MSE News: British Gas boss defends energy price rises

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  • grahamc2003
    grahamc2003 Posts: 1,771 Forumite
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    again graham2003 - where do you get a figure of 37% from

    It's in post 19 of this thread, which refers to the British Gas breakdown someone refenrenced earlier in the thread.

    From British gas, Wholesale electricity £35, Government environmental contribution £13
  • davidgmmafan
    davidgmmafan Posts: 1,459 Forumite
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    Though it pains me to say it some of what he is saying makes sense. Clearly they aren't going to sell at a loss. A lot of the discussion and news coverage on this topic is backwards. The media say massive prive rise after announcing massive profits. Well they aren't looking back when they change prices are they? They're making the best guess what they need to protect thier margins going forward.

    However there is one glaring factual error in the answers where he directly contradicts himself. He says on the one hand that levels of switching in this market are much higher than in banking for example. Then he says some doorstep sales are so damaging to reputation that they may stop doing it altogehter. Wow just wow. So there are high levels of switching but a lot of it is based on non-sense and lies, that's a quality market there!
    Mixed Martial Arts is the greatest sport known to mankind and anyone who says it is 'a bar room brawl' has never trained in it and has no idea what they are talking about.
  • magyar
    magyar Posts: 18,909 Forumite
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    However there is one glaring factual error in the answers where he directly contradicts himself. He says on the one hand that levels of switching in this market are much higher than in banking for example. Then he says some doorstep sales are so damaging to reputation that they may stop doing it altogehter. Wow just wow. So there are high levels of switching but a lot of it is based on non-sense and lies, that's a quality market there!

    Good point.

    The doorstep sales thing is a real hard one to solve: you're talking about low paid people doing a tough/tedious job. If you pay them based on success, there's a danger they just lie to get sales. If you pay them a flat rate irrespective, then where's the incentive to bother trying? They might as well sit at home all day.

    So I can see why they're saying this, but your point is totally correct: I wonder how many people have ACTUALLY switched to the cheapest tariff. We'll never know, obviously.
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
  • Cardew
    Cardew Posts: 29,038 Forumite
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    magyar wrote: »
    Good point.

    The doorstep sales thing is a real hard one to solve: you're talking about low paid people doing a tough/tedious job. If you pay them based on success, there's a danger they just lie to get sales. If you pay them a flat rate irrespective, then where's the incentive to bother trying? They might as well sit at home all day.

    So I can see why they're saying this, but your point is totally correct: I wonder how many people have ACTUALLY switched to the cheapest tariff. We'll never know, obviously.

    In evidence given to the Parliamentary Committee on Energy some while ago it was stated that xx%* of those who switched went onto a higher priced tariff; lured by a lower Direct Debit and/or persuaded by doorstep salesmen.

    * I can't remember the exact percentage - but it was suprisingly high IIRC around 30%?
  • magyar
    magyar Posts: 18,909 Forumite
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    Whilst a very well observed point, I think actually he isn't contradicting himself. Those people who switched may not actually switched to the cheapest tariff but they thought they were. So what it says is that if everyone is presented with the information as to the cheapest supplier, more people switch energy suppliers than switch banks. (And thinking about it, I've switched banks only twice in my life!)

    The only point would be if the price differences were so small that less people switched. But if that was the case then it does imply the market is as effective as it could be.
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
  • broxis11
    broxis11 Posts: 240 Forumite
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    magyar wrote: »
    Good point.

    The doorstep sales thing is a real hard one to solve: you're talking about low paid people doing a tough/tedious job. If you pay them based on success, there's a danger they just lie to get sales. If you pay them a flat rate irrespective, then where's the incentive to bother trying? They might as well sit at home all day.

    So I can see why they're saying this, but your point is totally correct: I wonder how many people have ACTUALLY switched to the cheapest tariff. We'll never know, obviously.


    The opinion of sales people who work fro suppliers is low due to the reputation for misleading tactics and lies.

    Phil Bentley was trying to make the point that BG has taken steps to make sure that the sales people who represent the company do so in a professional and trustworthy manner.

    Unlike some of the other companies BG consultants carry a laptop which compares rates so that a customer can make an informed decision as to whether the deal will benefit them. If the deal is more expensive then the customer would know about it before proceeding. Once the sale is confirmed, a copy of this price comparison is immediately sent to the customer.

