MSE News: Energy firms must offer (not give) cheapest deals, says Ofgem

jalexa

victor2 wrote: »

From another thread:
Quote:
its ok saying how many units you use but what is your monthly bill for
elctricity is ££££ wise im trying to find out if mine are normal all this kws
is doing my swede in
I rest my case.

Ha, a donkey at the water-hole:D

backfoot

MillicentBystander wrote: »

I'm a self confessed tariff tart and also used to give it large with the cash back but I'm also honest and realistic and I know I have benefited greatly from an unfair industry. Anyone with half a brain can work out that managing your account online does not and never has saved the company £200-£300 per year per punter compared to a standard rate tariff. It's clear that the loyal (some would say apathetic) standard rate punter has been ripped off to fund these online short term deals. And that's not right. No matter how we whinge and moan these are the facts. We've had it 'good' (OK, less 'bad') for quite a while but the 'good'/less bad times are probably over.

The best analysis so far for me.

Competition was predicated on Suppliers (originally 14 or so)and new entrants competing on price and customer service. The remaining 'big six' even referred by Ofgem as such, illustrates the model failed. Complaint levels are appalling even in a simple Industry. Complaint resolution is long and painful.

There is little price competion between the 'big six' with at best timing differences between price rises. The differentiation being for those based on the research done by the customer. The same supplier offering energy of the same quality and consumption profile to customers at totally separate and different prices. Pretend competition at best. How was that considered to be a good idea?

Yes, customers should have done what the majority here will have done and accessed the third party helpers to choose. I'm allright Jack says 'Shame on the 75% who haven't', ' . But if they all had, the price would have equalised anyway. It's a bizarre business process and model.

It's not the same as food shopping. There aren't different products, ranges of own brand or premium products. It's like having the same loaf of bread under the same package charged at different prices with the cheaper one, placed in the corner of the store on a high shelf and hoping very few notice them.The 'Big 6' then created confusion marketing and made up rules like exit fees, to limit and control competition amongst the savvy.

After many years of complete failure, Ofgem, are trying to redress the unlevel playing field, but have little prospect of it driving real price competion. The input pricing differentiators are so small with the same wholesale price,fixed network charges and similar overhead strcutures leaving onlythe profit margin. With only six ,cartel pricing is almost inevitable and Suppliers are content at around the 5% profit per customer level. Why wouldn't they? Easy pickings.

For the privilege of this non existent competition, customers are asked to pay 5% profit to keep the 'Suppliers' happy, so that they might manage the generating end of it as well. I'm sure you have picked up on the blackmail investment threats.

The online bonus will erode and the price of energy will continue to rise for all on a more equal basis. We will then almost have come full circle,with six instead of 14, offering the same thing.

Still Consultants and Executives did very well and we paid for them, but the game's up for the rate tart.

Pincher

wantanswers wrote: »

Fair enough, never expected a reply anyway.:)

I go and do some chores, and the I'm declared Missing in Action? I posted that yesterday. Are you one of those Alien pilots, joined to your computer by the hip?

I don't need to give you an example, since all you have to do is to use a comparison site, and look at the top and bottom price.

The £200 is the difference between the lowest tariff and the standard tariff for medium usage, in a typical dual fuel case,
which is just the simple case.

For the more fanatical bargain chasers, Scottish Power's Online Fix November 2013 is £1,030, or so you think. £70 cashback and 7% price hike in December (£1,000 x 7% = £70) means the standard tariff customer in December 2012 will be £200 + £140 = £340 worse off compared to if they had been awake in August 2012.

Being a high usage household, I expect to save even more.:p

techspec

Clearly - those of us that can be bothered switching (and get cashback) - will lose out.

Those that can't be bothered - will probably end up the same.

wantanswers

Pincher wrote: »

Being a high usage household, I expect to save even more.:p

You must have a big house Pincher! Surely not No. 10?

allule

I have changed suppliers twice, but the main difficulty with this is that suppliers leapfrog each other with price rises, so that a change can soon be counter-productive. To get a fair comparison, companies could be asked to set prices for the year on the same date.

Competition works with supermarkets because customers can balance cost with quality, service etc., but all energy suppliers provide the same electricity and the same gas, so the only competition is with price.

