Energy Prices (Strictly NO referrals!)

[danlightbulb]

That's fair, although I disagree with the water charges given that parts of the UK are privatised and other parts of the UK (Scotland for instance) are publicly owned.

I don't think the ownership model is relevant. I just think all these things are public goods and the costs to the end user should be equal everywhere with funding distributed around the country according to need.

From a cursory look, water charges in Scotland appear to be similar to the England averages.

 

[b0rn2sk8]

It is relevant, you just can’t ignore the fact they are private companies because you don’t like it.

 

[danlightbulb]

It is relevant, you just can’t ignore the fact they are private companies because you don’t like it.

Who's ignoring they are private companies?

It's not relevant because charges could still be homogenized nationally from a customer perspective, with different amount of funding passed to each company based on the same models as in place now.

So for example.

Current charges of company A in Wales are £300 per year, and company B in Kent are £400 a year. Both companies instead charge their customers £350, and company A passes £50 to company B.

Obviously this would all be proportionately worked out into a national charge pot and distributed accordingly.

No change in company revenue. But everyone pays the same rates.

Remember the £50 South West water bill rebate paid for by taxpayers? It was in place because South West had much larger charges than the rest of the country due to the amount of beaches they had to maintain. It's ended now because other areas of the country have caught up in bill level. But it's a similar idea, it was done to try and ease the burden of the more expensive charges in the south west.

 

[Richie]

Who's ignoring they are private companies?

It's not relevant because charges could still be homogenized nationally from a customer perspective, with different amount of funding passed to each company based on the same models as in place now.

But it is relevant. You're potentially asking for tax payers to effectively subsidise private companies (Scottish Water being publicly owned)

Edit - misread so deleted a portion. Point above still stands

 

[danlightbulb]

But it is relevant. You're potentially asking for tax payers to effectively subsidise private companies (Scottish Water being publicly owned)

Edit - misread so deleted a portion. Point above still stands

No I'm not, I'm saying charges for certain public goods (water, energy) should be the same nationally. It's the same principle as the NHS isn't it, we all pay the same (proportional to income) amount via our taxes. But different trusts still get allocated and spend different amounts of money because they have different costs. So for example someone in Scotland already cross subsidies London NHS where wages are higher.

Why not the same approach for other public goods?

Just to be clear, company revenue would not change. The cross subsidy would be between different regions of the UK so the money is a cross subsidy to/from customers not to companies.

Anyway it will never happen, I just think it should. And with energy it's the opposite to the regional pricing currently being touted. Completely the wrong policy to try and introduce more price disparity nationally instead of less.

 

[Richie]

No I'm not, I'm saying charges for certain public goods (water, energy) should be the same nationally. It's the same principle as the NHS isn't it, we all pay the same (proportional to income) amount via our taxes. But different trusts still get allocated and spend different amounts of money because they have different costs. So for example someone in Scotland already cross subsidies London NHS where wages are higher.

Why not the same approach for other public goods?

You're making the mistake of conflating public services with how they are funded and operated.

The NHS, as your example, is a public service which is publicly owned, funded and operated. Water is a public service but, in England, it is funded by customers and is privately owned and operated whereas, in Scotland, it is publicly funded, owned and operated (like the NHS)

 

[danlightbulb]

in Scotland, it is publicly funded, owned and operated

Sort of but not quite. Scottish water is publicly owned but it operates at arms length from government and has its allowed costs and revenues set via a periodic process which is then separately collected from customers and ringfenced.

So in terms of it's revenue setting process and collection model, it's essentially the same as in England. The only real difference is no investor returns. Scottish Water borrows from the Scottish government to fund it's operations, English companies borrow from private debt markets.

Obviously if it was proposed that Scottish customers should cross subsidise English customers for water there would be uproar. But in principle, the idea here is simply one of trying to avoid postcode lotteries in public services.

No one has control over where they're born and most people have limited control over where they live. If region A needs new infrastructure (roads, energy, water, hospitals - whatever), then I believe the costs of that shouldn't just be paid by region A, it should be borne proportional by the whole country as we all benefit either directly or indirectly from it. Also what goes around comes around, this year it might be region A that needs new infrastructure, but in a few years it might be your region that needs it, and you'd get that cost shared out too.

 

[Richie]

Sort of but not quite. Scottish water is publicly owned but it operates at arms length from government and has its allowed costs and revenues set via a periodic process which is then separately collected from customers and ringfenced.

So in terms of it's revenue setting process and collection model, it's essentially the same as in England.

Not really - Although it is itemised on your Council Tax Bill, it is still collected via your council tax. This is a different collection model than England. England is more like paying a mobile phone bill.

The only real difference is no investor returns. Scottish Water borrows from the Scottish government to fund it's operations, English companies borrow from private debt markets.

