MSE News: Government to announce energy crackdown

magyar

Obviously I understand Huhne's view about 'predatory pricing' and many different tariffs which are very confusing, but ultimately how's this any different to banks having standard mortgage rates and at the same time all sorts of flexible/fixed/capped rates and so on?

If you want to get the best mortgage, you go online. You do your research. You shop around. It's a darn sight easier to move energy supplier than mortgage provider, and yet there's just as much complexity in the tariffs.

We all need energy and most of us need a mortgage, too. How is this different?

Cardew

backfoot wrote: »

Obscenity isn't an accounting convention that I was ever taught. There isn't a measure for it.

Well of course I was quoting the term used in an earlier post.

The point, as I am sure you are aware, is that the constant tabloid hype about Utility firm's profits, spawns this type of post:

All these companies could have reduced their prices this year and yet still make an obscene profit - they're pretty much printing money at our expense

Admittedly, I don't have all the answers. Do you?;)

Obviously not - which is why I posed a question;)

Cardew

magyar wrote: »

£3.8m in profits is brilliant if your turnover is say £38m and it's 10%. It's pretty good if your turnover is £76m and thus 5%. But if you have 10 million customers and thus a turnover of £12bn it's lost in the noise.

Before we have any more posts using the figure of £3.8million, it is pertinent to point out that the profit was £3.8billion(£3,800million)!

backfoot

Cardew wrote: »

Well of course I was quoting the term used in an earlier post.

The point, as I am sure you are aware, is that the constant tabloid hype about Utility firm's profits, spawns this type of post:

Obviously not - which is why I posed a question;)

And always spawns the same irrelevant response regarding Tesco's profits

I think we should leave the analysis to the Forensic Accountants who have the terms of reference to look into this.

Cardew

backfoot wrote: »

I think we should leave the analysis to the Forensic Accountants who have the terms of reference to look into this.

Totally agree!

However, unless questioned, frequent posts in this vein become an accepted fact by many:

All these companies could have reduced their prices this year and yet still make an obscene profit - they're pretty much printing money at our expense

Frequent assertion ain't proof!!!

tagq2

A profitability statement is an exercise for accountants.

If you want your profits to seem low, you partition and overcharge each other (here your wholesale arm overcharges your retail arm); you invest in costly, underperforming systems which will inevitably have been created by some organisation friendly to the executives (see EDF's whole online customer-facing system); etc. Most importantly, you don't bother increasing efficiency more than you need to in order to "compete" with a few other big firms who are essentially behaving the same as you. You are unaccountable and it's not as if Enterprising Bob down the road is going to be able to fill the country with a competing gas network.

Put another way, creaming off 1-2% for printing out an invoice on the scale of millions of customers is, well, more than generous. Consider other payment processors such as credit card providers - they may charge the merchant 2% and that gets you a whole host of protections.

(However, there are other sectors comprising half a dozen dominant firms such as retail banking where the marketplace is not significantly more regulated and cost to start up is much lower yet there are very few new entrants. Why is this?)

frankie

Load of hot air!! Huhne should be addressing the cost for rural fuel users who do not have the benefits of being on the gas grid. No competition there, only 2 year contracts for lpg users and chancers prices for oil users.

Dave_save

The point is being missed here. There is no incentive for utility companies to reduce or minimise energy costs. While they may not (on paper anyway) appear to make excessive profits, one reason for this is the way they are being manipulated by wholesalers. Part of the cost we pay for our energy is the 'expertise' these companies bring in the way of negotiating skills (working with wholesalers and not acting as a middle man) and innovation in the way they purchase energy supplies. I see none of this. Perhaps OFGEM should look at this area as this is where the REAL competition should lie.

In Huhne's hot air spout the other day, he failed to mention the wholesale market/supplier relationship as an area for investigation. Now, either that guy is completely out of touch, or he's incompetent. My guess is it's a little of both!

Cardew

Dave_save wrote: »

The point is being missed here. There is no incentive for utility companies to reduce or minimise energy costs. While they may not (on paper anyway) appear to make excessive profits, one reason for this is the way they are being manipulated by wholesalers. Part of the cost we pay for our energy is the 'expertise' these companies bring in the way of negotiating skills (working with wholesalers and not acting as a middle man) and innovation in the way they purchase energy supplies. I see none of this. Perhaps OFGEM should look at this area as this is where the REAL competition should lie.

In Huhne's hot air spout the other day, he failed to mention the wholesale market/supplier relationship as an area for investigation. Now, either that guy is completely out of touch, or he's incompetent. My guess is it's a little of both!

Totally agree that the energy producer/distribution company relationship could be investigated.

However it is illegal for, say, Centrica to subsidise British Gas(who they own of course) by selling them cheaper energy.

Catapa

We simply get our electricity from a 100% renewable supplier, just don't care about the lowest rate.