Are loyal energy customers LEGALLY penalised by their suppliers?

davidgmmafan

"with British Gas making £379 million – equivalent to £24 for every one of its 15.6 million customers"

What's the average duel fuel bill these days about a grand? So that's just over 2%, not a huge margin by any means, less if the bill is more...

I totally respect where you are coming from but doubt it is going to happen so I'm back to my pragmatic approach of assuming they are all out to screw me and getting the best deal I can, which as you say is a balance between price and service.

There are some baby steps being taken, suppliers now have to tell customers if there is a cheaper deal but this is only in terms of discounts, they still won't say by the way our online tariff is £300 per annum cheaper

BigAl99

Plushchris wrote: »

...EVERYONES prices would go up...

The argument is a bit circular. Sure, everyone's prices would go up, but not by nearly as much as it presently does for customers who don't regularly switch - which is after all why you presently have to keep switching.

Ultimately market forces are market forces and prices would start competing again - but according to the same marketing model as the rest of the economy works to, rather than on a tidal wave of consumer inertia. But all this first requires the existing model to change.

Like you say - may never happen. But it will be interesting when everyone has Internet and actually uses it to keep switching -especially when some bright spark starts to provide automation for it and either sells that as a service or as a software package. At some point the existing model will fail because the inertia ceases to generate the desired profit. And at that point it will start to be about a real play-off between true "savings" and true "service" - i.e. real competition that actually benefits all consumers.

Blue skies? Maybe.

I guess I'm just an optimist.

Cardew

BigAl99 wrote: »

P.S. From the Daily Telegraph 27th Feb 2009 "Centrica reported an operating profit of £1.94 billion, with British Gas making £379 million – equivalent to £24 for every one of its 15.6 million customers." ...This should put "2% profit" in perspective. Apparently most of that profit went to the shareholders in 2009.

Doesn't that rather make the point about small profit margins? (Incidentally it supports the 2% figure) and little leeway on prices.

The average bill is about £1200 pa. So if BG made zero profit and gave it all back to customers we are talking about a reduction of £24 a year.

Compare that with the annual profit per customer of any of the major supermarkets!

Tesco made £3 billion profit last year. So with a customer base of 15 million(roughly the same as BG) they made approx £200 per customer - 8 times more than BG.

Yet the Utility companies have the reputation of being rogues!

BigAl99

davidgmmafan wrote: »

What's the average duel fuel bill these days about a grand? So that's just over 2%, not a huge margin by any means, less if the bill is more...

Yeh, about that 2%... Like I said earlier, before I finally woke up to the fact that Eon were offering new customers deals that were 20% cheaper, this 2% assumption would imply that my 20% extra was reducing those customers bills below what was profitable (20-2=18). Either that or it was generating huge profits for Eon. But then, the 2% quoted earlier was for BG. No idea how much Eon's profit was... That's the thing about numbers like these - you could prove anything with them!

BigAl99

Cardew wrote: »

Doesn't that rather make the point about small profit margins? ...
Yet the Utility companies have the reputation of being rogues!

Before we all burst into tears about the poor energy companies, let me remind you that "profit" is not "turnover", and is merely what is left after a company has paid legitimate costs such as directors pay, company cars, saleries, benefits, lobbying costs, investments, growth, takeovers, etc, etc. In other words, it is merely money that mostly goes to shareholders and the taxman. Anyone who has ever run a company for themselves knows that "excessive profit" means bigger tax bills and that your accountant hasn't been doing their job properly. £300m-odd is still a nice wad of "unused" money at the end of the year. Rest assured, when the economy eventually does turn around (and fuel acquistion costs fall relative to the rest of the economy), that "excess" will be back in the big numbers again.

P.S. It would be really useful if this forum allowed music clips. I would have used Status Quo earlier, ...and Sympathy For The Devil now.

BigAl99

By the way, before anyone accuses me of being a communist (it sounded like that a while back there)...

I run my own company, voted Conservative in the last G.E., but was pleased when the LD "also got in", believe in the NHS, and in the concept of a "safety net", and that "energy" is a fundamental need that should be included in some way in that safety net. I begrudge no one anything much and am not an activist.

If this all sounds contradictory to you, so be it. But I suspect it is how many people feel.

davidgmmafan

To give some other numbers which may be relevent to the discussion I recall an article in the Mail some time ago saying the average customer would save £2-£300 per year if they went for an online tariff rather than a standard tariff. So you'd expect customers to be beating down the doors to get online?

About 5% of people have online accounts. There can't be that people not bothered about saving money and unwilling/unable to go online.

There may be cases where there are tariffs running at a loss, which could explain why they tend to run for a set period. If everyone was on them then you are quiet correct thier business model would have to change, but its not even close at the moment.

BigAl99

davidgmmafan wrote: »

To give some other numbers which may be relevent to the discussion I recall an article in the Mail some time ago saying the average customer would save £2-£300 per year if they went for an online tariff rather than a standard tariff. So you'd expect customers to be beating down the doors to get online?

About 5% of people have online accounts. There can't be that people not bothered about saving money and unwilling/unable to go online.

There may be cases where there are tariffs running at a loss, which could explain why they tend to run for a set period. If everyone was on them then you are quiet correct thier business model would have to change, but its not even close at the moment.

Fair point. But, there was a time before the Internet existed. There was a time before this forum existed. There was a time before this forum dispensed advice about switching. There was a time... ...in the end, only time will tell.

As for the "set period",the 20%-over tarif I was on was once competitive. There was no mention of a "set period". And I suspect that, had I not looked, it would have run and run (and possible got more expensive). There was no compelling reason for Eon to "end it".

Also - in some cases it isn't that people necessarily can't be bothered, it may also be that they don't feel they have the time, or simply that they do not yet understand. In some cases, of course, they never will. So there may be hope yet for the more "right-wing" believers in the inertia-market system. Personally, I see it as just another poverty trap.


P.S. On reflection, that last sentence should clarify my "politics" on this issue, for those who were questioning them, but on a personal level - well, I'd just like to get a better service.

P.P.S. Maybe that is also where I went wrong. I stopped buying the Daily Mail way back when I stopped driving a Ford Mondeo. Maybe I would have been beating the door down earlier! But then again, mine was already an online tarif. So I guess that makes no difference. ho hum.

Sorry again for the late edits - I'll stop now.

davidgmmafan

Dammit I thought I'd just casually slid in there with a thread ending post

They may not feel they have the time, but I don't see this as a valid objection. Its a perception not a reality, it doesn't take long to get the cons and go for there so what is the reason?

Your other suggestin is, IMO, spot on. Some call it confusion marketting, I prefer the term confusopoly (not sure on spelling) which I got from Dilbert Cartoonist Scott Adams. They make it unclear so most people will look at it quickly and think I can't make head nor tail of it and thus not look at switching.

There must be some reason why British Gas still have the most customers and, apart from now, were one of the most expensive.

Totally understand the concerns about those who really cannot afford the utilities or will never understand due to poor maths skills or other issues. That is why IMo a lot more needs to be done in terms of social tariffs.

BigAl99

davidgmmafan wrote: »

Dammit I thought I'd just casually slid in there with a thread ending post

...So you are one of these people who always like to have the last word? :T

Excellent points - 'nuff said.



...and thanks to all you other contributors to this thread. :beer: