Electric and Gas ultility 'price fixing' ?

[Leekbrookgull]

SSE have put thier prices up and we all know the rest will follow,so how does this work if the market is not rigged ? http://www.npower.com/home/electricity-and-gas/products/fixed-long/

 

[Lord Bracknell]

Time was when gas and electricity prices were set to reflect the production costs of the product. The "market" has now been flogged off to a small number of companies who act as middlemen, with obligations primarily to their shareholders. This isn't a range of producers, competing to sell more products by holding down production costs. It's a market place dominated by companies who do no more than try to persuade captive consumers that their version of the product is worth signing up for.

No-one needs to "rig" a market like this. It's self-evidently set up to put consumers' interests low down the list of priorities.

Can anyone honestly claim that household gas purchased off, say, Scottish Power, is of a better quality than household gas bought from, say, EDF Energy?

 

[Frutos]

Electric pricing has always been fixed, shirley?

4 times what's on the dice, or 10 times if you own the Water Works as well...

 

[Norman Potting]

This is the term for it http://www.oft.gov.uk/OFTwork/public-markets/choice-and-competition/Confusopoly/#.Ulrm_xApc1I invented by the creator of "Dilbert" Scott Adams.

 

[drew]

The con is the price the big 6 charge themselves for the power they generate.

 

[Tricky Dicky]

Story in the paper this morning that SSE have lost 50,000 customers since the announcement was made and the other companies are holding off hoping to mop up these moving customers - that's an awful lot of customers to lose. I have absolutely no doubt the other will raise their prices in line at some point though. The cartel lives on.

 

[drew]

Story in the paper this morning that SSE have lost 50,000 customers since the announcement was made and the other companies are holding off hoping to mop up these moving customers - that's an awful lot of customers to lose. I have absolutely no doubt the other will raise their prices in line at some point though. The cartel lives on.

But according to Wiki, they have 9.6m customers so 50k is only about half a per cent of their customers. I suspect they would be very pleased if that is all that leave.

 

[Tricky Dicky]

But according to Wiki, they have 9.6m customers so 50k is only about half a per cent of their customers. I suspect they would be very pleased if that is all that leave.

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.

 

[Shropshire Seagull]

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.

 

[Seasidesage]

Time was when gas and electricity prices were set to reflect the production costs of the product. The "market" has now been flogged off to a small number of companies who act as middlemen, with obligations primarily to their shareholders. This isn't a range of producers, competing to sell more products by holding down production costs. It's a market place dominated by companies who do no more than try to persuade captive consumers that their version of the product is worth signing up for.

No-one needs to "rig" a market like this. It's self-evidently set up to put consumers' interests low down the list of priorities.

Can anyone honestly claim that household gas purchased off, say, Scottish Power, is of a better quality than household gas bought from, say, EDF Energy?

Exactly this. Having worked for a water company, this is exactly what is going on and what was intended from the outset...

 

[BLOCK F]

We have some of the cheapest power prices in Europe,so things aren't as bad as they could be.
Take off all the 'Green' costs Milliband in particular was instrumental in foisting upon the industry and bills would not be so bad.
If we have to indulge in the Green fantasy,remove the costs from the power companies and put them into general taxation and then the very poorest in society will at least be given some protection by the rising personal tax allowance due to increase to circa £10k next April.

 

[Vegas Seagull]

We have some of the cheapest power prices in Europe,so things aren't as bad as they could be.
Take off all the 'Green' costs Milliband in particular was instrumental in foisting upon the industry and bills would not be so bad.
If we have to indulge in the Green fantasy,remove the costs from the power companies and put them into general taxation and then the very poorest in society will at least be given some protection by the rising personal tax allowance due to increase to circa £10k next April.

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

 

[nail-Z]

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

Do you live in a giant incubator?

 

[spring hall convert]

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.

 

[BLOCK F]

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

Wow,what are you powering?
If you were actually in Vegas,I would suggest you are providing leccy to all the slot -machines!

 

[Colossal Squid]

We have some of the cheapest power prices in Europe,so things aren't as bad as they could be.

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

 

[ElectricNaz]

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

Not true.



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.

 

[beorhthelm]

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.

they dont need to communicate. wholesale prices are the same for all, give or take a few %. some might do better at forward pricing to get an extra % price over all. cost of infrastructure, transport is the same (as there is a monopoly operating the National Grid and gas equivilent). taxes, green levies, subsidies are the same. cost of operating a call centre and x thousand staff is going to be roughly the same within a few % and the only place they can really compete. all told i'd be surprised if they weren't similar in price.

the real competition is at the power generation end, but the governments have screwed up that area by imposing so many regulations that companies cant do much. regulations we wanted to address climate fears. if we want cheaper energy, get rid of green taxes, energy company obligation, subsidies for wind and solar, and allow the market to determine how to find cleaner, cheaper fuel themselves (hint, gas and coal more efficient than it was 30-40 years ago, nuclear safer than it was when super powers wanted plutonium and weapons grade uranium).

 

[GreersElbow]

It's all Labour's fault, is anyone mentioning when Miliband taxed the energy sector and openly admitted they'll be a price rise in January 2010 as energy secretary, but this is okay because it's helping to fight climate change?

 

[spring hall convert]

@ Electric Naz.

Just look where Germany is in that graph. I'm shocked, surely higher energy prices would lead to economic stagnation?

Is this because the Germans did invest heavily in Green Energy & Insualtion so they require less?