prices shooting upwards for Scottish households. It will be interesting to see if this argument gains any traction in the weeks until the Council elections in May.

  • Phil Beesley 28th Mar '22 - 3:55pm

    Mark does not make it clear, but isn’t this about standing charges?

    Standing charges, when your granny still had all of her teeth, used to pay for fixed infrastructure which the ‘leccy looked after (meter) or shared (cables and pipes). So where has feature creep, rising standing charges, taken us?

    One aspect might be looking after “fuel poor” aka penniless people, working out ways for poor people to pay bills over years. Basically, we pay a higher standing charge because the utility companies have so many people who they can’t cut off.

    It’s weird how The Taxpayers Alliance has missed out on how generously ordinary families pay out to look after poor people, you know. Because the richest people in the UK pay the same standing charge as the poorest.

    We all love “green initiatives” as liberals. There are some interesting problems.

    If I’m paying a greater electricity standing charge, for bulbs, appliances and cooker, it is natural to seek why the ‘leccy costs more. Basic answer: I’m paying a bigger standing charge to pay for rich people to drive around in flash electric cars.

    Road usage exemptions, parking exemptions, reduced road tax (emissions based after all that CO2 needed for charging) mean that posh people are taking the micturate.

  • Phil Beesley 28th Mar '22 - 4:36pm

    In the UK, there is no “big plan” to transform an environment of carbon fuelled cars to electric vehicles.

    Boris Johnson, a man known for delivering his promises, says that conventional fossil powered cars will be banned by 2030. So we’re going to drive unconventionally.

    The electricity companies are less stupid than government. They are expected to provide an electricity grid which provides random demand. If we’re lucky, they’re spending our standing charge money to build charging points for the middle classes driving cars driven by the middle classes.

    That’s where our money is going.

    Much of our standing charge is being used to install bigger transformers for rich people, but there is no plan for recharging poor people’s cars.

  • @Phil Beesley – “Mark does not make it clear, but isn’t this about standing charges?”
    No, it is also about energy prices which are also set regionally; if in doubt download any operator’s tariff book or simply put a different postcode into an energy provider’s pricing calculator, whilst keeping all other details the same.

  • Brad Barrows 28th Mar ’22 – 3:42pm:
    I noticed that the point was being made during the Alba Party conference that Scotland current generates enough electricity from renewable sources to satisfy the country’s domestic needs, and therefore was asking for the justification for electricity prices shooting upwards for Scottish households.

    Because wind doesn’t blow at the optimum speed all the time and often not at all. That means that almost all wind generating capacity has to be duplicated with other <dispatchable gas-fired generators that can be ramped up and down to balance the highly variable wind output. This makes electricity from such renewables very expensive, as we now see from our electricity bills.

    Today there is hardly any wind across the UK and even in North Scotland where there is some hydro power, two-thirds of electricity is currently (6.20pm) being generated by burning gas…

    Carbon Intensity API: Regional Data [click on region]:
    https://www.carbonintensity.org.uk/#regional

    This lack of wind has been the case every day for the last week…

    Monthly offshore wind power output:
    https://www.thecrownestate.co.uk/en-gb/what-we-do/asset-map/#tab-2

  • Phil Beesley 28th Mar '22 - 7:36pm

    Roland: “No, it is also about energy prices which are also set regionally; if in doubt download any operator’s tariff book or simply put a different postcode into an energy provider’s pricing calculator, whilst keeping all other details the same.”

    Thank you, Roland. I like to understand.

  • This leads to people in the North of Scotland, Wales and South West England paying more for their gas and electricity bills than other parts of the country.

    That’s because it costs more to supply them, not least due to their extensive network of rural 11kV overhead lines which cost a lot more to maintain than the underground cables used in cities.

    These same regions have the cheapest car insurance rates in the country. Why not campaign for car insurance to be ‘levelled up’ too so motorists in Padstow pay the same as those in Plaistow?

    ‘The Cheapest Postcodes for Car Insurance in the UK’:
    https://www.compareukquotes.com/insurance/motor/cheapest-postcodes-for-car-insurance-uk

    The cheapest area for car insurance is the South West of England, followed by Scotland and then Wales.

