Electric and Gas ultility 'price fixing' ?

[Colossal Squid]

Not true.

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The reason our bills are so much higher is because the housing stock here is so poorly insulated. Which is why the 'green tax' is on your bill, energy companies are being forced by the government to insulate your homes for free (and if they don't insulate enough homes, the government fine the energy companies, which in turn will only put up bills again). But because people are suspicious of 'free insulation' a number of homes aren't taking them up on the offer.

I don't think there is an issue of price fixing between the big six, as there can be such a big difference between tariffs, for instance, how can one customer save 300-400 from switching tariffs with different companies? The only price fixing is again from the government, who don't charge certain things like the green tax to a lot of the 'smaller' energy companies who have less than 250k customers I think (it could be 50k), giving them a competitive advantage.

We as a country generate less power from renewable sources because theres always going to be NIMBY's who don't want wind farms near their house, or nuclear power stations near them, because we're such a small country. Places like Germany, France don't have this issue due to the huge amount of space they have to build power stations. Hence why energy companies are having to make such a profit, so that they can buy energy abroad, from the USA, Qatar, Norway.

I find that graph hard to believe. Speaking from personal experience I know that the bills my sister pays for her three bedroom flat in southern Sweden are a fraction of the money I have to find to heat and power my tiny one bedroom flat in Brighton.

I appreciate that getting facilities built in Britain is always a problem BUT why don't we have more offshore wind farms, where nobody can complain? Similarly tidal power stations are fairly minimal impact and can be located on sites where nobody would be likely to object, but we don't do it.

Clever old Norway, who have more oil and gas than they know what to do with, long ago decided they weren't going to depend upon the stuff and invested heavily in renewable power generation to the point where today they are almost entirely self sufficient on wind and wave power. Therefore they can keep their country going indefinitely whilst making a pretty packet from all the fossil fuels they don't need. In fact I recently read that their renewable power generation is so great that they're selling their extra capacity to Sweden. So they've got more than enough energy for themselves, make income from selling the extra AND still have monumental reserves of oil and gas that they've just got in the bag for making obscene amounts of money from.

 

[Shropshire Seagull]

My gas & electricity is £580 pm DD, I'll buy you a beer if, in the whole of Spain, you can find one person paying more

Cannabis factory alert .....

 

[KZNSeagull]

What powers do Ofgem have nowadays? It used to be their job to ensure that the markets were competitive.

 

[Colossal Squid]

Incidentally, the figures here suggest only a handful of countries (Denmark, Ireland and the Netherlands) are paying more for their power than us in the UK.

http://web.archive.org/web/20120524204514/http://www.eia.gov/emeu/international/elecprih.html

 

[Joe Gatting's Dad]

The percentage profit which the power companies make of about five per cent of turnover is broadly the same as supermarkets.

We do not see Miliband trying to control their pricing.

 

[beorhthelm]

I find that graph hard to believe. Speaking from personal experience I know that the bills my sister pays for her three bedroom flat in southern Sweden are a fraction of the money I have to find to heat and power my tiny one bedroom flat in Brighton.

insulation. they are far better at it in northern Europe. mostly because they know they'll have really cold winters, where as we might have quite a cold winter.

we are building offshore wind, of course it doesnt get mentioned much. except when there is a group complaining. there always is in this country, tidal has been ruled out of alot of places because the effects it might have on wildlife and that lobby shouts loudly. its also very expensive, 3-4 times, with big subsidies and future price contracts to get going, and additional infrastructure cost to connect up to the grid, and provision made for gas/other power supply to be online when the wind doesnt blow or blows too strong. we pay for all that. Norway has a population of about 5m, less than London, with more North Sea oil than the whole UK. they can subsidise out of the profits from their unused oil revenues. Norway (or arab states) are a great example of how you can plan for the future, but they have smaller populations and arent very comparible overall.

take a look at the prices in the world comparison you linked to. look at say US, Canada, Chinese Taipei, note how their prices increases, 14-30%. then look at the european prices, see how they've doubled (even in Norway). this shows its regulation and in particular EU directives that have increased the power bills.

