Where we started reading was in the generally not alarmist FT in a story that started out:
Electricity prices will be pushed up from 2010 by the need to finance increased investment...
Now that seemed a little odd considering the collapse of commodity prices (oil has dropped 25% this week alone). It did seem a little strange that the FT didn't say anything more exact than they are going up. Stories like that lead to the constant drumbeat of fear and excessive caution which seems to appeal to some people: Nothing like a crisis to stiffen the back , or to raise prices. We don't think that investment in the electricity network is such a big deal or bad thing. The important thing is to have an electricity network that works, and we won't get one for nothing, but we shouldn't pay over the odds either. Stories like this become part of what we call the mental furniture: prices are going up, buy now and fix.
Since the FT, and Reuters, who are the only ones to go with the story didn't say was how much they were going up, we started to dig, a bit pissed off that the mainstream press didn't answer the very reasonable question of what the actual rise might be. If there was a story about taxes, or eggs or bread or shoes going up, we could reasonably expect a figure. Even a made up one would do.
This led us to the orignal Ofgem document. Ofgem decision documents can be relied upon to put even economists to sleep and to confuse both electricians and plumbers. Real people don't stand a chance. We never discovered how much the actual figure was either. But after wasting a lot of time on this we did discover :
Distribution charges currently stand at about 3.6 billion pounds a year, accounting for about 14 percent of a typical domestic customer's energy
Or £63 a year. So even if the costs rose by 30 per cent, energy consumers would have to fork out to the tune of: 70 pence per week. And that's the expensive and unlikely option! That's where we stopped reading.
What a complete waste of newsprint and electrons these stories are. But imagine Joe the Plumber sitting at home and reading that in the paper: Electricity prices going up. Better go to ...switch or ask British Gas to fix my electricity prices on their special fixed price until Armageddon tariff. Stories like this are not informing or helping people. We think a price rise worth worrying about is at least high single digits. Not less than 1% of the delivered price, which is almost definitely likely to go south big time with the lower commodity costs.
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