Energy companies price fixing.

MikeR71

I just wondered, is anyone still in doubt that the big energy companies get together and fix prices across the board? Only this can explain the fact that they increase their prices all around the same time while still making millions in profits.
If one or two decided to keep their prices constant and not to raise them, they would attract customers from other suppliers. So why don't they do this? The reason is as I suspect that the big companies get together and decide to raise their prices together and screw the consumer.

You might think this is no revelation but (and someone please correct me if I am wrong) I thought price fixing is illegal. The problem of course is that it's hard to prove.

martinsurrey

or its a game of Chicken,

the first company to raise always gets the most BAD coverage in the press, so they hold off as long as possible, absorbing the falling margins until one of them cracks and raises prices first.

Then after the CEO of this company has been forced into making statements and appearing on the TV to defend their action, the other companies ride on his coat tails to a much smaller public reaction.

MikeR71

^^I think it's more sinister than that. Competition used to bring prices down, not drive them up as it's currently doing.

WestonDave

The price similarity stems from the fact that the core "product" is a globally priced commodity. Natural Gas is traded on world markets so apart from a bit of margin for different buying habits (i.e. how far in advance they commit to buying gas) the price EDF or N-Power pay for their gas is going to be similar. (same largely for electricity). They all then have to pay the same green charges to the government, and same 5% VAT so the space for creating a difference in price on something that is has a very small price per unit (i.e 5p for gas 15p for electricity) is pretty small.

Then as Martinsurrey says it becomes a tactical game between capturing market share by holding back price increases and putting them up to get profits back on track.

Even with all that we still pay less per unit of energy than most European countries - our problem is that most of us use too much of it.

yangptangkipperbang

WestonDave wrote: »

Even with all that we still pay less per unit of energy than most European countries

This is a fact that is always ignored by the "rip-off" Britain crowd - it does seem to weaken their argument a lot :rotfl::rotfl:

thor

yangptangkipperbang wrote: »

This is a fact that is always ignored by the "rip-off" Britain crowd - it does seem to weaken their argument a lot :rotfl::rotfl:

So how much less are we paying for gas and electricity compared with customers in similar european countries such as France and Germany?

Cardew

thor wrote: »

So how much less are we paying for gas and electricity compared with customers in similar european countries such as France and Germany?

If you Google you will find tables giving prices for all of Europe. Particularly for gas we are very cheap and well below average for electricity.

However there are two factors that must be considered. Firstly the amount of tax paid by the consumer - we only pay 5% and secondly the Sterling exchange rate against thr Euro. That said fo the past few years, UK have always been one of the cheapest countries.

The point about a 'cartel' is often raised. Given that the big 6 buy on the same market, deliver exactly the same product(gas/electricity) using the same wires and pipes, it is surely not surprising that their prices stay roughly in line with each other.

wakeupalarm

Are there any figures available for the usage in Kwh of Gas/Electicity accross Europe?

yangptangkipperbang

Cardew wrote: »

If you Google you will find tables giving prices for all of Europe. Particularly for gas we are very cheap and well below average for electricity.

As half the people on this site seem to incapable of doing something as simple as Googling for an answer:

http://www.energy.eu/

I suppose they know what to do with this link - or perhaps not............