 

[Colossal Squid]

insulation. they are far better at it in northern Europe. mostly because they know they'll have really cold winters, where as we might have quite a cold winter.

we are building offshore wind, of course it doesnt get mentioned much. except when there is a group complaining. there always is in this country, tidal has been ruled out of alot of places because the effects it might have on wildlife and that lobby shouts loudly. its also very expensive, 3-4 times, with big subsidies and future price contracts to get going, and additional infrastructure cost to connect up to the grid, and provision made for gas/other power supply to be online when the wind doesnt blow or blows too strong. we pay for all that. Norway has a population of about 5m, less than London, with more North Sea oil than the whole UK. they can subsidise out of the profits from their unused oil revenues. Norway (or arab states) are a great example of how you can plan for the future, but they have smaller populations and arent very comparible overall.

But why would insulation cause them to use less electricity in a home that's heated by gas?

As for Norway, I appreciate that the needs of our two countries are vastly different and it's a lot easier to be forward thinking when you've got far less people to satisfy, or who can object, BUT it's still interesting to see just how far ahead of us they are. If we'd looked a bit more seriously at making investment in renewable energy back in the 70s, rather than taxing everyone for using fossil fuels instead, we might be in a far healthier situation now.

 

[BLOCK F]

Absolute shit.

We're paying through the nose for finite power reserves whilst every other country in Europe has upped their game in terms of renewables.

Only Malta generate less power from renewable sources than us, and we're better placed than many to take advantage of natural resources such as the wind and waves. Frankly it's embarrassing and we're paying the price for a serious lack of foresight. The power company cartels have us by the balls

Squid,I shall ignore that remark and refer you to various answers from others.

 

[drew]

Apparently British Gas (according to the paper story) are by far the biggest. True, in that context 50k doesn't sound too much but that was in 2 days I think, and they were expecting a lot more this week. Even if the total only doubled, you're getting into percentage points of reduction in customers which must start to hit the company a little. Whether they care or not is anther matter. I don't expect it to change anything, just found it interesting.

The maths is quite simple - if you put up your price by 5% and only lose less than 5% of your customers YOU WILL BE MORE PROFITABLE.

Factor in fewer customer service staff and other saving that come with a smaller customer base and you can see that it is a money maker.

Now if more than 5% leave, that's when it really gets interesting.

I await to be ridiculed by a true mathematician but for example, you have 1,000 customers paying annually £1,000 giving you income of £1m. Lose 5% of your customers brings you down to 950 and add 5% to your charges giving annual bill of £1,050. 950 x £1,050 = £997,500!!!!

It's an odd market, the profit per customer really isn't that high. However, the sheer size of these companies means they make huge looking profits.

The competiton act, I believe dictated the heads of Energy Companies weren't allowed to communicate with each other to resist the urge to price fix. I find it very hard to believe that this doesn't go on at some level.

The percentage profit which the power companies make of about five per cent of turnover is broadly the same as supermarkets.

We do not see Miliband trying to control their pricing.

Wrong. The percentage of profit that the retail operation makes is only about 5% but you neglect o take into account the generating profit that they make selling the power to themselves. Take a look at the reported profits and show me one energy company that is not just making a profit but actually increasing their profits year on year.

 

[spring hall convert]

Wrong. The percentage of profit that the retail operation makes is only about 5% but you neglect o take into account the generating profit that they make selling the power to themselves. Take a look at the reported profits and show me one energy company that is not just making a profit but actually increasing their profits year on year.

Maybe they are just all excellent companies?

 

[drew]

Maybe they are just all excellent companies?

Damn, hadn' thought of that. Must get in touch with my broker to get some shares.

 

[fat old seagull]

Another Gus thread. Borrrrriiiiiing.

