I understood that the way UK energy prices are set currently, the highest price point of the energy in use at a time is paid. So if any fossil fuel electricity is being used, then the price paid by the supplier companies is that price, even though some of the producer companies are producing fuel cheaper. I.e. we would only pay the hydroelectric/wind price for hours where they supply all the needs of the whole country.
I'm a little more hazy on how that filters into consumer price, and who gets the profits from wind/hydroelectric/nuclear being paid for at the same rate as fossil fuel - whether it is the electricity producing companies who are producing the cheaper energy or somehow spread between producing and supplying companies
Ofgem sets the price based on cost of fossil fuel to the generating company.
The wholesale cost of electricity is paid by supply companies.
So, the supply companies should make a small profit, depending on the contract they have negotiated with generating companies.
At the start of this, a lot of supply companies had fixed price contracts with consumers, but bought off the generating companies on the spot market.
As the cost to generate went up, these companies couldn't afford the cost to buy electricity, and folded.
The bigger supply companies had longer contracts with generating companies, so weathered the initial phase, they moved onto variable contracts with consumers.
So Ofgem allowed them to stay in business by making a small profit.
Fossil fuel reliant generating companies are paying out for high cost fossil fuel, eco friendly or nuclear aren't.
Ideally, fossil fuel generators should be the ones changing supply as required to fill the gaps left by nuclear and the rest.
The winners are the gas and oil companies selling fossil fuel to the highest bidders, which they have to, the market sets the price, and the non fossil fuel generating companies profiting from the increase in wholesale electric price.
