A lot in the news today about the gov't getting all narky with the leccy companies because they give you a better deal if you are a new customer than if you are a loyal one. They say that some people are missing out on over £200 a year. They also say that many of these are pensioners and those in "low paid work". There are also mumblings about "the Big Six" and how mean they are. Personally, I don't get this: Marketeers come up with frequent promotions to gain customers - so what's new? There are only about 4 banks, 4 or 5 supermarkets, so why worry about 6 electric companies? Isn't that enough choice? If people are too dim or lazy to switch to a better deal, why should the gov't get involved? I thought they loved free market capitalism? If you don't like it, nationalise the electric utilities (weren't they nationalised once?). This moral outrage has completely mystified me. Anyone else mystified, or are you all outraged?
i believe we pay more per unit up here for our lecky compared to say london (not trying to start a war) something to do with the cost of connecting to grid which has threatened the future of longanet, odd considering the amount produced up here, there's a wee hydro scheme not 400mtrs from my door. scandalous Scottish Power fears for Longannet Power Station - The Scotsman
Bit like insurance - some are to old / frail / incapable of understanding - much like Figs old friend My old dear wouldn't no how to turn a pc on
If you don't have internet access or are not computer literate you are excluded from the competitive market place and you will be mercilessly fleeced. All my existing vehicle insurance providers have been routinely doubling the premium on renewal for years. I cannot remember when I last renewed with the same provider. Household utilities are a similar rip-off and household insurance is almost as bad as car insurance. I am struggling to get a car insurance certificate from an insurer at the moment. They want me to download the document from a website which doesn't work properly - it will not accept any passwords. They are based in Peterborough but they seem incapable of using the telephone or the postal service. If my documents are not activated online within the next few days the policy will be cancelled and I will be charged a substantial "cancellation" fee. I'm at risk of getting tucked up and I have a computer and internet access. There must be millions of people who are not and never will be part of the computer generation and they are simply being exploited and mugged.
The OP is 100% correct in my opinion but politicians love to be seen to be doing something and the utilities companies are an easy target.
heard on the news this morning 2p per unit more up here. company made 1.2bill profit, if they made it the same across the board it would cost them 1%
That's great for those who can switch, who can surf the internet and get the best deals. What about those who can't? And it isn't just a handful of stupid or lazy people, its millions who are elderly, non-computer literate or impoverished with no internet access. They will always exist and with such things as household utilities they have no choice but to use services. Should no provision be made for them or is it a case of get online or get ripped off?
I don't agree with the above certainly regarding insurance. 3 years ago I switched from online insurance to a local ish office based broker and am getting far better service. There is a 24 hour help line but during office hours I speak to the same person every time I call. No waiting in a queue or having to give passwords etc,, straight through instead. I can deal with them online of course but usually I phone especially if asking for advise. Come renewal they do all the searching and have so far saved me hundreds of pounds. The internet is not the always the best way to proceed. I gave the details to my 81 year old father who is now using them for his home , motor and travel insurance and he is far from internet savvy. He is delighted and also saving money.
You are indeed quite correct sir they were all once nationalised including the transmission lines too. Its an oligopoly like the banks, they do not need to communicate, the competition's prices are all out there for each company to scrutinize. A cozy understanding that each individual company will only alter prices by a given percentage and everybody in that market get a nice slice of the pie and everybody in that market fleeces the customer. Its a set of utilities and an interconnected network and not IMHO, readily suitable to a freemarket model. That of course never stopped the idiots in Westminister and their clever chummies from dreaming up a model to make it that way. Then they act all surprised and outraged when it doesn't work. Railways also spring to mind. How many of you switch regularly, I don't and know I'm getting fleeced but if I change and don't make say a monthly habit of tracking both my consumption of each energy (elec and gas) and looking at what each utility has to offer and keep my eye on my own, then I am going to get "done over". How many track their consumption, "So sir what is you're average gas and electrical consumption in your household, we need this to offer you the best deal" "Eh?" Oligopolies and false markets specialize in this. My bills have been simplified to make it easier (according to my supplier) when in actual fact its made so difficult to get the info out I struggle. They know that but the regulator does sod all. No surprise to me that people are getting fleeced, just make it so complex, with hundreds of ever changing deals and the majority of Johhny public will give up. Just my take on it probably Pete will be along in a minute to explain how these assumptions are clearly the product of a simple mind
Excuse me whilst I pick my words carefully but ... fucking spot-on, OJ. Nail truly hammered and vice versa.
