MSE News: British Gas boss: Why I put your energy prices up

Dave_save

''British Gas doesn't control 85% of the bill. We have no control over the cost of energy''

Amazing! Here we have the top man in British Gas telling us that they cannot even influence the cost of our energy. They cannot innovate. They cannot cut costs. They cannot get better deals on the wholesale market. So what exactly do BG do? Seems like we have a pointless energy supply market with the 'big 6' all telling us 6 times the same thing, over and over.

Well Bentley, if I were you I'd look for a career that's more rewarding, you obviously have very little job satisfaction where you are! You must get up every morning knowing that whatever you do, you are a mere puppet.

Rafter

A good defence, but....

The main issues for me seem to be:

1) Why we have become slaves to the wholesale energy markets and are these markets working efficiently?

2) Why has investment in distribution and government levy's increased so much during the recession and downturn when customers can least afford it? In other words why don't we have a very long time horizon for this kind of stuff so cost increases are spread more evenly over time?


For me, I have yet to be convinced that wholesale energy markets are efficient and the split of supply and generation businesses have worked well for consumers. It seems that banks like Barclays and Goldman Sachs have made billions from commodity and energy trading and that this must have been passed onto consumers through higher bills. Also Centrica (British Gas') parent company has made big profits from rising gas prices - shouldn't some of this really be used to cushion BG customers rather than increase investment returns for shareholders?

As far as the increases in distribution costs and government charges, I think we need to be realistic about green energy targets and if we really can't afford to meet them in the short term then relax the timetable.

If the energy companies are paying large goverment charges to support social tariffs then that is simply wrong in my view. If people can't afford energy at the price everyone else has to pay, then benefits are too low. Hidden taxation and subsidy through everyone elses energy bills (paid out of their taxed income) is simply wrong.

R.

Aldridge_Andy

I think that next week will be a shock for BG and other energy providers as the customers switching tariffs start to become visible.

I'm convinced that some of the big players will lose a shed load of customers and may actually have to do something to attract or keep customers, what though I'm not sure,

callum9999

crispibits2 wrote: »

I notice that quite a bit of the increase is from the wholesale price of the gas. If only they had some control over that, for instance having some connection with a gas supplier like, I dunno, pick one out of the air - Centrica?

So you are saying Centrica should be supplying British customers at below market value? Not a business brain are you...

BargainGalore wrote: »

The energy companies all follow each other and use the same excuses each year. Well if they feel so bad about it why dont they do something about it, maybe take a pay cut and see how rest of us feel managing on pittance. Nope dont think they like that

And why would they want to do that? I'd wager you earn more than me - are you willing to take a pay cut (perhaps hand over the difference to a charity) so you can see how I manage? Nope, don't think you like that...

mrs_angry

i could well believe his statement if when the price of oil went down so did our energy costs, BUT it doesnt and so its a win win situation for energy companies.

maybe if we paid less when it cost less when it did rise we would then take the hike on the chin, but its a fact we have a hike say by 5% then they lower it by 2% and are still raking in the money and huge profits

and to make matters worse i actually had a meter reader from southern electric knock at my door to read the meter, when i asked why because im on a key, he said we have to check that your not stealing our energy!!!!!! cheek, so i didnt let him in politly telling him i pay a fortune for my energy and wont be checked that im stealing the energy i pay a fortune for, his reply " well i wont get paid now" said he works on commision, so southern electric stop paying people to check that your customers are not stealing and lower our prices, funny really because when i thought my meter was using to much electric would southern electric send anyone out, the answer was no, so unfortuantly we are stuck paying what they demand

crispibits2

I'm not saying Centrica should be supplying BG customers at below market rate, I'm saying that BG are trying to pass the buck for the prices, when it's another part of their own company selling the gas. Of course Centrica (and other wholesalers) charge as much as they damn well can because suckers like us can do nothing about it. I'd just rather they didn't try to justify it by saying 'it's not me guv, it's that guy who looks strikingly similar to me but he's wearing a different hat'.

Cardew

crispibits2 wrote: »

I'm not saying Centrica should be supplying BG customers at below market rate, I'm saying that BG are trying to pass the buck for the prices, when it's another part of their own company selling the gas. Of course Centrica (and other wholesalers) charge as much as they damn well can because suckers like us can do nothing about it. I'd just rather they didn't try to justify it by saying 'it's not me guv, it's that guy who looks strikingly similar to me but he's wearing a different hat'.

Centrica cannot supply BG with cheaper energy - it is anti-competitive. Undercut all the competition? force them out of business? and have a virual monopoly?

BG are justified in passing the buck for prices, it is the increase in world energy prices that is the driver.

edisdead

The reason that these excuses don't wash is that British Gas is part of Centrica, which also generates energy.

I know that British Gas buys its energy on the wholesale market - but it also generates energy for the wholesale market, on which it presumably makes vast profits when wholesale prices rise. Most of the other Big Six also do this and they all sell to one another.

Phil Bentley says that the retail arm has to make a profit in its own right in order to continue to supply energy, but who exactly does he think Centrica and the other generators would sell their energy to if the retail arms did not exist? The retail arms facilitate the far larger profits of the generation arms.

Bentley and the other bosses moan that there is hardly any profit in retail energy, which begs the question - 'why do they do it?'

I think the answer is that they have to if they are to make the huge profits on generation so his defence of retail price rises on the grounds that the profit margin has to be maintained is disingenuous.

Additionally, given that Mr Bentley insists that the price rises are unavoidable, and are therefore beyond control, is he not admitting that the privatised market for energy is actually broken and needs to be fundamentally reformed? For we have reached a point as a nation that we are being held to ransom over the provision of a basic necessity - heat and light in our homes.

crispibits2

Thanks edisdead, you have made my point far more eloquently :-)

crispibits2

Cardew wrote: »

Centrica cannot supply BG with cheaper energy - it is anti-competitive. Undercut all the competition? force them out of business? and have a virual monopoly?

Indeed, that would be horrendous - if there *was* competition - as it is it appears to be something of a cartel.

Cardew wrote: »

BG are justified in passing the buck for prices, it is the increase in world energy prices that is the driver.

They would be justified in passing the buck with full disclosure, e.g: 'this is the cost of energy provided to us by another part of our own company, and their profit is £X'. Perhaps I'm being disingenuous, do BG buy their energy from somebody else?