Has anyone heard a single consumer say how pleased they are that they have a choice of energy suppliers? I haven't.

backfoot

techspec wrote: »

Clearly - those of us that can be bothered switching (and get cashback) - will lose out.

Those that can't be bothered - will probably end up the same.

Yes correct.

Those responsible for the system have suddenly decided that its immoral to charge ordinary citizens,many vulnerable, some £200 or more for exactly the same essential life supporting product.

Those responsible allowed a system to develop which they called competition and attracted an IT literate section of the population to benefit. The real price differential between the big six being a small fraction of the savings claimed. Timing of price increases allowing some churn between Suppliers at the margin and helping maintain the illusion.

The thread and changes are aimed mainly at stopping the sham rather than us claiming smugness because we were in the know. We have done well (relatively) but not as well as the Suppliers and hangers on.

Party looks over.;)

Terrylw1

backfoot wrote: »

Competition was predicated on Suppliers (originally 14 or so)and new entrants competing on price and customer service. The remaining 'big six' even referred by Ofgem as such, illustrates the model failed.

Yes, as soon as deregulation went through, the more powerful suppliers just bought out or merged with others. Some even went into administration and were purchased extremely cheaply.

This was based on a corporate strategy of "its easier to buy a customer base than attract them individually" and as they did this they also inherited all the insider links to the old host agents and could purchase their volume of energy at a cheaper rate from the distributor since they had the largest % of supplies in the distributors region. A very unpopular policy with the more operational people fighting to keep everything running on so many systems with centres all over the place. A policy which did come back to haunt one CEO...who had to move on...

Later, new suppliers entered the market and they were bought out.

The Mergers & Monopolies Committee looked as this industry a long time ago due to all this and decided there was enough competition to rule a monopoly out.

Ridiculous really and something should have been done to prevent the energy companies making themselves so powerful in the sector.

backfoot

allule wrote: »

I have changed suppliers twice, but the main difficulty with this is that suppliers leapfrog each other with price rises, so that a change can soon be counter-productive. To get a fair comparison, companies could be asked to set prices for the year on the same date.

Competition works with supermarkets because customers can balance cost with quality, service etc., but all energy suppliers provide the same electricity and the same gas, so the only competition is with price.

Has anyone heard a single consumer say how pleased they are that they have a choice of energy suppliers? I haven't.

The only differentiation is the smoke screen created by tariff confusion. i.e. constantly introducing minor variants e.g.online savers from 1 through to 20 introduced at varying times and tying customers into anything labelled discounted.

If it wasn't for those confusion strategies the whole system would immediately crumble because everyone would have perfect knowledge as to which supplier offered the lowest price and we all would switch. Such a position is totally unworkable.

I can only see two real products i.e. standard variable and fixed over a period of time. The latter is a product based on gambling.

I totally agree that prices should be set at a fixed points in time allowing clear comparison and guarantees for the next year.

The overall process of creating product differentiation for something which is simple and identical is flawed. It has created a plethora of business processes and data flows which were never needed.

jalexa

backfoot wrote: »

Those responsible allowed a system to develop which they called competition and attracted an IT literate section of the population to benefit. The real price differential between the big six being a small fraction of the savings claimed.

I don't disagree with the moral argument, or that the system is "broken". However I don't believe that there isn't a panoply of advice available to the vulnerable. I may (or may not) have particular energy expertise but I have never found switching required either energy expertise, "IT literacy" or time. The last switch took minutes to initiate and proceeded fairly smoothly. May have resulted in a full year's direct debit woes but is another matter.

Actually not, and not something that Cameron/Ofgem/et al has pronounced upon, but it directly affects household finances.

Perhaps the point I am trying to make is that the deal was open to all, online or by telephone, and required little more knowledge than an answer to annual usage informed by the last annual statement.

For very low users, a social supplier such as Ebico, informed of (I hope) by the panoply of advice.

While the system may be broken, sadly the fundamental underlying issue is the wholesale price and future security of energy coupled with the deplorable insulation values of the UK housing stock inhabited by so many in "fuel poverty".

So I see the distinction as not so much the disparity between the price paid for energy but the cost in keeping a household at least "not cold".

And another point since I am fired up, off mains gas rural fuel poverty. It is a disgrace that winter fuel payments universally apply to those paying 3.5p/kWhr and 13p/kWhr.