And that's the crux of the difference. Scottish Water bills are set to cover the cost of running the service including maintenance and infrastructure improvements and NO private investors to pay. English water companies are run for profit including paying dividends to private shareholders. By putting your proposal in place, there is a possibility of some of a Scottish customer's money ending up in a private individual's pocket compared to the current model where it is re-invested into the business and service with no private shareholders to pay.

Obviously if it was proposed that Scottish customers should cross subsidise English customers for water there would be uproar. But in principle, the idea here is simply one of trying to avoid postcode lotteries in public services.

Of course there would be an uproar. You're proposing taking money that would be used to enhance the service and lining investor pockets with it instead. To give you an idea, and using your own example a few posts up (quoted for clarity):

So for example.

Current charges of company A in Wales are £300 per year, and company B in Kent are £400 a year. Both companies instead charge their customers £350, and company A passes £50 to company B.

Lets replace company A with Scottish Water.

There are circa 2.7m households in Scotland. 2.7m x £50 - £135m

Your proposal means taking a potential £135m in revenue that Scottish Water would reinvest in the business (maintenance, network upgrades etc) and siphoning it (pun intended) to a private company that will use some of that to pay dividends to people. That's £135m per year of lost investment in Scottish Water.


FWIW - This is not a nationalistic position I am taking. I would have a similar argument if the country's setup was reversed. I would also have used Wales instead of Scotland but IIRC, their water is not publicly owned either? (I could be wrong)



EDIT: Also, FWIW, I do agree with your principle that public necessities (water, NHS, energy etc) should not be a postcode lottery but only where the operating models are the same i.e. they should all be publicly owned. As soon as you introduce a "private investor" element into these, its almost always bad news.

 

[danlightbulb]

Your proposal means taking a potential £135m in revenue that Scottish Water would reinvest in the business (maintenance, network upgrades etc) and siphoning it (pun intended) to a private company that will use some of that to pay dividends to people. That's £135m per year of lost investment in Scottish Water.

No that's not what would happen/not what I'm proposing. The cross subsidy is to customers not companies.

We would be taking money from one set of customers that currently has lower bills by virtue of postcode, to lower the bills for another set of customers that currently has higher bills by virtue of postcode, so that everyone pays the same. Companies would not get increased revenues from this at all.

Perhaps using Scotland is a bad example but if you consider England where charges are higher in the south west than in the Midlands, shouldn't those customers be paying the same and sharing equally in the costs of national/regional infrastructure?

 

[Richie]

Perhaps using Scotland is a bad example but if you consider England where charges are higher in the south west than in the Midlands, shouldn't those customers be paying the same and sharing equally in the costs of national/regional infrastructure?

Now, this is more apples vs apples (all "owned" in the same way). In this, I can agree.

 

[danlightbulb]

Now, this is more apples vs apples (all "owned" in the same way). In this, I can agree.

Like I said, the ownership model is irrelevant. It's a customer to customer subsidy.

Interesting that you agree with the principle between regions in England but not between regions of the UK.

Do you think it's right that Scottish people have a higher rate of tax? I don't.

 

[pinkpound]

What are peoples thoughts on this ?

Octopus' 'Intelligent Drive Pack' is being billed as the UK's first 'unlimited' EV charging subscription. It costs £30 per month and enables EV drivers to charge their vehicles during set hours scheduled by Octopus.
The subscription will be available as a bolt-on for Octopus Energy home customers with a standard Fixed or Flexible power tariff.
Users need a smart meter and one of 280 compatible EV brands and home chargers. Once signed up, subscribers will be able to charge one EV during the provider’s ‘scheduled hours’, which it says will typically be overnight. Users will be asked to choose a ‘ready by’ time between 4-11AM, and Octopus’ smart charging system will prepare the vehicle for that time.

Octopus Energy launches 'unlimited' charging subscription - electrive.com

Octopus' 'Intelligent Drive Pack' is being billed as the UK's first 'unlimited' EV charging subscription. It costs £30 per month and enables EV drivers to

www.electrive.com

 

[Richie]

Like I said, the ownership model is irrelevant. It's a customer to customer subsidy.

In your opinion. In my opinion, it's very relevant.

Interesting that you agree with the principle between regions in England but not between regions of the UK.

As I already said, it's nothing to do with nationalism. If both England and Scotland had the same model (either both public owned.or both private owned) I could get more behind your suggestion.

A potential issue would come where one region would start getting more and more expensive due to scarcity of water and that cost being shared out to the region(s) which have a plentiful supply... Kind of the same thing as currently happening with electricity as being discussed in this very thread.

Do you think it's right that Scottish people have a higher rate of tax? I don't.

I don't have an issue with that. Scotland is a devolved nation and so has the power to make these changes. It's helping to do things like dealing with child poverty, which is much much lower in Scotland than rUK, for example.

