Official - Energy prices can form as little as only half your annual bill 25 June 2009 at 9:05AM edited 25 June 2009 at 9:15AM in Energy 8 replies 1.1K views

Premier_2

Remember last year when wholesale prices of gas & electricity were rising, most of us were subjected to a couple of price rises? Remember the British Gas scaremongering story suggesting prices could rise by up to 70%,

http://www.guardian.co.uk/business/2008/jul/18/gas.pricewarning.centrica

and then we all were happy they only rose by 35%?

Remember the excuse at the time? Why that's right, it was because the wholesale price of gas and electricity was rising and maintaining current pricing by the main energy suppliers was simply unsustainable.

Householders could see their gas and electricity bills increase by as much 40% this winter because of a "seismic shift" in wholesale costs, the UK's biggest energy suppliers warned today.

http://www.guardian.co.uk/politics/2008/jun/24/economy

Well guess what? Now that wholesale prices have fallen, that suit who appeared on BBC watchdog has made the following statement to support the big energy providers not lowering their retail prices accordingly.

"The amount of gas and electricity a customer uses can form as little as half their annual bill," said Garry Felgate from the Energy Retail Association

http://news.bbc.co.uk/1/hi/business/8117962.stm

Where was he at the end of last year? Oh yeah, here from December 2008

Garry Felgate, chief executive of the Energy Retail Association, said: 'The gas and electricity markets are still very volatile and there needs to be a sustained period of lower wholesale prices before the energy suppliers can reduce prices.'

http://www.thisismoney.co.uk/bargains-and-rip-offs/household-bills/article.html?in_article_id=459009&in_page_id=510

and here in October 2008

But Garry Felgate, a spokesperson for the Energy Retail Association, told the BBC that wholesale energy prices are still high and are preventing suppliers from reducing their tariffs.

http://www.uswitch.com/news/energy/20081017/consumer-focus-calls-for-energy-price-cut.cmsx

and here is what he promised on BBC Watchdog at that time

In October 2008, Garry Felgate the head of the Energy Retail Association came on Watchdog with a clear promise:
"When wholesale prices come down, the competitive market will get lower gas prices," he said.

http://www.bbc.co.uk/blogs/watchdog/2009/05/energy_prices_update.html


Talk about making up the rules as you go along to suit yourself :rolleyes:

1carminestocky

Felgate was on BBC Breakfast this morning. I do wonder if he genuinely believes the claptrap he spouts or he does it because he is paid (what I imagine is a handsome salary) to say such stuff? Let's be honest, this debacle is entirely of successive Govts making - Thatcher's disgraceful decison to sell off the industy in the first place (to help pay for the 3 million+ unemployed she helped create) and every Govt since in not appointing a regulator who has the consumer's interests at heart.

dori2o

I've said for a long time now there needs to be a mass movement from the people who pay towards these fat cats ever increasing bank accounts, something similar to the bank charges claims.

It's pointless these reports being compiled as the energy companies seem to send out this gofer and he's always got an answer. It is, and always has been blatant profiteering, brought about by the Thatcher Government, and their inherrant privatising of OUR services.

I remember a quote from one of the energy companies big bosses last year when the prices rose, he said something along the lines of:

"It is always hard to raise prices, however, we have a duty to our shareholders to maintain our profits and their dividend payments."

That shows you what we are up against.

The Watchdog never does anything about it, the Government has never stepped in to try and sort this out, so people, we are going to have to do this on our own (as usual).

However, unlike with the bank charges, I cannot see people rocking the boat. We'll continue to pay whatever they tell us to pay, and they know that.

Somebody, somewhere, must have the knowledge to take this to the next step, I wish I had, but for now I guess it's a case of bombarding the watchdog and my MP.

kippen_noedel

The actual conversation quoted above has been misrepresented

Garry_Felgate, wrote:

The amount of gas and electricity a customer uses can form as little as half their annual bill. "The remainder includes other costs, such as transporting gas and power around the country and meeting the Government's carbon emissions reductions targets – all these costs have risen sharply in recent years. Consumer Focus has ignored these facts during its research.

jimexbox

Its amusing that when respected organisation points out that we are being overcharged, the goal posts are moved. Wholesale prices drop, now its the infrastructure costs which are keeping costs high. What a joke.

Premier_2

kippen_noedel wrote: »

The actual conversation quoted above has been misrepresented

What exactly has been misrepresented, and how?

mech_2

Premier wrote: »

Remember last year when wholesale prices of gas & electricity were rising, most of us were subjected to a couple of price rises? Remember the British Gas scaremongering story suggesting prices could rise by up to 70%,

http://www.guardian.co.uk/business/2008/jul/18/gas.pricewarning.centrica

and then we all were happy they only rose by 35%?

Remember the excuse at the time? Why that's right, it was because the wholesale price of gas and electricity was rising and maintaining current pricing by the main energy suppliers was simply unsustainable.

http://www.guardian.co.uk/politics/2008/jun/24/economy

Well guess what? Now that wholesale prices have fallen, that suit who appeared on BBC watchdog has made the following statement to support the big energy providers not lowering their retail prices accordingly.

"The amount of gas and electricity a customer uses can form as little as half their annual bill," said Garry Felgate from the Energy Retail Association

Where's the disagreement? Wholesale costs doubled during 2008 and retail prices increased about 50%. That seems to all add up to me.

They brought the prices down a bit on the slow side this spring, but we won't know how that affects their profits until we see the figures. The issue now is what the hedged wholesale price turns out to be over this coming winter. The current prices are a bit irrelevant. Gas usage is at a minimum in the summer.

Premier_2

mech wrote: »

Where's the disagreement? Wholesale costs doubled during 2008 and retail prices increased about 50%. That seems to all add up to me.

They brought the prices down a bit on the slow side this spring, but we won't know how that affects their profits until we see the figures. The issue now is what the hedged wholesale price turns out to be over this coming winter. The current prices are a bit irrelevant. Gas usage is at a minimum in the summer.

Yes wholesale prices rose and retail prices went up by 50%

Now wholesale prices have dropped back, why haven't the retail prices followed suit? Most reductions have been less than 10% if any.

May I respectfully remind you that even you thought prices should have fallen further last March when the meagre price reductions were being announced.

mech wrote: »

It's rather frustrating. I would have expected the current price reductions to be closer to 25% for gas (though less than that for electricity). Maybe there will be more palatable price reductions in the summer. Or maybe I was just wrong in my predictions in the first place. I can't figure out how these tiny price reductions make sense though.

It's too late now anyway. The heating season is practically over. I shan't bother worrying about it again until September now.

http://forums.moneysavingexpert.com/showpost.html?p=20026915&postcount=5

Of course, if you are happy to just accept their current excuse that a seismic shift in wholesale prices doesn't any longer mean that retail prices follow suit that's up to you. One wonders just how much energy would be today if wholesale prices hadn't fallen, bearing in mind they now claim other costs have escalated.

I wonder if the shareholders will be out with their begging bowls once the annual accounts are published ... or quaffing champagne again.

mech_2

Premier wrote: »

http://forums.moneysavingexpert.com/showpost.html?p=20026915&postcount=5

Of course, if you are happy to just accept their current excuse that a seismic shift in wholesale prices doesn't any longer mean that retail prices follow suit that's up to you. One wonders just how much energy would be today if wholesale prices hadn't fallen, bearing in mind they now claim other costs have escalated.

But you were talking about last year.

[edit]: Or to be clearer about what I'm trying to say: You're making out that statements made last year about rising prices are incompatible with today's statement that only half of the retail price may be commodity costs. I'm just saying that I don't think there's a paradox there. Both can be true.