    They also do not take signatures from customers. A customer wanting to join is immediately contacted by a call centre who checks the customer is happy entering into a contract and then double checks the details of the sale ie. tariff type, cancellation charges etc. They also check the customer has been shown a price comparison and are aware that they have a 7 day cancellation period.

    Phil Bentley was making the point that Ofgem should be ensuring that all of the suppliers are operating to this standard. Given the recent court case with SSE, it is clear that there are still companies blatantly misleading customers.
    :money:
  • magyar
    magyar Posts: 18,909 Forumite
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    broxis11 wrote: »
    Given the recent court case with SSE, it is clear that there are still companies blatantly misleading customers.

    ... and SSE are one of them. I live in a Southern Electric distribution area, and had someone call round recently who claimed that "because we actually run the network here, other companies have to buy the electricity from us and then sell it on to you, so since they have to make a profit, we will always be the cheapest".

    Anyone in the industry would know that this is an absolute lie, but it sounds plausible enough to the uninitiated. When I challenged him, the guy claimed he had 'only just started and was just saying what he'd been told to say".

    I would have taken it further but I was cooking the dinner at the time...
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
  • broxis11
    broxis11 Posts: 240 Forumite
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    I work for BG and this week I called on an existing BG dual fuel customer. The customer was over 80 and on a fixed price deal with BG until the end of this year.

    SSE had called and explained that they were the recommended supplier for the area and showed her the SSE distribution details on the back of the BG electric bill to prove the point that they were `recommended`. He then stated that she was elegible for a reduction so promptly signed her up on a SSE Standard tariff and dropped her current direct debits by ten pounds. This would obviously be untrue. The agent also signed her up for maintenance without explaining what the customer would be covered for or how much she would be paying.

    The customer has now cancelled these contracts and called Consumer Direct to lodge a complaint. They have told her that an official complaint will be made to Ofgem and Trading Standards so hopefully that will be another blagger off the streets.

    For the people who do work in sales and do the job properly building trust with customers and providing true advice it is baffling why Ofgem don`t make all the companies operate in the way we do.
    :money:
  • davidgmmafan
    davidgmmafan Posts: 1,459 Forumite
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    My honest opinion is that they are all at it to a greater or lesser degree. I've said before perhaps we should have a list of whoppers to what out for including we're cheaper because we're the supplier for this region, we're cheaper because we're not the supplier for this regeion, they're foreign owned so they charge you more. You are paying too much because you need to be on a deregulated tariff.

    The whole thing is a joke, and us poor saps on the front line have to sort it out. What I REALLY want to know is how this can happen. NPower use the validation call referred to above and yet I still speak to many customers who say I was told (insert ridiculously puny figure which won't cover usage here) would cover. The sales agent has no business saying this unless they have looked at a full years consumption, and even then the usage can change.

    Now the people who, until recently, dealt with complaints about sales people often used to say they wouldn't have said that. So are the customers lying? Or are the sales people signing a memo about conduct because they have to then doing what they like in the field? That's pretty much what NPower got done for before I believe.

    Now onto Ofgem, whos investigation seems to be taking such a long time. This is SUCH an open goal even they should be able to poke the ball into the back of the net.

    I've gone a bit off topic here, but I believe the above goes to the heart of distrust in the industry which colours how people see prices rises. On topic I would repeat what many people have said in the media about the costs of renewables and also the HUGE sums of bad debt energy firms let people get into. Some of that is due to the recession granted, but some of that is due to thier poor systems and other customers are paying for this.
    Mixed Martial Arts is the greatest sport known to mankind and anyone who says it is 'a bar room brawl' has never trained in it and has no idea what they are talking about.
  • backfoot
    backfoot Posts: 2,700 Forumite
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    broxis11 wrote: »
    I work for BG and this week I called on an existing BG dual fuel customer. The customer was over 80 and on a fixed price deal with BG until the end of this year.

    For the people who do work in sales and do the job properly building trust with customers and providing true advice it is baffling why Ofgem don`t make all the companies operate in the way we do.

    Why were you calling on an existing customer?

    Don't you have records of your own Customers?

    Isn't it likely to be confusing to an 80+ year old? :(
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