In your argument - who makes the decisions of setting these things like tax levels, water bills etc etc? Central Government? If so, that's a slippery slope to the abolition of devolved governments.

 

[Mercenary Keyboard Warrior]

No that's not what would happen/not what I'm proposing. The cross subsidy is to customers not companies.

We would be taking money from one set of customers that currently has lower bills by virtue of postcode, to lower the bills for another set of customers that currently has higher bills by virtue of postcode, so that everyone pays the same. Companies would not get increased revenues from this at all.

Perhaps using Scotland is a bad example but if you consider England where charges are higher in the south west than in the Midlands, shouldn't those customers be paying the same and sharing equally in the costs of national/regional infrastructure?

Would you apply this logic to housing as well?
Do we say its a postcode lottery for those poor souls who have to live in the SE and London we should equalise housing!

How do you want to pay your £10k annual subsidy to those with higher housing costs due to postcode lottery?

Trying to make everything the same leads to inefficiency as the benefits of moving or doing something in another location can be drastically impacted.
If everything cost the same in L&SE as everywhere else then most of the country would end up living there I suspect.

 

[danlightbulb]

Would you apply this logic to housing as well?
Do we say its a postcode lottery for those poor souls who have to live in the SE and London we should equalise housing!

How do you want to pay your £10k annual subsidy to those with higher housing costs due to postcode lottery?

Trying to make everything the same leads to inefficiency as the benefits of moving or doing something in another location can be drastically impacted.
If everything cost the same in L&SE as everywhere else then most of the country would end up living there I suspect.

It's an issue I agree, which is why I'm limiting it to public services only.

The housing example doesn't quite work because obviously if someone buys a more expensive house they also own a more expensive asset. Whereas with services, you don't own anything obviously it's just an outlay.

I think overall my view is that certain fundamental services should be homogenous across the country as a social good that everyone shares equally (proportionally) the cost of. Whether it's water, energy, hospitals, roads, schools etc. There shouldnt be a different level of service or different charges of these across the country I don't think. If a kid in Kent gets after school cricket clubs, then after school cricket clubs should be available to kids in Bradford too. If people in the lake district don't need a new reservoir but people in East Anglia do, them that cost should be shared across the whole country. If there's a bigger drug problem in Glasgow than London, then Londoners should share in the costs of homogenizing that level.

If you think about it, it's partially cross subsidy now anyway albeit regional. Severn Trent supplies a huge area from the borders of Wales through Birmingham and over to Leicester. There are already different costs to serve those different areas within a large region that get spread over all the company's customers already.

There's no real logical reason why it's ok for a customer near a reservoir in Shropshire to subsidise a customer in Birmingham where costs are higher, but for the same thing not to happen at a national level. It's just by virtue of the arbitrary boundaries companies were given at privatisation.

Broadband is another good example. It's pretty much already fully nationally cross subsidised. If you live in rural shopshire and I live in London, and we both sign up to the same Vodafone deal for example, it will be the same cost. Cost to serve is different though, so one of us would be subsiding the other.

 

[danlightbulb]

In your opinion. In my opinion, it's very relevant.

But with all due respect, you seem to be basing your opinion on the belief that the money would go towards companies dividends, which is incorrect.

 

[danlightbulb]

What are peoples thoughts on this ?

Octopus' 'Intelligent Drive Pack' is being billed as the UK's first 'unlimited' EV charging subscription. It costs £30 per month and enables EV drivers to charge their vehicles during set hours scheduled by Octopus.
The subscription will be available as a bolt-on for Octopus Energy home customers with a standard Fixed or Flexible power tariff.
Users need a smart meter and one of 280 compatible EV brands and home chargers. Once signed up, subscribers will be able to charge one EV during the provider’s ‘scheduled hours’, which it says will typically be overnight. Users will be asked to choose a ‘ready by’ time between 4-11AM, and Octopus’ smart charging system will prepare the vehicle for that time.

Octopus Energy launches 'unlimited' charging subscription - electrive.com

Octopus' 'Intelligent Drive Pack' is being billed as the UK's first 'unlimited' EV charging subscription. It costs £30 per month and enables EV drivers to

www.electrive.com

How is this different to the £20 per month thing they recently released as well? That was all EV charging for £20 wasn't it?

 

[Richie]

But with all due respect, you seem to be basing your opinion on the belief that the money would go towards companies dividends, which is incorrect.

Incorrect how?

Your example again, and again switching out Wales for Scotland for the same reason as before:

So for example.

Current charges of company A in Wales are £300 per year, and company B in Kent are £400 a year. Both companies instead charge their customers £350, and company A passes £50 to company B.

