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

pennywise63

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'.

Yes that just about describes what actualy goes on. They put prices up because they can .lots of complaining but no real way of doing anything about it or avoiding the increases and they know that. Within a few pounds all charge the same when you work out the cheapest rates of each provider. Crafty as a barrowload of monkeys.

MillicentBystander

spot1034 wrote: »

Have a look at what happened the previous year.

Have a look at the profits their excavation/wholesaling arm made that year.... like i have said A LOT, they really can't lose.

backfoot

Mr. Bentley (yes) tells me that they take 20% of their energy from Centrica. He stressed it is at open market rate.

He didn't answer my question re the average profit margin per customer included in the wholesale cost, so I have asked him again.:)

mcbob_2

Have a look at the profits their excavation/wholesaling arm made that year.... like i have said A LOT, they really can't lose.

Exactly - the trading arm will at the moment be buying at 60p a therm or so, which is around 0.4p a KW.
If they are sufficiently hedged or are exercising swing deals, this is more like 40-50p a therm (and they most likely are)


Considering the customer pays around 4p a KW on their bill, the mark up is huge, even taking into account VAT, mandatory gov levies and other costs of supply.

It's a racket, and needs to be regulated.

backfoot

backfoot wrote: »

Mr. Bentley (yes) tells me that they take 20% of their energy from Centrica. He stressed it is at open market rate.

He didn't answer my question re the average profit margin per customer included in the wholesale cost, so I have asked him again.:)

Mr. Bentley, to his credit,kindly responded twice to me. Unfortunately, he skirted the question asked above.

Instead he responded

' No, it's of no consequence to me whether I buy the energy from a third party or from Centrica - it's the same price. I charge customers for buying transporting and billing for energy. Generators charge me for a return on the massive investment they've made and for their feedstock costs.

As it turns out, if you generate electricity from coal, you're doing well; if from gas (remember gas prices have gone up) you're barely covering your costs. Centrica doesn't have any coal generation. But as I said, it's of no relevance to me for what price I charge you.'

It's an astonishing admission from someone in the Business of supplying end customers, that he doesn't care what the upstream costs are.

I can't think of any other Chief Executive who wouldn't be striving to understand those costs and fighting to bring them down from his supply chain providers.

We all know why and yet no one in political power or regulation does anything to reveal the generation margins or control them for the benefit of customers. Instead we are left with wooly ROI statements to hide the truth.

MillicentBystander

Is Bentley having some sort of breakdown? I can't believe he would write something like that! :eek:

Cardew

backfoot wrote: »

It's an astonishing admission from someone in the Business of supplying end customers, that he doesn't care what the upstream costs are.

That is not how I read his statement. He doesn't say 'he doesn't care'

He is surely making the point that the price he pays on the open market is not relevant to his costs 'for buying transporting and billing for energy'

i.e. If his(BG) costs and profit are, say, 5p/kWh, and he has to pay 6p/kWh on the open market( or to Centrica) he adds on that 5p and charges 11p/kWh. If he pays 7p/kWh then he adds on his 5p and charges 12p/kWh.

backfoot

The specific and clear question I asked was how much profit is made within the wholesale price.

You often quote Tesco at me. Their buyers continually squeeze the profit margins of their Suppliers. I don't seem the same disciplines being applied by BG or the other Suppliers. The reason is they are usually part of the same Group.

Instead of sharing the knowledge he must have, he has said that is of no relevance. Yes, it's my interpretation of his words that he doesn't care and I am happy to stick by it.

Cardew

So you think BG alone can drive down prices on the world market?

Or even concerted action by all UK suppliers would achieve the same aim?

Why would any of the energy producers sell to the UK at a lower price than they can get from other countries?

backfoot

Cardew wrote: »

So you think BG alone can drive down prices on the world market?

Or even concerted action by all UK suppliers would achieve the same aim?

Why would any of the energy producers sell to the UK at a lower price than they can get from other countries?

Hi Cardew,

I presume the world market means oil, coal and gas imports . The Wholesalers (same Big 6) will still add a mark up to that prime cost.

I asked Mr.B what the margins were?

Until we know the size of those margins it is speculation whether or not there is scope for reduction.

You obviously know those figures and agree with him that all he can do is accept and pass them on.;)