My business (dairy farm) uses a lot of electric and our bill is well into five figures a year. We constantly review the price of electricity because just 0.1 pence per unit can equate to hundreds of pounds per year. I think I'm reasonably intelligent but trying to compare electric companies like for like is very difficult as not all of the charges are up front. I have considered building a wind turbine to drive an on farm generator to produce our own electricity and anything surplus we can sell back on to the grid. We can get a government grant, have a ready market for excess and its environmentally friendly. All sounds good doesn't it, so why am I not doing it I hear you say. Firstly I know now that as soon as I put in for planning permission I will become public enemy number one with the locals and all the people who just like objecting for the sake of it. Now as much as I don't care what others think I would like to keep my neighbours on my side as they are the eyes and ears of the area and are invaluable for alerting me to concerns or problems with land, livestock, trespassers and security issues. Secondly even with a grant the initial financial outlay for constructing a turbine, installing a generator, substation and having it connected to the grid is huge. Once installed and up and running the expenses don't stop the running, maintenace and manning of it is regular and significant. But the thing that really annoys me is that after all the expense of installing and maintaining a wind turbine is all the energy companies will offer me is 4 pence per unit for my excess electric that I put back in the grid. That is a piss take, they buy it from me for 4p and after all the expense and hard work I've put in sell it straight on for 14p +. It's just pure greed. There's nothing I can do because I have no control over the managing of the electricity grid infrastructure. So my environmentally way of producing electric will never happen until it stacks up financially. Maybe government should introduce a minimum price for people who sell onto the grid to make it viable because people who are willing to undertake such projects to produce electric naturally and cheaply should be allowed to do so for benefit of both the producer and end consumer. As usual though greed gets in the way and we all lose out.
In Japan (with none of the 50+ nuclear reactors actually working at the moment) there was a set price the electricity companies had to pay anyone who fed into the grid. Too many people took them up on it, so the government just lowered the rate. Thus screwing anyone who put in solar panels and was expecting them to pay for themselves. We have a right wing government in bed with the electricity suppliers. Both of them. One of them is Tepco, you might of heard of them. The other is on the other side of the country. Each side of the country uses a different frequency 50 vs. 60 Hz (I shit you not) so you can't buy from the other one. If you move from the West of Japan to the East you have to throw away all of your appliances and buy new ones that work on the different frequency. Bonkers!
OP is bang on, I used to work in the energy industry (yes, for one of the big 6) and the media/politicians victimise the energy companies in my opinion. We had to do loads of work for Ofgem to show that pricing was competitive, which it is. All this gumpf about non-competition is BS. The energy companies all charge about the same because they all incur about the same costs (as most industries do, compare the price of an Astra and a Focus etc. etc.). They all have long-term trading strategies that control risk of upward market moves but unfortunately these also remove access to downward market moves. Anyone who says that the wholesale price has fallen so the energy cost should is naïve. If the companies sold a product that was marked to wholsesale prices no-one would buy it. Unless you have a differentiator then the price will be about the same. There is no way to differentiate with energy. The people paying way over the odds are the people who have never switched. If you switch every few years the chances are that the savings will be small for a domestic customer. The people loosing out are those still with British Gas for gas and their host REC for electricity. I don't think they're all owned by foreigners aren't SSE listed...or is it Scottish Power...or both? Centrica are also listed. You will pay more if you are in a less densely populated area as the transmission and distribution costs are higher per customer. There's price control on transmission and distribution as those companies have a monopoly. This is an incredibly complicated industry that most of the public don't understand. The journalists certainly don't, or don't want to show they do. Ofgem work only for political purposes which shouldn't be the purpose of a regulator. The biggest worry shouldn't be the pricing, but how do we replace our aging generation fleet when anyone who is willing to invest will be slated repeatedly and often in the press, House of Commons etc. Whilst it makes good headlines quoting what a company earns as a $xxm profit is missing the point slightly as it's earnings per share that matters. The returns on massive investments aren't great if you look at the percentages. Certainly for a couple of years the firm I worked for would have been better off selling the business and putting the cash in the bank! Sorry for such a long post but I could go on and on.........
