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Leveling Down

With the energy price cap seemingly unable to cap anything, household bills estimated to reach £4,000 by January and 23% of households already behind with energy payments, many people will be anxiously wondering how on earth they are going to be able to afford such a price hike.

Some will take out loans, others will keep warm under the duvet and some may decide to opt out altogether by either refusing to pay (100,000 have already signed up to Don’t Pay UK) or replacing their gas and electricity meters.

While governments offer multiple reliefs such as the Winter Fuel Repayment, Pay-as-you-go emergency credit, Pension Credit and Energy Support Schemes (£400 for all, £650 for low income households, £150 for those on benefits and £300 for pensioners) the funding for such schemes - if not from a windfall tax - falls to the taxpayer at a time of rising inflation and when energy companies are turning a profit.

What to do?

Companies throughout the world use algorithms and AI to work out how much they need to make. They then pass the cost of their needs onto the consumer. So take a leaf out of their book by tailoring the amount you are prepared to pay around your needs and your means. If the energy companies can afford to pay out dividends (Shell is up to £9.5BN for Q2 while BP is at £6BN and Centrica - director Amber Rudd is also a director of The Climate Change Organisation - are at £1.34BN) they can afford to reduce the bills.

Ofgem’s price cap is based on the estimate of likely increases of wholesale costs in the year ahead. But most people have paid in advance (when my elderly parent died, Ovo sent £880 back in overpayment) and therefore, at previous prices. If the government is incapable of imposing a windfall tax at a time when investors in energy companies are receiving dividends, it is up to us to impose our own.

WHOLESALE COSTS account for 41.4 percent of our gas bill and 29.3 percent of electricity. Gas and oil are free commodities from the earth but there is a cost to extracting them. Wholesale costs can spike solely due to the speculation that something might go wrong; a war could last longer, sanctions could backfire etc. One of the responsibilities of the energy firms is to mitigate such risks by buying gas and oil in advance. In May 2021 the wholesale gas price was £48.29, which shot up to £314.52 in March 2022, falling back to £230.93 in May 2022. Why should the speculative increase be passed onto the consumer if the energy company has failed to buy in advance and if the customer has paid in advance?

Similarly, oil was at $68.23 in September 2021, hitting $119.40 by March 2022 before going back down to $93.33. Why not buy enough oil for three years when it was at $68.23? It’s not as if the Ukraine-Russia war couldn’t have been predicted in light of Zelensky’s decree of March 24th 2021 to retake Crimea. Surely wholesale brokers could have speculated (as the military analysts did) that this may be interpreted by Russia as a declaration of war?

Assuming the price of wholesale gas/oil accounts for only half of total wholesale costs, this would be a reduction of 7 percent for both gas and electricity. (These are calculations ‘on principle’ without factoring in the relative percentages of gas or oil used in the production of electricity).

NETWORK COSTS (27.9 percent Gas, 23.4 percent Electricity) such as transportation and maintaining the infrastructure are what gets the energy to your door and protects the flow. There is zero competition in this arena insomuch as Ofgem chooses the supplier, That said, if you don’t fancy going underground and checking pipes, this is a good one to pay towards.

Environmental/Social obligation COSTS (2.5 percent Gas, 25.5 percent Electric) cover renewables, costs towards those who can’t afford to pay their bill and the ‘green’ scam. Obviously if you’re struggling to pay your own bill, you’re not going to pay anyone else’s, so there’s a 2.5 percent reduction from ‘Obligation Cost’.

As for environmental costs, there is The Good, The Bad and the Ugly. Good is that in 2020, renewables accounted for over 40 per cent of the UK’s total electricity generated. Bad is that wind farms affect wildlife, are difficult to maintain and only last 20 years. Same with solar panels which can’t be recycled and end up in landfills. Some quarries now get paid more for the landfill space they liberate than for the products mined.

Ugly is Net Zero which is essentially a vast money laundering scheme by 114 world banks called the Network for Greening the Financial System (NGFS). NGFS estimates Net Zero will cost $275 trillion by 2050. No prizes for guessing who will pay for it. The green grab is all about developing “green” capital markets and ensuring sustainable finance. In other words, capitulating to the private bankers so they can continue ‘fleecing the flock’. Reduction: 2.5 percent Gas, 13 percent Electricity.

OPERATIONAL COSTS such as customer services, billing, meters, meter readings, IT etc are the basic day-to-day running costs of a company and account for 21.5 percent of the gas bill and 16.3 percent of electricity. There are probably mark-ups on this and further VAT so 2.5 percent reduction across both Gas and Electric.


According to the Federal Reserve, a crude oil price spike to $100 would boost the annual inflation rate by 3 percent. Factoring in the government’s legalised theft – otherwise known as QE – that's a further 9.4 percent. Other reductions can be made by removing broker’s fees at 2 percent and VAT at 4.7 percent. In total, that means savings of at least 30 percent on your gas bill and 41.1 percent on electricity.

The government wasted £407 billion on a needless lockdown including 73 billion on loans and guarantees for business and are now trillions in debt. The cost of keeping energy bills at last year’s prices for all 22M households hooked up to the grid would cost the equivalent of half the annual interest on national debt.

The good news is that the government is fully behind the consumer contacting their supplier to negotiate a lowering of their bills. ‘Anyone in financial distress during this time should talk to their energy supplier, who will be able to discuss personal circumstances and consider options to help, including reassessing, reducing or pausing payments’ suggests the government helpfully, while Centrica’s core values are repeated throughout their Companies House documents: ‘It is vital that we listen to our customers and act on their feedback…so we can understand what they want and what they need across a range of issues…such as pricing and support for their energy bills to fulfil our purpose of helping them live sustainably, simply and affordably.

With a zombie government far from the helm, it’s up to the individual to inform the energy company directly what figure they are prepared to pay. The energy companies can cover the shortfall. It’s called levelling up.


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