Don
I would imagine we’ll see energy company stress tests like they did with banks once the market returns to some semblance of normality.
This is getting ridiculous (energy prices - Strictly NO referrals!)
- Thread starter DXP55
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Soldato
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I don't understand why everyone has to pay the debts they accrued. A lot of people simply won't be able to afford the increases so they'll get into their own debt as a result. The whole thing stinks.
Soldato
I know that... I already posted that. I also asked, once the bailout has finished, will the SC decrease as this extra money is no longer needed?:
Quite the opposite actually but thanks for that
I knew there was going to be an increase and it's actually lower than I thought it might be, given some of the quotes on here, however that does not negate me asking Eon to justify an increase of such a level.
Soldato
So you would prefer that consumers who happened to have balances with suppliers that went/go out of business lose it all?
It was part of the target post privatisation. Create efficient market with competition
(im not going to go into the flaws in that logic)
Soldato
- Joined
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I don't know, isn't that what usually happens when a company goes under? All I know is that the standing charge increases are extortionate, and I feel they're inflated for reasons other than paying of those debts.
People should probably be aware of the risks and I bet none of the people behind any of these companies ended up poor
Soldato
It depends, in some areas yes, in others no.
As someone above mentioned I suspect that in future the market will be very different. Far more regulated, and therefore far less innovation.
You will probably find its all consolidates back into large companies, who will have no motivation to fight hard on pricing that was caused by the smaller companies.
Lets not forget, the main issue that caused most to fail was the price cap implementation and not corrected fast enough to avoid these companies going bust.
The price needed to be put up and quickly but was prevented from happening.
Something I saw was that the costs of all this storm damage will be factored in as well.
Soldato
Thing is no one really foresaw this level of risk.
As said the risk was minimal if they had been allowed to reflect the wholesale prices into their charges.
The only way you could derisk this as a customer was to have access to unpublished sensitive information into the companies exact financial position including their forward commitments.
The only way to fully derisk would be to have government owned energy distribution, and I suspect with that they would not have a price cap in place
Ofgem must have knownThing is no one really foresaw this level of risk.
As said the risk was minimal if they had been allowed to reflect the wholesale prices into their charges.
The only way you could derisk this as a customer was to have access to unpublished sensitive information into the companies exact financial position including their forward commitments.
The only way to fully derisk would be to have government owned energy distribution, and I suspect with that they would not have a price cap in place
Soldato
Yes but you said people, I assumed by people you meant individuals considering your quoted a comment on individuals losing their money.
Ofgem are part of the problem.
well I kinda was, but offgem should have made the people aware of the risks and knew it wasn;t good for the consumer.
are they not supposed to but consumers ahead of business interests? reselling energy is just parasitic behaviour like people speculating on the price of wheat or whatever.
breads to cheap here we should buy it then sell it on for profit
Are you saying you’re happy to pay back debts to people you don’t even know on behalf of failed companies here?
Just by luck I was locked in with Shell who were obviously big enough to not go bust when wholesale prices rose but had I not been if I lost money I’d built up in credit I certainly wouldn’t be expecting the rest of the country to reimburse me
I choose not to build up a big credit balance regardless of who I’m with for a couple of reasons with this being one of them
Soldato
Well I am not exactly happy about it, but I understand why its happened that way.
Part of the lowering of bills was to bring in agile market disruptors.
This massively unexpected change, alongside the inability of Ofgem to act more promptly has caused this.
I was actually one of those that nearly lost money, £13.3 so no drama, but still if the consumers are going in future to be able to lose these funds then the market is likely to be even more of a minefield than it has become.
There will likely be only a handful of suppliers to consumers, and the whole virtual oligopoly that the government deliberatly broke up will return. = Less choice, less change, higher prices.
Normally it wouldnt matter, the only ones that would fail would be lol companies, Ofgem literally forced most of these to fail. Ofgem were asleep on duty.
Its not even purely about the lost credit, its also about taking on customers to supply. Right now they are still taking on new customers at a current loss, would you prefer no supplier of last resort existed for those people?
Fair enough I see your points. Definitely a chaotic time for the energy sector
Soldato
https://amp.theguardian.com/commentisfree/2022/mar/20/big-oil-gas-prices-windfall-tax-russia-ukraine
Seems rest of Europe and America are wanting to push for a windfall tax and yet here in UK nothingnas usual.
Seems rest of Europe and America are wanting to push for a windfall tax and yet here in UK nothingnas usual.
Associate
You can think of it as a mandatory insurance, like car insurance. Everybody collectively takes the risk. IMO its simply an issue with archaic billing/measurement methods. There would be no need to protect the consumers balance if you could insure correct billing per month and not this averaged crap. (you would still need to protect against company failure so these people have a supplier). This would also weed out the real cowboys looking for a quick buck as they wouldn't be able to get free loans by forward charging customers and holding postitive balance over the summer to finance their company. Payment terms of 30-60 days is common in all businesses so a healthy energy company should be able to cope without forward charging.
Surely this "averaged crap" averages out over the year for the energy companies. Customers who joined in spring/summer will start out over paying and their credit is used up in the autumn/winter, those who joined in autumn/winter start by underpaying and their debt is paid back during the spring/summer.
how would you be the one accused of "losing the money"?You have no control of the money.
This is a feature for most. Predictable bills that are consistent each month. It isn't some conspiracy theory by the utility firms.
The cost of money is then reflected in their pricing. If they aren't paying big dollar to loan cash then that saving can be past on.
This is basic economics guys.
Soldato
Not only that, for many its an advantage in that they see bills stability across the year.
Some people cannot cope with budgeting that in the summer their bills will be lower but they need to put more aside for the winter months.
Much like some other sectors I suspect we will see in future clients monies in dedicated accounts, so that the funds are separated from the business more clearly. (think like solicitors work for example)
Only when a bill is produced can that money be removed from the clients funds to the businesses accounts.
Bar a deliberate fraud that should reduce the risk dramatically of companies going bust having spent the clients money already.
they should hit amazon etc with a windfall tax too....