You know you're taking on vested interests when several journalists contact you asking the same planted question - "are you advocating zonal pricing because it will increase Kraken revenue?"
In short - that's nonsense. We've pissed off incumbents and that's cost us sales but...
1. Zonal doesn't require software as sophisticated as Kraken, and there are many other platforms that handle zonal and (the far more complex) nodal pricing in many other countries.
2. The smear involves the misinformation that Kraken "earns money per trade" - this is not true. It's a license fee based on either customers or MW under management. The fee doesn't increase with complexity.
3. Occam's razor applies - we advocate for zonal because it will cut electricity prices.
Selfishly, that makes my job easier (I'd rather write to customers with cuts than rises).
But it also will help sales of EVs, heat pumps, etc and this *is* good for our business.
That probably also helps explain the unholy coalition of renewable generators and gas advocates who oppose zonal pricing.
Neither want a cheaper, more efficient electricity system.
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Suppliers' profits are capped at c.2% by the price cap, but wholesale costs are too high as the price is set by the most expensive generation in the country
We propose a fix- locational pricing- to lower bills for everyone
2/n With locational pricing - instead of the price being set by the most expensive unit in the whole country, it'd be set regionally based on local supply and demand. Every region would be cheaper
Today's system is like every house in the country being priced at London levels.
3/n Even when it's windy and sunny, the national price is often set by gas - so we don't get the benefits of cheap wind & sun at those times. Instead, we pay as though all the generation came from gas.
Locational pricing would dramatically improve that.
Thanks to @AnnaJonesSky for a grown-up interview on recent price cap increase.
Not only did Anna raise the immediate issues and concerns from billpayers who again face a winter of higher energy costs, but also discussed the solutions we need to bring bills down for good.
2/n Global gas prices are 3x higher than they were in 2020, and it doesn't help to produce more in the UK - it's a drop in the ocean in a global market. We are at the mercy of geopolitics and major fossil fuel powers.
And our outdated electricity market means the price of gas...
3/n ..the price of gas sets electricity 84% of the time (even though it is <50% of production)
We need three things to bring bills down permanently
Make no mistake - there are real issues in energy caused by global gas and shortfalls in UK nukes - but the idea of "crisis" is being pumped up by the former Big 6 in order to try to bounce govt and regulators into restoring the cosy oligopoly they used to enjoy.
Undoubtedly, there are idiot companies out there who offered bonkers low prices when market was low, and seek bailout now it's high. They don't deserve a place in a critical market. And the B6 habitually overcharged for their bloated operations through opaque prices.
The key now is for a calm resolution to the "idiot companies" problem without losing the competitiveness which prevents oligopoly pricing behaviour from incumbents.
Excellent piece by James Coney: although without competition we wouldn't have seen @OctopusEnergy. Sadly, until recently regulators used to model energy on market stalls while consumers prefer the world of supermarkets and online equivalents
The regulatory community, schooled in Chicago economics, loves the idea of consumers haggling their way through noisy stalls, with each trader yelling their offer. A cacophony of buyer beware.
But as James illustrates brilliantly, those noisy traders can only offer bargainousness on the basis of a sting in the tail - awful service, risk of going bust, holding on to your money. Regulators try to legislate for all that, but like Jurassic Park, trader nature finds a way