• Mr Jones is in Scotland paying £300/year into a publicly owned water company. All of that money is used to run the company with none of that £300 "leaving" the company i.e. its used to maintain/improve the infrastructure and pay operating costs (wages and the like)
  
  
• Mrs Smith is in Kent paying £400/year into a privately owned water company. Some of that money is used to run the company i.e. its used to maintain/improve the infrastructure and pay operating costs (wages and the like) and some of it is used to pay a dividend to a shareholder and so is "lost" to the business in that it is not used to run/operate or improve the business or its services.

Your suggestion is to equalise the cost. This means that Mrs Smith pays £350 and Mr Jones pays £350 and this £50 from Mr Jones would be passed to Kent Water (a private company with shareholders). So you have increased Mr Jones' payment but, instead of that increase being used to maintain/improve the service or pay operating costs, some of it is being used to pay a dividend to a shareholder.

To return to the first bit you said ("you seem to be basing your opinion on the belief that the money would go towards companies dividends, which is incorrect.") - are you saying that NONE of Mr Jones' increase would end up in shareholder pockets?

 

[danlightbulb]

Your suggestion is to equalise the cost. This means that Mrs Smith pays £350 and Mr Jones pays £350 and this £50 from Mr Jones would be passed to Kent Water (a private company with shareholders). So you have increased Mr Jones' payment but, instead of that increase being used to maintain/improve the service or pay operating costs, some of it is being used to pay a dividend to a shareholder.

To return to the first bit you said ("you seem to be basing your opinion on the belief that the money would go towards companies dividends, which is incorrect.") - are you saying that NONE of Mr Jones' increase would end up in shareholder pockets?

The £50 from Mr Jones has gone to Mrs Smith, to equalise the charges. None of it needs to go to the shareholders.

Water companies are regulated on what they can collect and spend - that wouldn't change. They would still spend what they are allowed to spend, it's just effectively now the whole country contributes to water infrastructure no matter what the region, by paying the same rates.

Are you aware of how much cross subsidy already exists across our various utilities and other wide scale services? It's loads.

 

[Mercenary Keyboard Warrior]

It's an issue I agree, which is why I'm limiting it to public services only.

The housing example doesn't quite work because obviously if someone buys a more expensive house they also own a more expensive asset. Whereas with services, you don't own anything obviously it's just an outlay.

I think overall my view is that certain fundamental services should be homogenous across the country as a social good that everyone shares equally (proportionally) the cost of. Whether it's water, energy, hospitals, roads, schools etc. There shouldnt be a different level of service or different charges of these across the country I don't think. If a kid in Kent gets after school cricket clubs, then after school cricket clubs should be available to kids in Bradford too. If people in the lake district don't need a new reservoir but people in East Anglia do, them that cost should be shared across the whole country. If there's a bigger drug problem in Glasgow than London, then Londoners should share in the costs of homogenizing that level.

If you think about it, it's partially cross subsidy now anyway albeit regional. Severn Trent supplies a huge area from the borders of Wales through Birmingham and over to Leicester. There are already different costs to serve those different areas within a large region that get spread over all the company's customers already.

There's no real logical reason why it's ok for a customer near a reservoir in Shropshire to subsidise a customer in Birmingham where costs are higher, but for the same thing not to happen at a national level. It's just by virtue of the arbitrary boundaries companies were given at privatisation.

Broadband is another good example. It's pretty much already fully nationally cross subsidised. If you live in rural shopshire and I live in London, and we both sign up to the same Vodafone deal for example, it will be the same cost. Cost to serve is different though, so one of us would be subsiding the other.

But you said because of postcode lottery. How is it not a postcode lottery in regards housing.
Little timmy who happens to be born in north London hasn't done anything different little billy who is born in Bolton.
Why should little timmy have to pay 20x the price for a 3 bed semi compared to little billy?
Be that to purchase or maybe say 5x more to rent. Rent is a service, you have no asset at the end of it...

Life is literally a lottery on so many things. Where you are born and if you choose to not move away from that is certainly one of those things.

What about public transport, do we all pay the same, on what basis is it cost per journey or cost per mile.
Should we reopen all the closed routes, or routes with vastly reduced numbers of busses so that there is equal provision for everyone no matter where they live.
Do we ask everyone to pay more on commercially viable routes to subsidise the commercially unviable ones. On what is a public service.

If the postcode lottery is a problem then as the most significant cost for most people is the house itself, be that buying or renting then if we are trying to create some socialist utopia of not penalising those in some areas as opposed to others we should address the largest issue first, which is housing.

If thats not you argument, but your argument is we should all pay the same for essential services then we have to get into questions such as fuel and food prices which are also not the same for all.
There is a postcode lottery on petrol for how close your are to the distribution sites for example. As well as volume they sell and competition.

Why pick certain things that must be the same when many many other things aren't. Does it really matter that item X is/was a public service and that item Y was only ever supplied commercially. I would say no that is a daft differentiator.