[jrochkind1]

Very interesting!

I wonder what leads to the gas/electricity price relationship being usually (but not always) inverted here in USA from UK. A good reminder that we think of these prices as being set by "the market", but there is so much policy and subsidy that actually effects them, probably in both/all countries.

Here my electricity is charged in kWh, but gas is charged in `therms`! I'm not sure if I can just convert one to the other to compare, or if differences in efficiency in various places matter, or what.

Let's see what I can figure out...

On my last bill, in Baltimore, Maryland, USA, from BGE. (I use standard BGE supply, I don't try to choose a different supplier on "the market", which is possible here in a confusing way)....

OMG looking at my bill, it's a mess. The first so many therms of gas were charged at a different rate than subsequent, then there's also a separate delivery charge per therm, then other fees... But let's just take my actual total bill and divide by therms... gives us $1.88813/therm... which I think google dimensional analysis tells me is $.0644/kWh for gas? Which is GBP 0.053/kWh for gas? Double what you are paying?

Electricity, doing the same with their crazy 5-part itemized bill and just dividing total charge by kWh used, I get $0.177/kWh. Which if I've done my numbers right is in fact 3x what I pay for gas, hm. GBP 0.15 -- same as you are paying?

I am confused and may not have done proper arithmatic.

OP suggests:

> In Connecticut, electricity costs a little more than $0.20 per kWh. Those same electrons cost $0.10 per kWh in Louisiana.

So my electricity rates are right smack dab in the middle there.

OP says of gas:

> In Florida the average price of residential natural gas is about $2. In Idaho it’s $0.65.

If those are therms, my gas rates are to the top end of that but within range: $1.80. Ok that makes sense.

Hm, so OP is suggesting at these prices heat pumps should still work out, which is not what you found...

[Jochim]

> which I think google dimensional analysis tells me is $.0644/kWh for gas? Which is GBP 0.053/kWh for gas? Double what you are paying?

You're paying about half of what I am for gas and electricity, almost 1/3 of the unsubsidised price. I'm paying GBP 0.1028/kWh for gas and electricity is GBP 0.3376/kWh. We usually list energy in pence(£1/100) as it's a bit easier to read.

It's interesting that you have additional consumption based supply charges. We have an additional daily "standing" charge that's independent of use. Currently those are GBP .2256/day(GBP 93.294/year) for gas and GBP 0.4669/day(GBP 170.4185) for electricity.

> Hm, so OP is suggesting at these prices heat pumps should still work out, which is not what you found...

The ratio between electricity/gas prices has reduced since I last looked into it. Based on 2020 energy prices in the UK a heat pump would have been more expensive to run unless it had a cold weather efficiency greater than 4.85. At the time this necessitated a much more expensive heat pump which is probably where the 10k came from.

If we look at the Energy Saving Trust's current projections[0]. Someone with a relatively new boiler would expect to save £115/year. My energy provider offers a relatively cheap installation package starting at ~£3k[2]. It would take 26 years to pay off the air source heat pump at that rate. Their projections based on April's price data.

Many people require extra insulation and larger radiators to offset the reduced output temperatures of a heat pump. Radiators add an additional £200-300 each (£500+ if you're splurging) and a 4 bedroom family home will have a minimum of 6, more likely 8. If you end up spending £5000 overall it'd take 43 years to recoup the cost of changing your system.

On the bright side! If you're on an older boiler you could pay it off in under 10 years and if you're unfortunate enough to be on resistive electric heating, as far too many people still are, you'd break even in just over 3.

If we look back to March 2022 when energy prices were still inflated, Which[1] estimated that replacing your combi-boiler with a heat pump would cost you an extra £80/year. Should energy prices stabilise we'd expect to see the savings offered by a heat pump decrease. Which also estimates a much higher installation cost at £7,000-13,000. At the top end it'd take 113 years to pay for itself based on energy costs at what appears to be the peak of the gas crisis.

Ground source heat pumps are more efficient but the time to pay it off is similarly dire. The Energy Saving Trust estimates £24k to install one in a horizontal trench[3]. If you don't have the space or don't want bury a grid of pipework across your entire garden they estimate closer to £49k. They estimate a saving of £195/year. You'll break even in 123 years.

The issue with them is that they're a large capital investment that doesn't result in equally large cost savings. Until gas prices rise much closer to that of electricity, heat pumps will either cost more to run or will take longer than their expected lifespan to pay for themselves.

[0] https://energysavingtrust.org.uk/advice/air-source-heat-pump...

