Energy Prices (Strictly NO referrals!)

[Troop]

Octopus are paying out the alternate fuel payment of £200, just received mine today.

 

[HungryHippos]

I don't understand why prepaid is more per unit. There's less overhead in terms of account management, and no credit risk..? Should be cheaper than postpaid.

Presumably because running the systems that allow for pre-paid to work costs more than just DD billing customers on regular meters.

I don't think it's about the credit worthiness of the customers in this respect, just total cost of operations.

 

[SDK^]

I don't understand why prepaid is more per unit. There's less overhead in terms of account management, and no credit risk..? Should be cheaper than postpaid.

All comes down to DD being a consistent payment flow to the supplier.

Why are prepayment meters more expensive than standard credit meters?​

While the savings are lower right now due to the energy crisis, a typical household on a standard tariff, paying by monthly direct debit, still pays £79 a year less than someone on prepayment.
One of the main reasons prepayment meters are more expensive than standard credit meters is simply that they are more effort for the suppliers. Providers prefer to get regular, automatic payments for your energy, which is what you get with direct debit payments on standard credit meters. This is why it's the cheapest way of getting your energy.

Prepaid gas and electricity

Switch to prepaid electricity and gas with Money Saving Expert. Get a standard meter or switch & save

www.moneysavingexpert.com

 

[chrcoluk]

So that’s BGs fault because the courts and tribunal service failed in their duty, not sure I follow that one.

BG can apply for as many orders as they want, just like the police can ask for as many search warrants that they want. Just because they have asked, doesn’t mean they should be approved. It’s literally the courts entire job to ensure the relevant checks and balances as set out in statute are followed.

If the statute, regulation or guidelines are wrong then the buck is passed to the regulator and the government I’m afraid.

Sure you can place moral blame on the energy company, but that’s all it is.

Edit: It’s also worth pointing out that the energy companies are legally required to protect the interests of their shareholders.

The courts failed, but also BG were not supposed to do it in vulnerability cases.

Courts should never become a rubber stamping exercise though which is what these became, once it gets to that state legal protection is effectively lost, every case should have a proper due process, no matter how minor it may seem.

 

[Werewolf]

I don't understand why prepaid is more per unit. There's less overhead in terms of account management, and no credit risk..? Should be cheaper than postpaid.

Typically you're making more, smaller payments and there is still the same level of account infrastructure/management if not more (you still need the meter linked to an account, and you're potentially making 1 or more payments a week vs 1 DD a month). There are still also a lot of people on older prepayment meters that require things like physical tokens to be inserted into the meter to update the balance, and they require a different type of meter entirely to standard, and that the various pay points have the equipment to interact with that token and the pay point will want a fee for handling the transaction on top of your normal banking fees.

Basically direct debit/monthly customers there is a fairly simple account mechanism in place with what is often the cheapest way to handle transactions, whilst pre pay often has a host of additional costs including things like a percentage of what is paid going to the retailer who tops your meter key up on top of everything else.

So prepay may mean no credit risk (although many on prepay are already a credit risk/in arrears), but loads of additions costs.

 

[b0rn2sk8]

I don't understand why prepaid is more per unit. There's less overhead in terms of account management, and no credit risk..? Should be cheaper than postpaid.

There are additional transactions fees if the person is paying by cash or bank card. They also have to give a cut to the retailers who operate the pay point machines otherwise they just wouldn’t do it.

 

[chrcoluk]

I expect we will see prepaid get cheaper in the future, the current assumptions they more expensive to manage is based on outdated metrics now in my opinion.

People putting a payment card in a machine its automated, is no manual work involved by the supplier, there is no calling the call centre to dispute direct debit amounts, no meter reading management either, no unpaid bills, you pay ahead of time.

However i think what might be happening is when people mess up their credit accounts and then get moved to prepay, I expect the cost of managing that is considered a pre pay cost not a fixed DD cost. The way accounting is done can change the picture.

 

[Mercenary Keyboard Warrior]

Don't think pre pay with additional hardware, number of transactions etc will ever match the simplicity and cost of DD for companies.
DD collections are cheap, with mass collections of the scale they are doing they are probably paying very low double digits pence per collection. (I mean likely 10-20p each)

Card based collections would likely be that level per transaction, minimum. (not likely below 1% of the ticket, so a £10 elec card topup would be 10p etc)

What could be better for prepay is to set the unit costs the same, but pay the specific additional costs of the network on top. That way adding less frequently could save money compared to having to share the larger costs for many many micro transactions.

 

[Alex_6n2]

Breaking into peoples homes and force fitting pre payment meters really paying off for British Gas.

Not really, British Gas made £94m profit in 2022.

