Time to demand the scrapping of Ofgem

mech_2

kippen_noedel wrote: »

Having actually worked for a gas wholesaler in Holland for 3years, I have to laugh at people who think the retailers of energy (domestic suppliers) are the ones that make any of the real money out of this market.

The government gets the biggest share, start with the "discovery tax", starts at 50% rising to 75%, thats before the gas gets to your supplier.

Then once your supplier bills you there is a further average 26% in taxes bolted on.

Wholesalers take the next biggest slice leaving energy companies to run their businesses on average less than 4% before tax. so for every £1000pa you spend on gas your supplier is making £40pa.

If people really want lower bills, then petition the government to reduce the taxes. Of course that just means your taxes will rise somewhere else.

If it was 4% in previous years what will it be this winter after their costs have fallen and retail prices haven't? I think that's the issue.

I find the whole tax argument rather unconvincing. Centrica has a higher level of vertical integration in gas supply than the other UK suppliers. So we can see the effect of profits moving downstream in the overall tax rate of the the Centrica group. This year that has fallen from 58% to 36%. Has this meant lower BG bills since this was announced in the summer? No. So reducing taxation doesn't mean lower bills. It just means they get to keep more of their profits. But it never made much sense in the first place: if you assert that the pre-tax profit has a small contribution to retail prices, then therefore the tax on that profit has an even smaller one.

Graeme_r_2

SwanJon wrote: »

I think it was about the Gas and Electricity Markets (the GEM bit of OFGEM).
For example, parts of the Gas and electricity supply network are regional monopolies, like water in England & Wales. Ofgem are also responsible for this part of the market.
Do you suggest that we get rid of the only regulation on these monopolies?

Before you start bleating about disbanding something, do some research on the consequences.

The consequences of not having a regulator that regulates is that the cartel of the big six charge what they can get away with in order to maximise the dividends of their shareholders not what is socially responsible or reasonable.

Your comment about the semantics of local monopolistic control is avoiding the issue posted here in the first place - why do we should have a regulator that doesn't regulate the prices the consumer pay. If it did, the regulator would by definition understand how the generating and distribution networks are configured and what the actual wholesale prices are and reach a decision about what is a fair price by looking at the whole picture. By not being empowered to regulating anybody, OFGEM is not fit for purpose and it's difficult for me to see it anything else but a waste of taxpayers money.

kippen_noedel

mech wrote: »

I find the whole tax argument rather unconvincing.

That's only because you aren't looking at the whole tax burden, you are only looking at the tax on downstream profits.

BG profits in fact dropped in real terms 44% in the last quarter (October).
SSE on the other hand reported an increase in profits.
Teir are many factors in why one has greater profits than the other, a lot to do with the set aside for vulnerable customers at BG in comparsion to all the other energy companies. Some, like UW, do almost nothing.

If you really want to look at profits in the energy industry look at the European, Russian and Far Eastern wholesalers, they make bank profits seem tame.

oh and back to the OPs question, OfGem certainly do not do very much for the consumer. Often times I have looked at their reports and just cannot fathom how they have reached their conclusions. The best regulator in the market is the French CME

Gerrard_8_lfc

Lets stir it up

In BG we trust :rolleyes:

Centrica :A


In all honesty ofgem do need a bit more bite but correct me if im wrong have we not got the cheapest gas bills in europe and the 5 th cheapest electric ?

SwanJon

Graeme_r wrote: »

Your comment about the semantics of local monopolistic control is avoiding the issue posted here in the first place - why do we should have a regulator that doesn't regulate the prices the consumer pay.

Disregarding the 'semantics*' of monopolies in transmission and distribution, the title of the thread is 'Time to demand the scrapping of Ofgem'.
You obviously had no idea of the range of Ofgem's remit as you offered no replacement for their control of this, or you are happy to have an unregulated monopoly possibly overcharge you for the distribution of energy.
In these areas, Ofgem do regulate the prices the transmission and distribution companies charge, which is exactly what you are asking for.

*Not really sure what you mean by using semantics - are you saying the transmission and distribution of energy in Britain are not monopolies?

Chrysalis

Ofgem like other regulators seem to exist only to make the public believe they are been looked after, often these regulators only act when pressured. We in a era where the government (who gives the regulators their remit) strongly believes in market forces.

For example, recently its been exposed people on prepay meters are still been ripped off, ofgem play dumb pretending they had no idea of what was going on, when they really should be proactive and making sure it doesnt get to the stage were hundreds or thousands have to complain to the media, likewise we have a clear obvious pricing cartel going on and again ofgem dont see a problem.