Interesting post and POV from Stang there. It does gloss over the central issue (for me). The supplier of your energy, plus all the competitors who have to choose from, all "buy" energy from the same wholesalers, as far as I can tell. When you change "supplier", all you do is change the name of where your direct debits get paid to. You don't get a better class of electricity if you go for a more expensive electricity supplier, you don't get cut-rate gas if you go for a cheaper gas company. The whole principle of competition and market forces is a ludicrous shell-game as far as utilities are concerned - gas, electricity, water, sewerage, etc. Instead of paying for gas from a nationalised Gas Board for a price that includes the cost of production/administration and the cost of future maintenance/improvements, you pay a gas company for the same thing, plus of course a premium to the shareholders (and the CEO). So, you don't pay £X + £Y for your nationalised industry gas supplier, you pay £X + £Y + £Z to a private company. All very simplified of course but essentially that's it. The argument in favour of privatisation was specious - that only privately owned companies could possibly deliver cost efficiencies and investment necessary for these industries to flourish. If such an positive outcome is being achieved at present, it is because of watchdogs exercising their powers - it is on spite of private ownership, not because of it. Whereas a nationalised utility doesn't have to fail at its job, it just requires proper management and oversight (same as in the case of a privatised industry). Privatisation of the utilities, in a country as tiny as Britain, was foolish and driven by a complete misunderstanding of what a free market actually is.
SSE are Scottish & Southern but as I haven't been in the industry since I retired, I could be wrong but I think they had foreign investors also Scottish Power are owned by Iberdrola (Spain) Station type, location, when generating, flexibility and station age all impact. The cost of generation can vary enormously (for electricity). Transmission and how and when the gas contracts have been negotiated are yet more variables. Some companies will be doing it better than others yet the cost they all charge is similar (in the case of the big 6). The point is the big 6 were all making pretty good profits (up until recently) and hiding behind industry complexity should not be an excuse. Price hikes were obscene and when the cost of gas falls the cost that the suppliers charge does not (unless there is a public outcry). If on the other hand naive as I am, and that the big 6's charge to the consumer is not linked to wholesale gas cost then why the fuk does it go up when gas does? Then we come to the generosity of the big 6, I just weep as they have it so hard. British Gas - HEADLINE LOWERING GAS COST (but after the winter when you won't be using nearly so much). Of course often gas contracts are negotiated years in advance so it does not always follow that the energy companies are paying less. The cost of gas is as I remember their biggest capital cost. Customers are getting fleeced through obfuscation, using similar tactics to the banks, making something complex that isn't, they sell energy to you, you as a customer buy it. When you see the foreign utilities piling in ask yourself are they doing it for altruism? The industry is complex internally but a lot of that is through the false market and not the mechanics of generation or transmission. But between the consumer and the supplier please!!!!! I spent a long time in the industry (25 years plus) too so I have a little knowledge, admittedly, not for a supply company, but I've had to deal with many many. It is of course just anecdotal evidence and opinion gathered over the years I'm gettin ma coat
Indeed. Privatisation has not been driven by a realistic understanding of costs, benefits and practicalities, but by a political doctrine driven by faith. Let's say you (as a government) have a choice: you can sell off some publicly-owned assets at a discount to your friends and supporters, thereby rewarding them for their contributions and cutting the amount of tax you have to collect in that year. Or you can nationalise privately owned industries, in the teeth of strenuous opposition, by collecting extra tax in that year and investing the money on adding to public assets. Which is easier to do in the short term? Which is more difficult, but better for the national interest in the long term? Whenever there is discussion of the amount of public debt, complaints that it is excessive, etc, there is a point which troubles me but is never mentioned. In (say) 1980, the UK government owned all the assets of several industries, including electricity, gas, coal, rail, telecoms, steel, aircraft, and docks, as well as a lot of land, buildings, vehicles, etc. Those assets were of immense value, a value which served to offset much of the national debt. But over the past 35 years most of those assets have been alienated, and are no longer publicly owned; consequently they no longer offset public debts. As I have said many times, debts do not worry me, so long as they offset corresponding assets. It is losing the assets while still owing the debts which worries me.
If you look at the Centrica announcement today they average a £42 off a turnover of £1,152, so a profit of 3.6%. Hardly excessive? The companies have admittedly had some good years, but like any industry there are good and bad years . Around '03/'04 was grim I recall, it's not looking great now. So like any industry you need good years to offset the not so good. You're absolutely correct that large parts of the energy costs are bought years in advance. But it is only a longer trend to increasing costs that leads to increased prices, or falling prices. I do to some extent agree that the price falls seem slower than the rises. I still think that the way the press quote a falling market it is misleading as it's a trend over years that matters, not a trend over days or even months. Remember that there are 48 different electricity time slots and therefore prices every day. The bad news is that Centrica announced another 2 unprofitable generation plants to close. Where is the replacement capacity coming from? I say again, this is the real worry.......
it would still be nice to know why longanet pays 40mill for the pleasure of connecting to the grid while others (south and south east) get payed 4-5mill to connect, a quick scout around the net couldn't give me the answers. environmental?