It was £267m in 2021

LESS PROFIT

The bulk of the Centrica Group profit was due to Nuclear electricity production (Costs broadly the same, market electricity prices per Mwh up), Oil and Gas upstream (storage, production etc) and their energy trading division (huge price swings on any market are an opportunity for profit (see Bitcoin, TSLA Shares etc etc etc)

 

[Minusorange]

Centrica boss refuses to say if he will waive bonus after ‘obscene’ £3.3bn profit

Chris O’Shea urged to ‘look at his conscience’ amid cost of living crisis and prepayment meter scandal

www.theguardian.com

Taking people for mugs really considering everyone was told costs were raising because of the war when in reality costs stayed the same and they just rose prices to consumers to profit 3x, government should make these companies pay for their deception on the public with another windfall tax and a rebate to households, but that's probably unlikely and society will get even more angry

 

[SDK^]

Taking people for mugs really considering everyone was told costs were raising because of the war when in reality costs stayed the same and they just rose prices to consumers to profit 3x, government should make these companies pay for their deception on the public with another windfall tax and a rebate to households, but that's probably unlikely and society will get even more angry

It's pretty simple !

• The global cost of gas increased due to supply/demand.
• Cost of operations didn't change.

Most of the issue across the general public is a lack of understanding of how the energy market works.
e.g. British Gas aren't making £3bn profit, it's actually about £72m, which is approx £10 per customer household, per year !

Centrica are paying a windfall tax, but again, that £3bn isn't all made in the UK, it's much less.

 

[chrcoluk]

Don't think pre pay with additional hardware, number of transactions etc will ever match the simplicity and cost of DD for companies.
DD collections are cheap, with mass collections of the scale they are doing they are probably paying very low double digits pence per collection. (I mean likely 10-20p each)

Card based collections would likely be that level per transaction, minimum. (not likely below 1% of the ticket, so a £10 elec card topup would be 10p etc)

What could be better for prepay is to set the unit costs the same, but pay the specific additional costs of the network on top. That way adding less frequently could save money compared to having to share the larger costs for many many micro transactions.

I actually also wouldnt be surprised if the costs of changing meters to prepay was also considered a prepay cost when ultimately its a credit customer who is in arrears, the more I think about it the more skewed I think it is.

A prepay could also be topped up via DD if a provider chose to accept that type of payment.

 

[Minusorange]

The global cost of gas increased due to supply/demand.

The supply and demand didn't change, what changed was Europe deciding they didn't want Russian gas, which caused prices to increase due to greed, which ironically helped Russia as they could now charge the new price and people still paid

It was greed that caused the increase in prices

 

[Mercenary Keyboard Warrior]

I actually also wouldnt be surprised if the costs of changing meters to prepay was also considered a prepay cost when ultimately its a credit customer who is in arrears, the more I think about it the more skewed I think it is.

A prepay could also be topped up via DD if a provider chose to accept that type of payment.

They could although it wouldn't make sense.
DD is 14 days notice and a 3 day cycle time.
(day 1 submit, day 2 process, day 3 credit). You can pull a DD request up to day 2 evening, although it costs the submitter if they do that.

 

[chrcoluk]

I think the 14 day notice is waived if the payer initiates it?

I can pull money from my bank to paypal using DD and its not a 14 day wait. giffgaff goodybags and topups can be paid via DD as well, thats a prepay system.

 

[SDK^]

The supply and demand didn't change, what changed was Europe deciding they didn't want Russian gas, which caused prices to increase due to greed, which ironically helped Russia as they could now charge the new price and people still paid

It was greed that caused the increase in prices

You mean Russia closed 2 major gas pipelines leaving Europe with much less supply.

That wasn’t a choice - it was forced!

-> Supply was much less
-> Demand was about the same as previous winters

Back to my point about the general public not fully understanding the situation, before their fingers type nonsense on social media

 

[jpaul]

not just social media .. Kier Starmer & Co probably need re-branding , participants in that echo chamber / lynching mob for enhanced windfall taxes

 

[Minusorange]

You mean Russia closed 2 major gas pipelines leaving Europe with much less supply.

That wasn’t a choice - it was forced!

-> Supply was much less
-> Demand was about the same as previous winters

Back to my point about the general public not fully understanding the situation, before their fingers type nonsense on social media

This isn't true, supply is the same, demand is the same all that's happened is a change in providers (Technically there is a slight increase in demand due to reaching back to pre Covid levels, but it's not really an increase in demand, it's just returning to normal levels)

Russia is still selling gas, just to different countries who no longer need to buy from their previous suppliers, those suppliers now have surplus supply to sell to Europe, if anything Gas should have been cheaper because of the cap imposed on Russian gas

 

[Simon]

Supply has dropped massively for eu markets !

 

[Uther]

Only £72 million profit? Poor sods, when do the mass redundancies start?