Fight back

krisl

i'll agree that most utility companies are terrible at estimating any bills, however i do see the issue from the other way round. For a company with such a large market share, they don't make a huge profit.

People see billions of profit from banks and petrol companies and think it's bad. Things need to be in context of their profit compared with Revenue. Centrica's isn't actually that high and was really low last year and is expected to be worse this time around.

Therefore whilst i'm annoyed that things are costing more, i don't see it as profiteering as many on here do. Prices have gone up, there's little we can do other than find the best provider in the market.

1carminestocky

Cardew wrote: »

GG
I am not confused.

I agree that Centrica are the parent company and their profits are high; however thats because their assets(energy) have risen in value because of the rise in world world energy prices.

Surely that is no different to say a property development company who finds it housing stock has risen in value.

You can hardly expect Centrica to sell its energy for below the world market price to BG, when it can get a higher market price from abroad or other UK companies.

In the same way you couldn't expect the property company to sell its assets at below the market value.

However leaving aside the above argument, even if you take Centrica's profit of £1,442 million. That is still less than £100 per BG customer.

So the entire Centrica and BG profits are not the reason for the huge increases in price we are paying.

Also as discussed in another thread, gas prices in UK were amongst the lowest in Europe. Doubtless these latest rises will put us up the 'league', however it is a fair bet that the price will rise in other countries.

P.S.
I clearly believe that there is scope for international scrutiny on how the energy price market operates - but to expect any individual company to sell below market price is just not realistic.

The Parlimentary Committe on Energy supply that sat recently makes interesting reading - all available on the Web.

But that is still in the region of 15-25% gross profit!!!! Tesco ( a hugely-maligned company and with very good reason IMO) make in the region of 6% gross profit. Go figure....

1carminestocky

Cardew wrote: »

GG,
It is all too convenient to blame the huge rises in energy on "Profit for the shareholders."

2 points to consider:

Firstly Ebico are an excellent no profit company. Yet their prices are, on average, no cheaper than any of the other companies. Cheaper for low users and more expensive average/high users.

If excess profit is the reason for high prices, why can't Ebico undercut everone?

Secondly. BG increased their profits by 500% in 2007 and thus made approx £35 on each of their customers. In 2006 they made £7 from each customer. Not a huge factor I suggest.

Just because Ebico are a no-profit company doesn't mean they don't make a 'surplus', you know.

CarlMC_2

Every energy company comes out with the same well rehearsed spiel about needing to maintain profit levels to invest in new sources and generation - such as the BG head tonight talking about building the first new power station for 8 years - but why no mention of increasing storage capacity for holding larger stock of energy when wholesale prices are cheaper? Are these energy companies run by idiots? I still remember when every town/city had one or more large gas storage tanks, now sadly mostly all gone. Would we be held over the current barrel if we still had them, I wonder.

Ouzy

Obviously this cannot continue year on year. If a £1000 a year bill rises by 32% every year then in 10 years that bill will be 16,000 pounds. Whilst an average £30,000 salary rises approximately 2.5% (0% for some people) per year to £38,200 in 10 years.

If this was to continue at this rate the whole country will fall apart as it is unaffordable. You would go from paying 3.5% of your salary to gas/electric to paying 41% of your salary. It would be a choice between eating or heating I`m afraid.

I think I may build a real fire place and stock up on timber..:)

How I wish for the good old days of Sid and Buzby....

:P

PS. I`m not saying this is what everyone is earning or paying (as most people earn less than this ...its just a figure plucked from the air to make a point)

mech_2

1carminestocky wrote: »

But that is still in the region of 15-25% gross profit!!!! Tesco ( a hugely-maligned company and with very good reason IMO) make in the region of 6% gross profit. Go figure....

I'm not sure how you worked that out. The average household energy bill is around £1000. 1442 million divided by 16 million domestic British Gas customers is about £90. So even if Centrica makes no profit at all from any of its other businesses (ie: 0% profit there), the profit shared equally amongst the domestic customers is still only 9%. Where does 25% come from?

krisl

The income statement on http://www.centrica.com/index.asp?pageid=100

about 16BN revenue with 1.1BN net profit which is about 6 % profit. Not overly high, but i don't particularly know the standard profit for the utility market.

PS thats Net profit. Gross profit isn't a good measure as it only includes sales & cost of raw materials (gas/leccy) without overheads.

wakeupalarm

British Gas are justyfing the 35% price increase due to them needing to maintain their margins/profits. If we all use less energy then the energy companies profits would be lower. So in order to maintain their margins/profits they will need to increase prices further, it's just a vicious circle of increase after increase.

This is the stupidity of the current system and the Government lets them get away with it. :mad:

CarlMC_2

And if the government ever reacted by imposing a windfall tax, the companies would just find some other way to maintain their margins.

Cardew

1carminestocky wrote: »

But that is still in the region of 15-25% gross profit!!!! Tesco ( a hugely-maligned company and with very good reason IMO) make in the region of 6% gross profit. Go figure....

I figured!

Arithmetic seems to be yet another area in which you are challenged!