MSE News: British Gas owner posts £1.3bn profit, so why the price hikes?

backfoot

davidgmmafan wrote: »

"the fact remains that all energy suppliers operating in the UK are only after one thing: maximum profit."

I often wonder whether or not it is relevent but I finally settled on the view that it probably is when most of the 'debabe' concerning energy prices consists of people jumping up and down saying we're being ripped off. That it a relative concept and so needs to basis for comparison.

If there is a general point to consider here I would think why did most companies end up being foreign owned? Have the british just become utterly unable of running anything?

You answered the last point yourself in the opening part. They invested to buy that future stream of profits. At the time,they paid a significant premium to do so (Price/Earnings multiple). The UK managements sitting on huge share options awarded at privatisation and paid as remuneration packages after, were unable to resist the huge personal windfalls.

The impact now is devastating. The German,French and Spanish Group Execs can just set demanding ROI targets for the Generation and Supply businesses and care not about the political aspects for the UK.The UK Managers can only collude to make the best a bad job in their vertically integrated companies. Supply currently being squeezed so put up the wholesale price on the back of the 'oil crisis'. Easier to explain than Supply business profits.

What other levers do they have? Cut costs and the effect is the demise of resource and skills to operate even the fundamntals of the business. They are all shocking now and are getting worse by the day. Just look at the EDf shambles.

Anyway,pensions are safe and gold plated, so lets say it's all understandable and a bit like the deficit accept that we all have to feel the pain.

Or ? We could unearth the truth.

backfoot

No cross subsidy . tick

Generation = Profit. tick

Who pays for generation output?

Supply Businesses. tick

Supply businesses put up prices by +20% to pay for higher generation. This maintains supply margins at 5%. tick

Everyone's happy except the customer.

Cardew

bengalknights wrote: »

It would be nice to see a utility company that was "not for profit" and was there to always provide the cheapest when possible, although im guessing it would have to be a community run company in the same format as coops etc.

There such a 'Not for Profit' company called EBICO.

For customers with low consumption it can be a good alternative.

They have no standing charges(or Tier system) all customers pay the same rate regardless of their payment method - even pre-pay meters.

However despite making no profit, they are not cheap except for those with below average consumption.

backfoot

Cardew wrote: »

There such a 'Not for Profit' company called EBICO.

For customers with low consumption it can be a good alternative.

They have no standing charges(or Tier system) all customers pay the same rate regardless of their payment method - even pre-pay meters.

However despite making no profit, they are not cheap except for those with below average consumption.

Therein lies their problem. They have no economies of scale, no Group behind them making it at the wholesale level. Returns in supply being low (not much more than a high rate bond.)

Little chance to gain volume as they are not undercutting the market except in a small segment.Didn't start with the incumbent customer base.

Probably just trying to tick along for a while. Probably due to be swallowed soon.

bengasman

Cardew wrote: »

There such a 'Not for Profit' company called EBICO.

Ebico = Southern Electric, and they most surely are quite keen on making a hefty profit; they bought Ebico a couple of years ago.

Cardew

bengasman wrote: »

Ebico = Southern Electric, and they most surely are quite keen on making a hefty profit; they bought Ebico a couple of years ago.

Really!!

Are you sure!

The Directors and customers of EBICO are not aware they have been bought by Southern! They thought that Southern just administered the accounts. Sneak B$%%&(*s to have bought EBICO without anyone knowing.

https://www.ebico.org.uk/

bengasman

Cardew wrote: »

Really!!

Are you sure!

It was one one of the big boys that bought Ibeco a few years back, just when I tried to join them. Fairly sure it was Southern, though it could have been one of the others.
At the time I wanted to join, they definitely had the best rate of all suppliers available in my postcode.

Cardew

bengasman wrote: »

It was one one of the big boys that bought Ibeco a few years back, just when I tried to join them. Fairly sure it was Southern, though it could have been one of the others.
At the time I wanted to join, they definitely had the best rate of all suppliers available in my postcode.

You made the statement that Southern had bought Ebico a couple of years ago.

Are you still maintaining that is a factual statement?

Or are you saying another company have bought them out?

http://ebicolimited.wordpress.com/author/ebicolimited/

The Managing Director doesn't seem to be aware his company has been bought.

kar999

Interesting quote from BBC's Robert Peston's Blog as millions of ordinary people benefit from these increased British Gas profits.

Pain for customers is a reward for shareholders. Now these are not two distinct groups: millions of people hold British Gas shares indirectly through their pension schemes. But, if asked, many of those saving for a pension would probably sacrifice the dividend for lower energy prices.”

MillicentBystander

bengasman wrote: »

It was one one of the big boys that bought Ibeco a few years back, just when I tried to join them. Fairly sure it was Southern, though it could have been one of the others.
At the time I wanted to join, they definitely had the best rate of all suppliers available in my postcode.

A bit of advice: when the likes of Cardew can beat you on an argument it's my contention that you should pack it in. You're clearly not cut out for this gas and electricity lark.