  • From a green perspective and encouragement of minimal gas and electric usage, standing charges need to go (the companies can get their money back by increasing unit charges). Some countries have a lower unit rate for households where energy usage is low (easily done with smart meters), others credit all the electricity generated by solar panels to the household’s account rather than the tiny fraction in the UK (easily done using smart meters).

    A much more radical stance by LibDem’s along these lines to encourage people to use less energy which in turn will decrease prices. Totally at odds with the industry which needs users to pay them back for all the money they have lost over the last six months and the reason why standing charges have gone up by a hundred quid for electric (so that people can’t avoid it).

    A final idea, stand by Ukraine by turning the gas off at the meter for six months, thus allowing our European mates to buy more gas that does not come from Russia.

  • @Jeff – That’s because it costs more to supply them, not least due to their extensive network of rural 11kV overhead lines which cost a lot more to maintain than the underground cables used in cities.

    I get this, however…
    There are other services such as telecoms that are priced nationally…
    Perhaps, the mobile networks should be permitted to vary their charges depending on the location (and its designation) of the masts your phone connect to…
    Perhaps Openreach should be allowed to charge some ‘remote’ users more…

    Remember given the energy market, companies like Scottish Power, operate nationally not regionally. Perhaps what is needed is to separate out the local network maintenance costs, so these monies can go directly to the network maintainers (eg. Western Power Distribution) without the majors taking their slice. Interestingly, this would have the effect of enabling the energy consumption related taxes to be correctly attributed to the energy consumption line item.

  • @ Roland “Perhaps Openreach should be allowed to charge some ‘remote’ users more…”…. Do you really want to retain Lib Dem seats in areas such as Caithness etc. (or for that matter to give ammunition to the SNP) ?

    It’s nearly 200 years since the early Liberal Rowland Hill campaigned for a comprehensive reform of the postal system, based on the concept of Uniform Penny Post and his solution of pre-payment, facilitating the safe, speedy and cheap transfer of letters.

    Whether that principle was maintained by Sir Vincent Cable is open to question, but
    I would certainly argue that the principle of universality is a basic principle of social Liberalism.

  • Roland 1st Apr ’22 – 10:24pm:
    Remember given the energy market, companies like Scottish Power, operate nationally not regionally.

    As an energy supply retailer. As a Distribution Network Operator (DNO) Scottish Power only covers Central and Southern Scotland, Merseyside, North Wales and parts of Cheshire and Shropshire.

    Perhaps what is needed is to separate out the local network maintenance costs, so these monies can go directly to the network maintainers (eg. Western Power Distribution) without the majors taking their slice.

    That’s effectively what already happens. DNOs are separately regulated and their charges included in bills — hence the different prices in different DNO regions for electricity from the same retailer…

    ‘What is the Energy Distribution Network and how does it work?’ [February 2020]:
    https://www.dyballassociates.co.uk/what-is-the-energy-distribution-network-and-how-does-it-work

    There are 14 licensed distribution network operators (DNOs) in Great Britain and each is responsible for a regional distribution services area. The 14 DNOs are owned by six different groups. […]

    Since the DNOs are natural monopolies they are regulated by us to protect consumers from potential abuse of monopoly power.

    In order to be able to distribute electricity through the network, DNOs […] must hold a licence. The licences contain conditions which, among other things, limit the amount of revenue which these companies can recover from their customers.

  • Regardless of ‘how’ the energy is produced it is rather telling that the UK government has OK’d a 54% rise to consumers whilst those consumers just 20 odd miles away have their rise capped at 4%..

  • Jeff, you are right, and the Scottish Government have already got into trouble for using misleading figures on this one. I’m guessing the people from Alba either don’t understand the difference, or are relying on their voters not understanding it. Or just as likely, relying on their voters seeing any challenge to their claims as proof of an anti-Scottish conspiracy.
    https://fullfact.org/environment/scotland-renewable-energy/

    @Expats. There are a number of factors at play, but worth remembering that over 70% of France’s electricity production comes from nuclear. 78% in 2020 according to Wikipedia, though a good chunk of that is exported. Meanwhile, almost 20% of consumption is from renewables.

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