[1] https://www.which.co.uk/reviews/ground-and-air-source-heat-p...

[2] https://octopus.energy/get-a-heat-pump/#heat%20pump%20cost

[3] https://energysavingtrust.org.uk/advice/ground-source-heat-p...

[jrochkind1]

> You're paying about half of what I am for gas and electricity, almost 1/3 of the unsubsidised price

Ah, maybe that explains it.

And that matches my assumptions about US vs UK and EU -- US makes energy really cheap for consumers.

That could explain the OP, the cost-benefit might make more sense with US energy prices? Or is that right, should it be the opposite? The OP seemed to know what they were talking about, do you think they were wrong? I'm figuring they were right for US prices but maybe not UK.

> It's interesting that you have additional consumption based supply charges.

So it's complicated, and has to do also with the fact that my state in the USA, Maryland, has a complicated "market choice" thing where you can choose your "energy supplier" from a number of different companies with different complicated rate structures (most of which float in some way, and change month to month). But of course you still get the gas and electricity through the same pipes and wires. So you still pay the traditional legacy companies for "distribution" to pay for the infrastructure, while (if you choose) paying different companies for "supply". then there are various other fees and taxes (some based on usage) on my bill that I have no idea what they are.

My impression is that the "supply choice" thing is all a neoliberal scam. The price structures are super confusing, and a LOT of people, especially poorer people who can't afford it, get really taken for a ride. Often there's a cheap "teaser" rate, then the rates balloon to something hypothetically "market-based" but who really knows where the numbers on your bill come from. I have stuck with the traditional/legacy supplier myself.

At least once a week people knock on my door (in a not very wealthy neighborhood), salespeople trying to get me to switch my energy supply. Except they don't say that, they usually are very misleading about what they are selling, trying to imply (or outright lying and saying) that they are from the government or the traditional utility company, or are here to "check that you've done things right on your energy bill" -- they never have written materials to leave with you or a brochure, just a patter. Which only reinforces my belief that it's just a giant market for scamming people. (I think the salespeople themselves often don't really know what's going on, they're young people desperate for work recruited for commission-based door-to-door and being scammed themselves!)

So USA -- cheap subsidized energy prices, but a system still set up to screw poor people and enrich scammy corporations (and screw the environment).

[Jochim]

> And that matches my assumptions about US vs UK and EU -- US makes energy really cheap for consumers.

It's hard to judge, prices here spiked 3-5 times in two years; I'm pretty sure they more than doubled last year alone. I don't think the US was affected as seriously by the Ukraine situation. Government negligence has allowed a lot of price gouging by energy companies. Further incompetence has led to renewable suppliers being paid a rate based on the inflated costs of running a gas power station.

> That could explain the OP, the cost-benefit might make more sense with US energy prices? Or is that right, should it be the opposite? The OP seemed to know what they were talking about, do you think they were wrong? I'm figuring they were right for US prices but maybe not UK.

Cheaper energy makes capital intense investments a less sensible. As an extreme example, if your energy bills are only $50/year spending even $1k on a device that cuts your bills in half would be a poor financial decision.

The other major factor is the ratio of electricity to gas prices. It sounds like in some places they're nearly equal. Heat pumps are a much more sensible option in those places. If a heat pump is 3x as effective as heating with gas, 1kWh of electricity needs cost you less than 3x that of gas before you begin to see a financial saving.

Another is that UK homes are almost universally heated by circulating hot water through radiators in each room. Comments from others seem to indicate that these setups are typically more expensive than the air based systems typical of the US.

> My impression is that the "supply choice" thing is all a neoliberal scam. The price structures are super confusing, and a LOT of people, especially poorer people who can't afford it, get really taken for a ride. Often there's a cheap "teaser" rate, then the rates balloon to something hypothetically "market-based" but who really knows where the numbers on your bill come from. I have stuck with the traditional/legacy supplier myself.

Private energy companies feel like a joke. Cheap energy is fundamental to the health of the economy and the population's quality of life. Seeing as any kind of shock require government intervention, I don't see the benefit of allowing private companies to siphon off profit when times are good.

We have similar-ish systems. The majority of people are on a fixed tariff with top rate capped by the regulator. "Agile" tariffs allow people to opt in be billed at half-hourly market rates. If you can shift your usage to the cheapest hours you'll sometimes find yourself being paid to use electricity. In a stable market with battery storage and solar you can save a lot of money. During the crisis there were 2-3 months periods where people were paying 1-3x more than the capped rate though.