Haven't you heard, the DM to supply gas now...
DELETED_3139
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Haven't you heard, the DM to supply gas now...
I believe that part of the problem right now is the suggestion by the Labour party that if they were to win the election they would freeze prices for a certain amount of time. None of the big energy companies are willing to cut prices in case Labour do win and then they are stuck charging low prices if/when wholesale prices return to normal.
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Lower operating costs, the problems with the large suppliers is that they still have numerous legacy systems from pre-privatisation when a number of local entities were merged into one.
This has created inefficiencies, waste & excessive management - not to mention a somewhat technophobic stance of change & technology.
I've worked in two of the big six & spent a fair few years within the energy trading arena - it's not actually huge profits by any margin - average of 5% (by the fact that most have had many years of wage freezes & stagnation within the business).
The problem is that an energy company with a large portfolio will purchase out up-to 3 to 5 years in advance, making them not that able to react to changes in the market - in some cases resulting in them having to recoup costs when the energy price stabilises.
This is avoided by small suppliers due to them having a smaller, mostly fixed customer base (such as a the new small suppliers) who can essentially cherry pick customers by tilting the standing charge/unit rate to be desirable to a smaller portion of the market.
I do believe that splitting up supply & distribution would be a good move for transparency, but the downside being that the actual domestic energy supply business is hardly worth the risk on it's own.
This will also be a factor.
If Labour want to assist the poorest in society regarding energy prices then expand the winter fuel allowance to other vulnerable groups, attempting to put price freezes on a market highly driven by external factors is stupid. If they want to nationalise it just do that.
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yes, if all the pigs were able to fly into the upper stratosphere making it hard to shoot them down for baconisation.............
Associate
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It's similar to the whole supermarket discount scam.
Price increase, THEN they rollback on the price increase.
the first paragraph is rubbish. If we are to really believe that then in 2014 we should have been paying prices on the 2011 wholesale prices which were a damn sight lower than 2013/2014 prices, but yet the average consumer was hammered.
And to the second paragraph NO !! why should tax payer effectively subsidise energy for the less fortunate because of the greed of the energy companies. Companies like E-ON et al need to stop gouging the public. If they can inflate prices immediately there is a rise in whole sale they can also work the reverse. If energy whole proces suddenly spiked 25% this month do you think those rises would only hit consumers in say 2018 based on wholesale purchase plans of 3 to 5 years. of course not we'd get hammered the following day / week of the price spike.
What we are witnessing is plain and simple, pure unadulterated corporate greed. Trying to fudge that idea with rubbish about wholesale purchasing plans and market volatility is a nonsense, because it has already been proven that when prices rise we feel the pinch immediately, but when they go down there is always an excuse by the companies to reduce accordingly.
It was a dig at the kind of misinformed people that read the daily mail are attracted to threads like this.... point in case Wildman who clearly doesnt really know what he's talking about.
The only person who has posted any fact or common sense is Elmarko who is right on the money with his post. I work for one of the big 6 and have for 5 years and I can confirm pretty much what hes saying is correct.
Smaller supplies buy on spot prices so can react to changes in the market, the larger suppliers are buying well in advance on forcasts so are unable to react as effectively or to the same scale.
This is rather a large assumption that this is the case. Without knowing all the market condition and all of the variables involved it would be hard to say. Obviously the media will say this is the case as it stokes fires and sells newspapers.
Regarding Milliband trying to enfroce a price freeze i would be interested to know if this is even legal as surelythe government can't impose a restriction on a private companies prices. I shall ask some colleagues in the know as im curious to be honest
Probably because it's a business
You can switch supplier at any time if you are not happy - it's a competitive market out there
Soldato
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There is a lag to investment, in some cases we are talking decades ago effects were put in motion. OBviously the north sea oil and gas is a very long term thing, we do import more now and rely on those costs outside the UK. Then we got exchange rates with which to pay that import, its not a company thing really. Very big lag effects in play though, these companies cant just pick and choose what they do
We import from Qatar, Im not sure of the exchange rate.
Soon we will import gas from USA. To bring down costs its best to have as much competition as possible. At one point we lent too hard on Russia for its gas.
The labour thing seems bad in general because its trying to use force. If they want to do big government, then look to France who use nuclear power a lot but again this takes decades
I don't doubt the fact the energy companies buy supplies in advance. It's just the fact that you never really see the price come down significantly later down the line. It always feels like there is some excuse as to why the prices can't come down.
I would have thought a system where there is a flexible unit cost based on the market price of fuel, then another separate cost on top for your tariff. It would be plain as day to see changes in fuel cost, and what the energy company is charging in their tariff.
Ofgem can control prices.
Soldato
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Yep. You could walk right in and not realise that you're in a private company rather than a public sector organisation.
Just need to say this.
Because you are on a fixed contract does not mean your mfdd will not change in the duration of the contract. All it means is your unit prices stay the same. Please stop complaining when it changes, just makes the call queues even longer.
If you want no trouble go onto qvdd and give readings every month online.
Most calls are people complaining about nothing of importance.
Also profits are like 4% because of all the costs.
We (npower) cut our gas by 5.17% or something forgot the exact number, you need to realise how risky that is, there isn't a lot of profit. Our jobs are at risk if this decrease goes wrong.
Because you are on a fixed contract does not mean your mfdd will not change in the duration of the contract. All it means is your unit prices stay the same. Please stop complaining when it changes, just makes the call queues even longer.
If you want no trouble go onto qvdd and give readings every month online.
Most calls are people complaining about nothing of importance.
Also profits are like 4% because of all the costs.
We (npower) cut our gas by 5.17% or something forgot the exact number, you need to realise how risky that is, there isn't a lot of profit. Our jobs are at risk if this decrease goes wrong.
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Unless im very much mistake they can put a control in place with regards to the costs of distribution in the 14 different areas in the UK but they cant control the price at which an energy company can buy and sell Electric and Gas at.
Ofgem is funded by the big six and is a non-ministerial government department
LOL
Your one of those people, am sure the CEO personally read your letter.
It's like going to kfc and asking to speak with the colonel because your unhappy with your popcorn chicken.
They have people that handle complaints and am sure you would have the same outcome should you have followed their complaints process. You don't really have the right to be going straight to the big cheese.
Please also see my earlier about about viewing the supply chain end to end, and who owns that supply chain.
Most regulators are funded by the industry that they regulate - it is very common. Look at who funds the FCA, for example.
The price control and enforcement part relates to the prices set and issued for the distribution agents within the 14 MPAN areas in the UK and aren't related to supplier prices for buying and selling gas and electric.
Whilst some groups down own the supply and distribution in some areas they are ran as separate entities.
The long and short of it is the Government cant tell Ofgem what to do as its an independent body and Ofgem can't tell the suppliers the prices they should be buying and selling gas and electric at. They can however take action to ensure there is fair competition and ensure price fixing doesn't occur
I know several areas of Npower's back office have been shifted to India at the expense of British jobs and my god has that made a lot of work for some of our departments entirely painful and vastly more complicated.