feed in tariff budget

[petex2416]

All this also fails to acknowledge the profit the big6 are making by buying at 3.2p and selling at ~14p!

 

[solarsparkie]

Ted , you are wrong about fit charge as this is a levy the same as vat the suppliers have no choice in the paying for it, you are however right on diminishing forward costs per kwh ( this will be dependent on install rates , which will be in turn will be governed by simple market forces ie ROI return on investment ) else i would have taken an hour to have a stab at the calc's myself. I never said it would be simple so for those of you with a degree in maths and an understanding of economics i would imagine ploting the yeild and demand curves should come pretty close , ive seen some good work on here so I know there are a few about

 

[solarsparkie]

5.67 p is at power station gate cost , you may as well aledge panel wholesaler gate cost less the end user retail price is the profit on an install but it doesnt work that way does it pete!

 

[TedM]

Ted , you are wrong about fit charge as this is a levy the same as vat the suppliers have no choice in the paying for it, you are however right on diminishing forward costs per kwh ( this will be dependent on install rates , which will be in turn will be governed by simple market forces ie ROI return on investment ) else i would have taken an hour to have a stab at the calc's myself. I never said it would be simple so for those of you with a degree in maths and an understanding of economics i would imagine ploting the yeild and demand curves should come pretty close , ive seen some good work on here so I know there are a few about

I didn't say that the suppliers don't have to pay it - they do. I said they don't have to charge their customers for it - which they don't. They could just as easily pay for it out of their profits or shareholders dividends, or, god forbid, by reducing their directors' bonuses. Whichever way you cut the cake the money comes from the same place - their income.

But they want to pass it on directly to their customers in as visible a form as possible. That's a political decision on their part in my view.

They didn't decide to do that from April 2010 when many would have thought that that was what they would do. They have only decided 2+ years in to the process to make it explicitly visible on customers' bills. And many customers will query why, with the planned retrospective billing for this, that maybe they are actually being charged twice for the same thing?

But this does give their customers the chance to vote with their wallets and move to a different supplier. Quite how the suppliers would implement retrospective billing to collect a few pounds from old customers will be very interesting to watch. The costs of doing this will far exceed the extra income they can generate.

 

[solarsparkie]

Ian this wasnt decided 2+ years ago , if you would have read the first attached doc you would have known that "For the forward collection of theFiT charge, relating to the period April 12 to Mar 13, we will start billingthe indicative charge as supplied by DECC and based on their assessment oflikely costs. This will be shown as a separate line item on your invoice, (labelled‘Feed in Tariff’) with the first invoice for Apr-12 consumption issued to you fromMay-12 onwards*.

If DECC significantly revise theirindicative charges during the April 12 to Mar 13 period, we will alter theamount we collect from you. This is so that any subsequent reconciliationagainst actual costs will be minimised.

When the actual FiT costs for the2012/2013 period are published by Ofgem, we will reconcile any outstandingcharge.

This process will then repeat foreach subsequent year.
*If you do not receive a standardinvoice, but have alternative billing mechanisms, the way the Feed in Tariff isdisplayed may differ.

Why can't Ijust be charged the right amount, instead of you changing the amounts?
Costs for the Feed in Tariff depend on the take up of each renewabletechnology covered by the scheme, so final costs are not known until the end ofthe FiT year. For example, for April 10 to Mar 11, actual costs were publishedin Ofgem’s January 12 Annual Report**.

This is why we have to charge based on the indicative informationprovided by DECC and then reconcile this against the actual costs when these arecalculated. " this is why threads get junked up and lost

 

[Gavin A]

I don't know about anyone else, but I'm not really understanding the point you're trying to make here.

A mockery has just been made of the feed in budget , as now feed in costs are being born by consumers , commercial bills are starting to filter through with a feed in tariff levy on ! what a nonsense the last 9 months of DECC sham has been​

The FIT has always been funded directly by the energy companies, and ultimately from consumers bills, all that has apparently changed is that they're now going to be itemising this specifically on commercial customers bills.

The decision to itemise this specifically is a commercial decision made by the electricity companies, although it's possible that they needed and have now received Ofgem permission to do this, which would explain why they would all start doing it at once, if that is what's happening.

For some reason you seem to think this is a good thing, I'm struggling to see why, perhaps you could explain your POV in case I'm missing something.

 

[Earthstore]

I am getting a little lost here too.
Are you all saying that they have already been collecting FIT payments through bills, and from this point forward they are going to list it separately.
Or they have not collected any FIT payments yet through any bills and are going to now do this retrospectively and even if you have left your provider they will pursue you for the FIT charges because they have only just received the FIT figures.

I hope that makes sense...

 

[TedM]

I (Ted not Ian) have read the document.

My reference to 2+ years ago was reference to the start date of FiTs - April 2010.

All suppliers have known since then the likely costs of the FiTs scheme, they haven't needed to wait for OFGEM to tell them the precise figures to the penny. They have plenty of accountants and economists who could predict their costs just as accurately (heck - even I can do it) as they need to ensure they recover the cash they have to hand over in the FiTs Levelisation process from their customers.

I don't see how this discussion can be called 'junking the thread'?

