So it’s only relevant when the wholesale price drops by 10% which hasn’t happened for a while now.
The only way to guarantee market stability is to move everyone onto a variable rate, that way the market can closely follow the wholesale price a rid the gambling practices for short term gain long term harm.
Er no, well
The point being made was that if there is a correction, as expected at some point, then even if the market rate falls significantly, then you wont get cheap deals since the new company wont be able to afford it.
Eg Elec price falls by 50%, lets say 30p to 15p. >10% so new supplier has to pay old supplier 85% of the impact. So you would have hoped to be seeing new deals for 15p since the market rate has plummeted, but your new supplier is in effect paying 15p + 85%x15p = 27.78p per unit. IE they cannot track the market even if they can buy at spot
Moving everyone onto variable rate is probably what should happen but its not allowed as the price cap is stopping that happening so they would need to ditch that mechanism completely, and then individuals would be at risk of the market price.
Your not moving to market price if by default its not market price they are all offering.
Its not the gambling practices that are the issue, its the combination of everything thats in force.
As I said before, if you want to go back to the old ways of doing it thats fine, but all the current combination is doing is killing competition and forcing the market to a more oligopoly like position.
You could argue offgen is forcing them to gamble as they have to buy ahead. Its all terminology and viewpoints at that point.
All the recent changes seem to be to defend the companies rather than help the consumers.
Eventually if the market prices fall we will see them take effect, the changes just mean that will take some time to happen since the prices the companies have purchase at will in effect be setting the market rate in the UK. Once they all start to reduce prices they will fall broadly in line, but as a consumer its going to be practically impossible under the rules to move to a significantly cheaper deal quickly. And lets face it, the reason you move is to get a noticeably better deal. I wouldnt bother for less than about £40 a year, not worth the hastle if it goes wrong.
Now dont get we wrong, it was too easy to setup an energy supplier in effect, it needs to be a bit more restricted and some capital buffer in place so that if they go pop mostly consumer balances are ring fenced and then in theory there is less pooling of the risk.
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