I even spoke to ofgem earlier this year (was very hard to get to speak to them as they dont like talking to the public), regarding accuracy of meters etc. and they were incredibly laid back putting a lot of trust into the companies themselves to be honest and the quality of the meters out there.

Graeme_r_2

"You obviously had no idea of the range of Ofgem's remit as you offered no replacement for their control of this ....Ofgem do regulate the prices the transmission and distribution companies charge, which is exactly what you are asking for".

To this contributer and the other supplier friendly posters who are trying to spin their own interpretations on my simple message. I am not going to propose a model for a new regulatory body, that is for Government. Nor am I asking for the regulation of prices by the transmission and distribution companies. To spell it out in simple terms, I am asking for a regulatory body to control the Prices paid by the customes of the electricity & Gas suppliers, i.e EDF, British GAS , NPower etc etc and for Ofgem to be scrapped as they are not doing this.
If they can't make suppliers charge fair prices to their customers and relinquished the right to do that years ago, what is the point of keeping them? Regulating the prices charged by the transmission and distribution companies does not equate to what EDF, British GAS , NPower etc charge domestic customers.
On Ofgem's website they say
"Ofgem is the Office of the Gas and Electricity Markets. Protecting consumers is our first priority. We do this by promoting competition, wherever appropriate, and regulating the monopoly companies which run the gas and electricity networks."

BBC watchdog asked OFGEM to be interviewed by Ann Robinson and they declined.
Watchdog said "In fact, Ofgem has no power whatsoever to tell the suppliers to reduce their prices. It gave up that right seven years ago, because it thought competition was keeping prices fair. The only time they can act with regards to pricing is when they have evidence that a cartel is in place. An investigation by Ofgem in 2008 (published in October 08) found no evidence of this occurring, so nothing has been done."

SwanJon

Graeme, you seem to have chip on your shoulder about this. You'll note that at no point have I disagreed with you about the need for greater control of the supply end of the energy market, but you have decided that I am supplier friendly just because I pointed out a flaw in your plan. However, it seems like you entirely missed the point of my post.

Graeme_r wrote: »

I am not going to propose a model for a new regulatory body, that is for Government.

So you offer no ideas to replace the current system? Scrap it first, then think of what to replace it with? That way lies chaos

Graeme_r wrote: »

Nor am I asking for the regulation of prices by the transmission and distribution companies.

Ofgem already regulate the prices of the distribution and transmission companies, so you don't need to ask for this (This was my point)

Graeme_r wrote: »

To spell it out in simple terms, I am asking for a regulatory body to control the Prices paid by the customes of the electricity & Gas suppliers, i.e EDF, British GAS , NPower etc etc and for Ofgem to be scrapped as they are not doing this.

This is no longer in Ofgem's remit. Barnsley FC* aren't regulating the prices of the energy suppliers either - should they be scrapped?

Graeme_r wrote: »

If they can't make suppliers charge fair prices to their customers and relinquished the right to do that years ago, what is the point of keeping them?

As above, they regulate other areas of the gas and electricity market.

Graeme_r wrote: »

Regulating the prices charged by the transmission and distribution companies does not equate to what EDF, British GAS , NPower etc charge domestic customers.

But it is a part of the charges they pass o to the end consumer

I'm not sure of the point you are trying to make with the last 2 quotes.
*No offence meant to Barnsley fans, just the first thing that popped into my head.

Graeme_r_2

SwanJon
I am asking for the scrapping of ofgem and repalcing them with a regulatory body that is empowered to control the prices that EDF, British Gas, n Power etc charge to their customer as ofgem used to do. How much more simple can that be? Why do you keep going on about regulation of the charges of the supply and distribution networks? They don't set the prices that consumers pay - EDF, British Gas, n Power etc decide.
In simple terms, the Govt could set up a new post Ofgem organisation with the same powers that ofgem used to exercise in the era before the introduction of the Utilities Act 2000.Where is the chaos in that? It seems you have a vested interest in speaking out for the continued existence of ofgem and are looking to find difficulties where none need exist if there is the political will.
You conveniently say that Ofgem used to set the prices that EDF, British Gas, nPower etc charge until 2002 but it is no longer in their remit. The whole point of this post is that it should never have been removed from their remit and because they decided not to regulate the big six any more any more the gas and electricity customers are at the mercy of the big six.

By analogy, it's like the Police deciding that they will no longer investigate Car thefts, then we get a huge problem with massive increase in car thefts and people getting injured by Joyriders. When asked about this, the Police say "sorry it's no longer in our remit." By removing it from their remit it not only means joyrtiders can do what they want and other adverse consequences arise too.

markharding557

ofgem are like my !!!!!