Fer fecks sake don't tell me Gus is managing EDF now !

 

[Westdene Seagull]

Which is why the 'green tax' is on your bill, energy companies are being forced by the government to insulate your homes for free (and if they don't insulate enough homes, the government fine the energy companies, which in turn will only put up bills again).

In part the Green tax - brought in by Milliband of all people ! - is why our bills are so high. About £100 accounts for this "tax". The other thing the energy companies don't tell you is the huge bonuses and staff entertainment budgets they have which obviously pushes up customers charges as well. As an example, a couple of years ago, the EDF marketing department ( around 20 people ) spent in excess of £30k at the Amex on a "team building" day. Now multiply that up to all the staff in EDF and the other big 5 companies !

 

[beorhthelm]

Wrong. The percentage of profit that the retail operation makes is only about 5% but you neglect o take into account the generating profit that they make selling the power to themselves. Take a look at the reported profits and show me one energy company that is not just making a profit but actually increasing their profits year on year.

i see your point about generating profits, your arguement falls down when looking at the numbers. SSE plc made 2.37% operating margin in 2013.

 

[drew]

i see your point about generating profits, your arguement falls down when looking at the numbers. SSE plc made 2.37% operating margin in 2013.

Or to put it another way, in the year to March 2013 their profit went up by 28%!!!

Another way of cynically looking at is that the more we insulate our homes and the more we conserve energy, the less of their product they sell so to maintain profits and keep the investors happy they have to put up prices!!!!

 

[raba]

Cannabis factory alert .....

I work at the CPS, the majority of factories bypass the meter to save on electic bills!

 

[goldstone rocks]

Why aren't people crying out for renationalisation?

With 21st century technology there is absolutely no reason why we should need to rely on foreign investment for electricity in particular, and considering so much our taxes go towards their carbon friendly projects anyway, it would be common sense to return power to the British people.

SO when Norway announced in July it is closing for maintenance a major gas field that supplies the UK from Nov to April (and gas contributes to 31% of current electricity supply), how would nationalisation or Millibrain help prevent the price increase then (basic laws of demand and supply).

So back in March when the Belgium-Uk gas connector suddenly closed when the UK had only 2 days gas supply left (we have hardly any storage in the UK) and prices shot (demand and supply as we have to import) http://uk.reuters.com/article/2013/03/22/uk-britain-gas-price-idUKBRE92L07J20130322 If we hadn't of opened Fawley oil fired power station on March 22 as an emergency we would have had the lights go out. What has happened to Fawley since? It shut permanently on March 31st and decommissioned due our commitment on carbon reduction.

Please tell me how renationalisation or Millibrain's 20 month plan would stop Norway doing maintenance on a gas field or having a crisis in the interconnector in Belgium to the UK both of which directly impacted on price?

 

[Shropshire Seagull]

I await to be ridiculed by a true mathematician but for example, you have 1,000 customers paying annually £1,000 giving you income of £1m. Lose 5% of your customers brings you down to 950 and add 5% to your charges giving annual bill of £1,050. 950 x £1,050 = £997,500!!!!

It's not a mathematician that will ridicule you, it's you inability to read the words ... "LESS THAN"
Your example shows a 5% loss in customers AND a 5% price increase.
The breakeven for a 5% price rise is actually to not lose more than 4.762% of your customers.
If you lose LESS THAN this you will be more profitable.

Hope this clarifies ....

 

[beorhthelm]

The solution is not to rely on gas or oil for power - the reason that we do is because it is most profitable for share holders for reasons like that.

great idea. whats the alternative then?

 

[beorhthelm]

Renewable energy of course, we are island nation with untapped natural power in abundance, yet only 10% of our energy comes from renewable sources - compared to Denmark's 45%.

of course. and who will pay for this, for the equipment and infrastructure to be built to tap those sources of energy? (can you see where this is going yet...)