 

[Ian-LS]

Ian this wasnt decided 2+ years ago , if you would have read the first attached doc you would have known that "For the forward collection of theFiT charge, relating to the period April 12 to Mar 13, we will start billingthe indicative charge as supplied by DECC and based on their assessment oflikely costs. This will be shown as a separate line item on your invoice, (labelled‘Feed in Tariff’) with the first invoice for Apr-12 consumption issued to you fromMay-12 onwards*.

If DECC significantly revise theirindicative charges during the April 12 to Mar 13 period, we will alter theamount we collect from you. This is so that any subsequent reconciliationagainst actual costs will be minimised.

When the actual FiT costs for the2012/2013 period are published by Ofgem, we will reconcile any outstandingcharge.

This process will then repeat foreach subsequent year.
*If you do not receive a standardinvoice, but have alternative billing mechanisms, the way the Feed in Tariff isdisplayed may differ.

Why can't Ijust be charged the right amount, instead of you changing the amounts?
Costs for the Feed in Tariff depend on the take up of each renewabletechnology covered by the scheme, so final costs are not known until the end ofthe FiT year. For example, for April 10 to Mar 11, actual costs were publishedin Ofgem’s January 12 Annual Report**.

This is why we have to charge based on the indicative informationprovided by DECC and then reconcile this against the actual costs when these arecalculated. " this is why threads get junked up and lost

I think you mean Ted not me.

 

[Ian-LS]

I'm not sure the big 6 could have forecast the uptake from late summer to the end of March this year. If they were basing to FIT payments on government predictions on uptake then obviously they forecast payments would be way out

 

[Gavin A]

All suppliers have known since then the likely costs of the FiTs scheme,

actually Ted, I'd have to disagree on that point, as I can well imagine that a lot of suppliers have been caught out last year by the massive increase in the installation rate for PV, combined with DECCs slow / incompetent reaction to it.

I can't see that many would have been prepared for what must have been in the region of a 2000% increase in the installation rate for solar PV year on year, which was massively over DECC's predictions and the budget implications of this, so most will have had to make tens of millions of pounds of extra funding available that they'd not budgeted for. This will at least partly come from their accountancy depts finding a way to ensure that the unpredictability of the FIT scheme payments doesn't impact on their bottom line, but I'm also pretty sure it's them making a political point in the process.

Fair enough that they're all in the same boat, so none should have gained competitive advantage, but it will still have impacted to some extent on their bottom lines this year.

 

[TedM]

The Big6 have their finger directly on the FiTs pulse. They have to as they employ staff in their FiTs departments at least vaguely proportional to the number of applications they are receiving. They also employ economists with at least an order of magnitude greater intelligence than DECC do. They also understand exactly what the FiTs Levelisation process means, how it works and its impact on their cash-flow. They will be carrying out rolling predictions of their exposure to these, and all other, costs and updated weekly.

For the Big6 the FiTs payments are little more than petty cash - even after the recent explosion in installations. Highlighting the amounts on bills and threatening retrospective billing, where the amount they will get back will be less than the administrative cost of processing, is a political decision by them.

[I'm off to talk to DECC about it.]

 

[solarsparkie]

Ted your right but if we pool our resources we can be on par with thier economists and make a little extra cash im sure there are enough brains on this site to bring it all together.

FIT was initially to be paid from central govt funds ,which is what all the debacle was about in the fit cuts ( for those of you howmissed the last half of last year ) DECC stated that they would run out ofmoney and testified at present rate of install and needed to slash returns (prompting the cut dont kill campaign ) the whole basis of the DECC argument wasthat they didnt have enough funds . Now central govt are not having to pony upfor the fit payments the DECC argument is dead in the water . The Uk is committedto installing new generation to make up the shortfall in future demand as aginggeneration plant is decommissioned , non govt funding was the key as they are potless as we all know so fits could theoretically increase now govt constraintshave been removed ( obviously its better for govt to have large offshore windas there will be owned by the corporates paying tax on the profits rather thantax free money going to the likes of the general public and 2000 + solarinstallation companies making a buck is not as nice for the big 6 to competeagainst is the muscle flexing that has gone on with the big six as none of ushas the required capital or inclination to get into the offshore market

 

[TedM]

Ah, now I see the misunderstanding.

This doesn't represent a change in how FiTs is funded at all. It has been setup to work this way for at least the last 3 years. (I've been involved in FiTs since May 2009 when the first consultation process started.)

The government 'budget' for FiTs has never been a real budget just an illusory one under a 'framework' deal foisted on DECC by HM Treasury. It has always been the electricity bill payer who was going to pay for it - not the taxpayer. All the hub-bub from Greg Barker about "running out of money" last October was just the politician's way of saying they wanted to cap the amount that electricity bill payers would have to stump up.

The only new thing here is that nPower plan to include a separate itemised line on their customers' bills to make it plain that they are recovering their FiTs costs and that they are trying to say that they have so far not recovered any cash from their customers in regards the amount of FiTs already paid out.

 

[TedM]

Just to add -

There is an ongoing review of the FiTs budget by the Office of National Statistics (ONS) who are supposed to decide, based on an EU precedent, whether FiTs should be considered government spending at all. If this review finds that it shouldn't be part of the government 'budget' under the framework agreement then things might change.