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

Terrylw1

MillicentBystander wrote: »

This. Being saying it on here for ages, there's massive duplication in the industry as it stands compared to a nationalised one. Compared to if the industry was stiill nationalised we have extra: 5x hugely expensive IT systems (BG's IT system reportedly cost half a BILLION pounds and was so unfit for purpose they sued the company that supplied it), 5 x hugely rewarded CEOs, SIX x sales depts, 5 x CS depts., a simply massive parasitic industry that gives financial incentives for switching and we all know where the money for that comes from don't we? Etc etc. But at least we are saving on spending in one area now - STORAGE FACILITIES! Shakes head. Stupid.

But if you look at the old nationalised model for elec, we had:

- 14 suppliers which were regional but all operated on different computer systems will little or no similarity to each other except for the data items used to manage the data.

- 14 suppliers with were regional that operated all processes to a national standard but in each of their regions, there was no processing outside of region. So, there 14 of everything at dept level.

- pay grades were civil servants and they got paid a lot more then than they do now. As their service years advanced they ended up on pay that equates to up to 2 management levels above in the case of entry level staff compared to the same regions now. So, how much were their managers earning? I don't know about senior management level but it was a gravy train at the bottom. I'm also sure that the public would be complaining about them as part of the public sector pay & benefits issue.

So, it wasn't all rosey back then. At an operational process level, it was pretty poor from what I saw. It tools years to improve basic inefficiencies and lack of knowledge. From my experience, the operational model was based on everyone only doing X with no knowledge of anything else. So, who really took ownership for anything? The part the public used to see was better, but if you went into the backend you wouldn't have the same opinion of the industry.

In terms of systems, aside from them all being different, they were 30 years old. So, I don't think they would keep them when they can upgrade to more modern systems such as SAP. They may even do it in a largely isolated manner. So, it would still cost us all.

An example is the way you enter readings into the nationalised systems & how the meter readers managed it. In some regions it was rate 1 = night & rate 2 = day, but in some regions it was the opposite. So, if they were so joined up, why did they build their billing systems the opposite way round for this?

I also wonder whether fighting a complaint in a nationalised sector is harder...after all, who do they answer to?

Bgas should have managed their consultants better. Although, SAP seems to be having lots of problems in the sector for them all so is SAP fit for purpose in this industry?

[Deleted User]

there are a huge number of people on dual rate eco 7 meters for no reason. They are not using night storage heaters now and havent been for years.some towns I visit such as Retford and Worksop the meters are the norm. People are not "savvy " to the 30% break even night use figure. The suppliers havent informed them or educated them about their money losing meters. I hope that the suppliers will be forced to finally at least drop them a simple letter to let them know that they are paying through the nose. I will send an email into OFGEM to remind them of all these unused, high priced eco 7 meters

spot1034

The collective switching idea just seems to be a way of reaching out to people who aren't going to go on comparison sites and make the move themselves as individuals. They aren't going to get any better rate than is readily available to active switchers, beacuse the margins just aren't there to be given away.

wantanswers

backfoot wrote: »

For me this is further recognition that the current market is not promoting price competition.

Ofgem's consideration of such schemes and organised local government bulk buying schemes are a desperate effort to kick start some pressure on price and get the market moving. It clearly has the hand of the politicians driving it.

I didn't follow the big switch closely but I believe it was watered down from its original target numbers and the savings,if any, were small.

This mechanism is used in the industrial and commercial market by Group buyers on an auction type basis, where capturing Big group business is quite competive and there is more active competiton.

Clearly Backfoot the Energy Minister seems to have a positive view about collective buying schemes and Local Authoritie involvement and the possible advantages for some.

"I believe that local authorities are well placed to help local residents manage high energy bills by organising community energy switching and bulk buying schemes, thanks to your position of trust in local communities and partnerships with other key players."

His idea is one which I support and will pursue with my MP and for those on here who have concerns about some not being able to access price comparisons I hope they will do the same?

I agree about desperate effort, however I look upon it as a way forward.

Re: Group Business buying.....I've been there and it works!

backfoot

wantanswers,

I agree that anything which improves the position for those still paying more than they need to is a positive move.

More fundamental is the current proposal to stop the same supplier being allowed to charge £200 more on standard when they have the same product (different label) being offered at £200 less. Why Supplier's have been allowed this basic and obvious abuse is beyond comprehension.

The collective purchasing idea will level off at about the same price as the best offer. The big six are unlikely to bid lower than that imho. There will be tacit agreement.

So if we must have this so called competive market then it is right to give any new ideas a chance.

backfoot

Terrylw1 wrote: »

I also wonder whether fighting a complaint in a nationalised sector is harder...after all, who do they answer to?

Terry,

A strong and accurate analysis as usual. I would just like to answer the above.

You may recall the Consultative Councils who I felt were a very powerful body representing customers and dealt with individual complaints on a very detailed basis.

Such complaints were actually quite rare but when they appeared they were investigated in depth and presented to and signed off by Senior Managers, who then knew their stuff.

Often the principles of such complaints were discussed at the Consultative Council Meetings by those Senior Managers and the CC Reps who were knowledgeable and strong advocates for the customer.

Today the volume of complaints is so high and the resource low and unskilled. There is no problem solving to prevent further issues.

Cardew

sacsquacco wrote: »

there are a huge number of people on dual rate eco 7 meters for no reason. They are not using night storage heaters now and havent been for years.some towns I visit such as Retford and Worksop the meters are the norm. People are not "savvy " to the 30% break even night use figure.

Agreed if it is 30% 'break-even' figure; and on some BG tariffs I believe it is currently around 40%.

However with some competitive tariffs with other companies the break-even point has been much lower. Scottish Power are particularly competitive at the moment for E7 tariffs - their fixed 2014 tariff break even point is under 15%(midlands).


If you get up early(before E7 period ends) and use appliances overnight, it is quite easy to use around 20% to 25%.

The problem is that the 'goalposts change' and what is good advice now, may not be tomorrow.

Cardew

Terrylw1 wrote: »

But if you look at the old nationalised model for elec, we had:

- 14 suppliers which were regional but all operated on different computer systems will little or no similarity to each other except for the data items used to manage the data.

- 14 suppliers with were regional that operated all processes to a national standard but in each of their regions, there was no processing outside of region. So, there 14 of everything at dept level.

Absolutely correct, and also powerful Unions could demand high wages.

However, given that the situation today now might be better 'the bad old days', it doesn't negate the points about duplication of resources outlined above.

I don't think anyone is suggesting that we revert to the pre-nationalisation days, just improve the current system where there isn't real competition; and to be fair it is difficult to see how there can be real competition when all firms are selling the same product, delivered by the same means.

backfoot

Cardew wrote: »

I don't think anyone is suggesting that we revert to the pre-nationalisation days, just improve the current system where there isn't real competition; and to be fair it is difficult to see how there can be real competition when all firms are selling the same product, delivered by the same means.

Gosh we agree

So the model is flawed as a competitive tool .

All the spaghetti would take some unravelling but it shouldn't stop some overall standardisation of prices, central control over them on a planned and systematic basis and the removal of the unnecessary overhead of false marketing, pointless intermediaries and the Supplier profits.

wantanswers

@ backfoot (post 76).......I agree with all you say and although the idea from the Energy Minister is not new or original in fact, I personally see it as a way forward and also as a means of possibly getting us back to a situation similar to the Area Generating Boards.

With that in mind I have already raised the issue with Local Government and will await there response.

Thank you for your comments!