Are we being ripped off...again?

mech_2

Perelandra wrote: »

Please read my post-

I said, if prices remain as they had been in H1- I'm interested in today's position, with today's costs and today's prices.

Prices are only a couple of percent lower than the average for the first half of the year averaged across all suppliers. Wholesale costs have fallen hugely (30% to 40% for the second half of 2009 depending on whether gas rises back to its historical connection to oil straight away or gradually). Ofgem says wholesale costs are 60% of the price, so you would expect to see gas prices fall at least another 15% if those figures hold true. British Gas Residential profits for the first half of the year were healthy compared to the year before, so taking that as a benchmark for the rest of the industry there doesn't seem to be much of a case for inflating that margin.

In other words, given where we are "today", the amount that prices could be cut from "today's" position would still be very small, otherwise profit for 2009 could easily be 50% of 2008. There's a fine, fine line between profit and loss.

Where does 50% come from? A greater than 10% margin doesn't seem to me to be a fine line.

However, I'd be interested in knowing how much you think a bill would need to be inflated by in order for the energy companies to be "ripping you off" or "chronically ripping you off". £100? £150?

Well that's subjective and it would depend on the size of the bill. I think a profit of much more than 10% would be unusually high. So if an average yearly energy bill is £1200, then £120 per annum would seem a good maximum. Supermarkets can only dream of that kind of profit margin.