Electricity Pricing Policy is very strange as the more you use the cheaper it get or the easier it is to switch to a cheaper supplier.

This is crazy at it does not encourage savings

Shouldn't it be "The more you use the more expensive it becomes" -- this could also apply to other fuels

Should there be a minimum tariff below which no supplier can go? and a free band above which it costs more to encourage low use.

While electrical energy is as cheap as it is, there is little incentive to reduce usage anyway. You can play around with the pricing structure as much as you like but it really comes down to how much you use. The price is set by production which is a mix of long term fixed price, auctions and sometimes desperation.

Personally I would like a standing charge and a fixed unit price, fortunately as we head towards the marvels of smart metering (not yet working anywhere in the world but some places are close), we are going to get much more confusing tariffs.

Diesel's about 14p per kWh, which translates to about 35p/kWh of useable energy. Electricity is about 11p/kWh. Use cheap rate electricity and a good heat pump and you could pay about 3p/kWh of useable energy for heating.

There are heat pumps that run off nat gas but not for domestic settings as far as I have seen. There have COPs of around 1.6. So at 4.5p/Kwh natural gas would reduce the cost to 2.8p/Kwh.

If minimum wage is between £2.65 and £6.19 an hour, electricity is really cheap when you think what it can do.
Yes there are cheaper forms of energy, just as there are cheaper labour rates in other places.
Try getting a building apprentice to shift 50 lb of rubble one yard every second for an hour and see what you end up with.

I don't agree with the unit price getting cheaper the more you use, though have no problem with the standing charge as long as it is just an infrastructure charge and not used to make excessive profits or offset the unit charge.
I think I get charged 18p a day for mine, so that will be about 70 quid a year with VAT.
Just looking at last bill it seems I now have just 2 bands, Day at 15.24p and Night at 5.77p per kWh.

We are used to fixed charges and variable charges on usage, take road fund license and TV licence, RFL is fixed but banded, TV is fixed and both are regardless of usage. Excess baggage surcharges are a usage driven price though airport tax is a fixed fee.
My mobile operator does not pretend to give me anything free, just states for £7.50 a month I can use 250 minutes of voice calls (to certain lines) and 2500 texts before I start paying charges, never had to pay extra on my latest contract so no idea what the charges would be for going over the limit.
Bank charges are another area that has a mixture of fixed and variable charges.

It really does not matter to most people how their bill is calculated as it is the overall price that is important, as that is what they pay. Would be interesting to find an average street, with average people and put them on different price plans and see if it really makes any difference.

But for £70/year I get a reliable, consistence and safe electrical supply into my house, engineers working around the clock to keep it that way, investment in infrastructure and service, development to reduce usage and emissions, free or highly subsidies insulation and a moron in a woolly suit at the Olympics.

I think that fuel poverty is not caused by energy prices but from low wages. Should we really be expecting some households to be living on 40 to 60% of the median wage, there is not that kind of difference in energy pricing.
http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom

Paul, that's why my brother was in such a panic to get his heat pump fixed last winter!

Posted By: Paul in MontrealThis is where you pay roughly half price per kWh above -12C and four-times as much when it's below (and then you're expected to use another heat source).

I like that idea but over here I would worry about what people consider 'another' is.

Posted By: Ed DaviesI think the electricity companies would need to introduce something like this to pay for the capacity needed for the peak but not used the rest of the year.

Damon is the expert on this, but the way I understand it is that with our 'competitive market' it is already going on to a certain extent, just that the troughs and peaks are flattened out for the domestic customers to avoid a price shock.
Demand can be predicted to within a couple of percent and then the generation companies offer to supply (other than what they have on long term contract), if they under supply they then have to buy in from companies over supplying, there can be a big price difference here. This is all done on a relatively short (3.5 hour) timescale so that demand and weather can be matched pretty well. What can happen is that some generation is neither auctioned or used, but kept aside just in case there is a need for it (a generation facility going off line), the thinking being that it is cheaper to keep the reserves spinning and not use them than buy in when disaster strikes. This lowers overall efficiency, and by definition profitability, but gives better certainty and reliability. As consumers we like certainty and reliability, not many of us would want a cheaper supply for an unknown numbers of hours a week (though it may be a good way of regulating what we use).

Posted By: SteamyTeaI like that idea but over here I would worry about what people consider 'another' is.

One has to understand that, over here, most people heat with forced air - the reason being that this allows them to install an A/C system into the ductwork that also serves for heating. So the classic set up is some kind of fossil fuel "furnace" with ductwork that includes and A/C evaporator.

The conversion of these people to using a heatpump for heating is easy - they get to keep their existing fossil fuel furnace and swap out the A/C for a heatpump (which looks identical to an A/C unit anyway except for the addition of a reversing value and maybe an extra TXV and refrigerant filter - cost is not the different between the two). All you need now is a control to switch off the heatpump at -12C and turn on the fossil fuel furnace. Easy :)

Paul in Montreal.

p.s. it's very rare here to have combined heating/hot water heating systems

Good link WIA, thanks.

Rgds

Damon